BCB eyes more property projects in the Klang Valley

PETALING JAYA: Johor-based property developer BCB Bhd is eyeing opportunities to develop more projects in the Klang Valley.

“We are definitely looking at more prospects in the Klang valley,” group managing director Datuk Robert Tan Seng Leong told StarBiz yesterday.

Tan: ‘The prospects in the Klang Valley is good and is quite stable.’

“The prospects in the Klang Valley is good and is quite stable,” he pointed out.

BCB currently has three ongoing projects in the Klang Valley with total gross development value (GDV) of RM2.6bil.

“We have 151 acres in Kota Kemuning, Shah Alam, which would be allocated for a bungalow development. We also have a bungalow project in Taman Yarl and a luxury condominium development - Concerto Kiara @ Mont Kiara.”

He said response for the company Concerto Kiara, which was launched earlier this month,was good.

“Our other developments are in Johor. In Batu Pahat, BCB has a market share of between 60% and 70% of the projects being undertaken by about 26 developers there.”

Tan said the company had about 1,000 acres in Batu Pahat.

For its third quarter ended March 31, 2012, BCB's net profit rose to RM3.95mil from RM2.42mil a year earlier mainly due to better sales margins, while revenue fell to RM32.26mil from RM34.97mil previously.

For the nine-months ended March 31, net profit rose to RM7.64mil from RM6mil a year earlier while revenue rose to RM89.70mil from RM80.35mil previously.

In its notes accompanying its quarterly results to Bursa Malaysia, BCB said it was optimistic of its performance for its current financial year.

“In the coming months, the group will facilitate the launch and development of its Klang Valley properties.

“The group is optimistic that these projects as well as existing ones will contribute positively to its earnings,” the company said.

By The Star

iProperty to partner with LJ Hooker

KUALA LUMPUR: The iProperty Group today announced its partnership with LJ Hooker, Australia's best-known and most trusted real estate brand.

Listed on the Australian Securities Exchange, the iProperty Group owns and operates Asia's number one network of property websites under the iProperty.com umbrella brand.

The partnership between the two parties will see over 50,000 sales listings published from over 690 LJ Hooker offices in Australasia on the iProperty Group's network of property portals in Malaysia, Indonesia, Hong Kong, Macau and Singapore.

iProperty Group Chief Executive Officer Shaun Di Gregorio said in a statement that the agreement will allow LJ Hooker agencies to advertise their for sale properties in key Asian markets.

"This can tap into a whole new market of potential property buyers and investors in the Asian region," he said.

The partnership means that when a vendor lists a property for sale with LJ Hooker, that property will also be advertised on the iProperty Group's network of property portals.

Di Gregorio added that the partnership is in line with the company's strategic mission to deliver more choice for their consumers who are in search of properties locally and internationally.

LJ Hooker's General Manager of International and Head of Network Development Bill Russell said the company was proud to be in partnership with the leading operator of property portals in Asia.

"LJ Hooker is committed to growing and expanding the reach of our agents, not just in Australia and New Zealand but also in Asia.

"Our aim is to provide the best real estate experience and service for our customers and to continue to be the leading brand and the name that is synonymous with real estate," he added.

By Bernama

Malaysia's real estate remains a preferred investment choice

PETALING JAYA: Despite the overall gloom and doom in the global economy, a glut of condominiums and cooling measures by Bank Negara to deter speculation in the overall property market, the general observations on the ground indicate strong sales for certain segments of this market.

This underscores the fact that real estate continues to be a preferred investment choice in the current economic climate.

The latest report by Knight Frank Real estate highlights 1st half 2012 said there were five completions in the first six months of this year, bringing the total cumulative supply in Kuala Lumpur to 29,882 units.

Another five developments are expected to be completed in the second half this year. This will bring the cumulative supply to 31,163 units. These numbers cover the high-end condominium market priced RM500 per sq ft and above.

These new completions, coupled with existing supply and weak occupancy rates, are expected to put further pressure on the rental market.

The report also noted that smaller sized apartments and SoHo units were becoming a mainstay in the Kuala Lumpur condominium scene and the dual-key concept was steadily gaining acceptance and popularity among developers and purchasers.

These two over-riding trends in the high-rise residential sub-segment help add product diversity, it said.

Dual-key units comprise a studio apartment unit attached to an otherwise standard condominium unit. Such units come with two separate doors with one leading to the studio unit, and the other to the adjoining unit, bonded with a common foyer.

While there were multiple SoHo developments being launched, three dual-key concept residences entered the market and all three recorded good take-up rates, the report said.

The recent increase in the number of new launches offering smaller units in established locations and popular suburbs is driven by the scarcity of land and high land costs, as well as pressure for developers to keep end-pricing affordable. Although the units are small, on a per sq ft basis, the price will be higher than the larger units.

As for pricing, in the primary market as when buyers buy directly from the developers, the high-end condominium sector saw a slight drop in average asking prices in the city while the fringe and suburban areas generally demonstrated a stable trend.

Similarly, there was a notable decline in transacted prices in the city's secondary market where buyers buy directly from owners instead of from developers. Projects located on the fringes of the city, however, saw more sales and leasing activities.

DTZ Research report for Kuala Lumpur Q2 2012: Resilience across all sectors said the overall residential market was “stable with average capital and rental values experiencing marginal increases.”

“The outlook is, however, more cautious as sentiment is clouded by both internal and external issues, including those of a political nature,” the DTZ report said, adding that the market was expected to experience a period of slower growth going forward.

In the office segment market, the market was relatively stable despite a spike in new supply.

Menara Felda will be the new corporate headquarters of Felda Land Development Authority which has just listed Felda Global Ventures Holdings in one the of biggest initial public offerings internationally for the year.

Menara Darusalam, a mixed development, will house the new Grand Hyatt Hotel. With several recently completed office buildings in the vicinity such as Menara Worldwide and Menara Prestige still filling up spaces, the new additions will add pressure on rents, DTZ report said.

Prime office rental rates remain stable and resilient at the moment, averaging RM6.23 per sq ft per month, while top tier offices are commanding about RM7.90 per sq ft per month, the report said.

“With a substantial pipeline of supply completing in the second half of this year and next year, rents are forecast to fall,” the report said.

Knight Frank said the cumulative supply of office space in the city stood at 47 million sq ft and will increase to 48.6 million sq ft with the completion of three new offices by the end of this year. The supply in the city fringes today stands at about 17.5 million sq ft. Some 4.1 million sq ft will be added to the fringes by the end of next year.

By The Star

Busy time for Prasarana with rail-and-property projects

PETALING JAYA: The next 18 months will be a busy time for Syarikat Prasarana Negara Bhd as it goes full steam ahead with its rail and property projects, what its group managing director Datuk Shahril Mokhtar once called its “rail-and-property play”.

Besides teaming up with the Crest Builder group for the Dangi Wangi project, and with Naza TTDI group for the Taman Tun Dr Ismail project, Prasarana has a few other projects which entail working with other developers.

The company is currently evaluating plans from six bidders for its 6.5 acres in the up-and-coming township of Ara Damansara.

“We are in the final stage of evaluation and will not be able to estimate the gross development value (GDV) of the project just yet. We expect to present the results of our evaluation to the board by mid-August and to make the formal award by the middle of September,” Shahril told StarBiz.

He said the key idea of this particular project was to have a park-and-ride facility.

“The developers must use their creativity on how to build the other commercial development that can also include a residential element around the park-and-ride facility,” he said.

It is understood that Prasarana is looking for a joint venture (JV) partner on a profit-sharing basis who has the experience and track record.

Speaking on its first property development along its rail line on the site of the Dang Wangi light rapid transit (LRT) station, he said the company is finalising details with its JV partner.

The project, with a GDV of about RM220mil, is awarded to a JV company between Crest Builder Holdings Bhd unit Crest Builder International Sdn Bhd and Detik Utuh Sdn Bhd.

“We want to start work as soon as possible but there are a lot of regulatory approvals that we must seek. Thus, we expect to start groundwork by the second half of next year,” he said.

The company had also recently teamed up with Naza TTDI Sdn Bhd to undertake a condominium project in Taman Tun Dr Ismail.

The project would be based on a 30:70 profit sharing model, with Naza TTDI doing most of the development work on Prasarana's land, valued at RM12mil.

Its fourth project is currently at the tendering stage. This will be on a two-acre site near the

monorail station in Brickfields. The tender ended on July 21.

Its fifth project, at a pre-tender stage, is currently being worked on. Once it has worked out the details, it will tender out Putra Heights and the former bus depot land in Taman Melawati for development.

“We will make announcement for Putra Heights by the end of the year and open up the tender for Melawati by the second half of next year,” said Shahril.

By The Star

The Haven set for completion mid-2013

IPOH: The Haven, the luxury lakeside residence in Tambun, Ipoh is set for completion by the middle of next year, said The Haven Sdn Bhd chief executive officer Peter Chan.

He said the group was the first developer to conduct a “topping-out” event for the three towers simultaneously, and construction of the project was ahead of schedule. “The project has surprised many people with its speedy sales and construction by topping out all three towers concurrently,” he said at a dinner to mark the topping-out ceremony on Saturday. The Haven is Perak’s largest and tallest residential condominiums.

Chan said that out of the 500 units, over 75% has been sold while another 100 units were still available with each unit costing between RM600,000 and RM3.8mil.

The Haven would be managed by international hospitality chain – Best Western which would market and lease out the apartments on behalf of owners. At an average price of RM600 per sq ft, The Haven is located near Sunway Group’s Lost World of Tambun water theme park and the Banjaran Hotsprings Retreat in Tambun.

By Bernama

MB: Rapid real estate growth in Perak

IPOH: The real estate sector in Perak is undergoing rapid development especially in Parit Buntar and Bagan Serai as demand for housing was mounting, says Mentri Besar Datuk Seri Dr Zambry Abdul Kadir.

“I would like to inform that land application in Parit Buntar has been exhausted, which means there is no more government land left for development following the high-level of development taking place,” he said, adding that the state government would ensure there was enough demand in every development to avoid any over-supply situation.

“Ipoh is not about old abandoned buildings. We have many new projects,” he said after officiating at the topping up ceremony for a RM270mil luxurious condominium project in Tambun.

By Bernama

Great Mall of China set to become world's largest

BERJAYA Land Bhd's (BLand) The Great Mall of China (GMOC) is set to outdo others for the bragging rights as the world's largest shopping mall.

And BLand has every reason to be confident of GMOC's success, particularly in 'terms of demand for space leasing' as Beijing has high per capital income of US$12,447 (RM39, 200) in 2011.

By the World Bank's standard, cosmopolitan Beijing is already considered a wealthy city, on par with London, New York or many other rich cities around the globe.

GMOC, the world's biggest integrated mall complex, is estimated to be worth about RM7.5 billion on a 32ha site in China's Hebei Province.

It is expected to be completed in five years. GMOC has strategically positioned itself in an area where massive integrated public transportation project is due to take place.

One notable project is a big subway station, which is expected to be completed in 2018, linking it to neighbouring TongZhou.

TongZhou is about 20km away, and the subway will bring its distance to GMOC within 2km, reducing travel time to mere minutes from half an hour now.

Beijing's population of over 21 million people, excluding the population of its neighbouring cities such as Tian Jin, Hebei and Yan Jiao, which are also booming due to the country's sound economy, is expected to give rise to the project's popularity.

The vision for such a project of epic proportions is a timely investment by the Berjaya Group founder Tan Sri Vincent Tan.

Tan owns 49 per cent of BLand's subsidiary and GMOC operator Berjaya Great Mall of China Co Ltd (BGMOC) through Berjaya Times Square Cayman Ltd.

GMOC was planned at a time the Chinese market began witnessing a boom followed by the gross increase of the republic citizens' spending power worldwide.

Tan definitely knows his market.

The Berjaya Times Square, which is the eight largest building in the world in terms of floor area, is proof of the conglomerate's big dreams and visions.

Unlike other shopping malls in Beijing, which are mostly purely shopping driven, GMOC will be the first to break out of the ordinary shopping culture in China by housing three indoor theme parks.

GMOC will also impress its patrons with its many world-class amenities, including a multi-purpose convention hall to cater to all forms of business needs.

With Phase One due to be completed in October next year boasting of three all-weather and indoor theme parks namely Extreme Park, Family Park and Water Park, GMOC is poised to set the Malaysian flag sailing high globally.

By Business Times

Sunway shines with green concept

Green, green homes: Artist’s impression of an aerial view of Sunway Rymba Hills. Gross prices range from RM4mil to RM4.9mil per unit.

SUNWAY Bhd's concept of integrating the beauty of nature with stylish architectural designs amid a low density gated and guarded community is a popular draw with well-heeled property buyers.

Both the property and construction company's Rymba Hills in Sunway Damansara and Sunway Montana @ Desa Melawati feature sizeable private forests and well-planned park-inspired environments that adopt the LOHAS (lifestyles of health and sustainability) concept.

Sunway Rymba Hills, which is a joint venture with Selangor State Development Corp (PKNS), consists 80 units of leasehold three-storey villas on 19.72 acres in Sunway Damansara, Petaling Jaya.

The villas have standard lot sizes of 45 x 90 ft, and gross built-ups ranging from 4,442 to 4,650 sq ft.

Gross prices range from RM4mil to RM4.9mil per unit.

The group's managing director (property development Malaysia) Ho Hon Sang tells StarBizWeek that Rymba Hills' 6.5-acre private forest park forms the character of the residential development.

Rymba Hills also has nature trails, meditation pavilions and exercise par courses.

All hillside villas are designed to look outwards towards the forest park, or the landscaped strip gardens. Ho points out that Rymba Hills, which has its name derived from the Malay word meaning “primary forest”, has only 4.1 units per acre. “It is very low density, in an area that is known for quite a number of high-rise residential developments,” says Ho.

He points out that Sunway had initially planned for 960 condominium units on the Rymba Hills site, before changing the plan about five years ago. “Even then, it would not have been such a high density development, with about 50 units an acre.”

It is worth noting that had Sunway stuck to the original project plan for the condominiums, the gross development value (GDV) would have been between RM700mil and RM800mil (compared with the GDV of RM270mil for the three-storey villas in Rymba Hills).

Ho: ‘Rymba Hills’ 6.5-acre private forest park forms the character of the residential development’.

“Yes, we would have made a lot more money. But Sunway is always a responsible developer. We respect the environment, and the social aspect of development for this area. There are a few thousand condominiums around this area (Kota Damansara, Mutiara Damansara and Damansara Perdana).

“So, when we decided to change the development plan to one with a much lower density, the authorities were only too happy to approve the conversion,” Ho recalls.

Highlights of Rymba Hills, which is scheduled to be completed by end-2012, include a fully equipped clubhouse with a gym, recreational pool deck and infinity pool.

Rymba Hills has eight landscape garden themes, namely nature trail, fruit orchard, herbal/kitchen garden walk, terrace nursery, jogging and par course area, deck and recreation pond, linear garden, playground and water cascade area.

There are four villa designs, where Type A and D come with lifts.

Type B has a contemporary design, with its entrance at the centre of the unit or the middle floor.

Type C has a master suite (bedroom and dedicated pantry and study room) on the highest floor, linked to roof garden.

Ecological design

Ecological design features include large balconies offer solar shading and anti-glare by way of their generous overhangs, while sun shading screens are placed on the north western part of the levation to screen off the strong afternoon sun.

Building layouts are designed to facilitate natural and cross ventilation. Other passive thermal design strategies include the use of cavity walls for western facing wall, sun shading screens and use of insulation in roof space. The development was also given a provisional Green Mark Gold award by Singapore's BCA (Building and Construction Authority).

“About 30% of the units are still available,” says Ho.

Rymba Hills is located near colleges, hypermarkets, lifestyle neighbourhoods (such as Sunway Giza), commercial areas (Dataran Sunway) and shopping malls such as 1 Utama and The Curve. It is accessible via Damansara-Puchong Highway (LDP) and New Klang Valley Expressway (NKVE).

Ho points out that Rymba Hills is among the newer phases of Sunway's 450 acres in the Kota Damansara area. “Our landbank here is about 90% developed, since we started development about 17 years ago.”

Completed Sunway projects in the area include Sunway Sutera and Opal Damansara condominiums, Laman Impian garden villas, Challis Damansara and Parkview townhouses as well as Sunway Damansara Technology Park.

Presently under development is Sunway Nexis, which is a commercial development consisting of three-storey retail shops with sizes ranging from 4,133 to 8,718 sq ft, 13-storey office suites with sizes ranging from 925 to 1,636 sq ft, and a 20-storey flexi office block.

“The upcoming My Rapid Transit (MRT) station will be nearby, at Sunway Nexis @ Dataran Sunway. We have very strong take-up rates for Sunway Nexis,” says Ho.

Meanwhile, the group recently launched the first phase of the 56-acre Sunway Montana @ Desa Melawati, Kuala Lumpur.

Green splendour: Rymba Hills has nature trails, meditation pavilions and exercise par courses.

Ho says the development will have terraced villas and semi-Ds on elevated freehold land, with a 14-acre private forest. “We have sold more than half of the 107 units in the first phase, which is priced RM1.7mil to RM2.7mil.”

According to Ho, the group was not too concerned about the perceived slowdown in the demand for mid-high and high-end residential properties this year, due to stricter bank lending guidelines.

“Our buyers know our branding. They appreciate and continue to see value in Sunway properties.”

By The Star

Can we afford to buy that property?

The last two weeks were rather sobering.

There was this small 700 sq ft condominium unit that seemed rather promising for retiring in, priced at more than half a million ringgit. There were no steps to manoeuvre, no slippery floor tiles and the bath was elderly friendly. The project had all the merits for retiring in with nearby amenities.

There was another unit, about RM800,000, which was about twice the size, which, from the start, was way beyond the radar of affordability. So off to the financiers.

The first, after looking at the relevant documents, and assuming the purchase would be for the small unit, looked up and smiled broadly. Doable!

The little heart smiled, relieved! Incidentally, according to ancient Chinese culture and beliefs, it is the heart that is the fountain of wise decisions - and bad ones - not the mind. That is why, the word wisdom (hui) is written with the heart symbol as its base, or root word. Unlike Romanised languages, Chinese is based on pictograms or pictures.

So let's consider the second and bigger unit. Doable! That is shorthand for getting the bank's stamp of approval, that is, getting a loan would not be a problem.

But wait! It will be a stretch after retirement, she cautioned.

A second and third bank officer were consulted. Both gave an outright No! even for the small unit.

The conversation went something like this:

“We could approve it for you. We just lengthen the tenure up to 20 years but you make your repayments based on a 10-year tenure. But you will be the one to suffer when you retire.”

The third officer said: “You can put in 40% of the purchase price, instead of 10%. Or you can stay with 10% downpayment, we stretch your repayment, but six months before the unit is completed, you sell your present house, and put in a big lump sum. But you will be the one to suffer because it is a huge risk you are taking.”

They said it will not be right to earn the commission because they will not be doing their good turn for that day if they were to go ahead with the loan application. They want the good karma to remain with them. Both convey the same message not a wise purchase at all. So perish the thought.

Before parting ways, they brought up several reasons why a property purchase was not the best decision. That was when the moment of truth came, which brought about the sobering effect. Being a bit defiant, another type of financier certainly not an Ah Long was consulted; a reputable lender, but one that does not come under the purview of Bank Negara's regulations.

Incidentally, the most recent change in lending criteria when evaluating loan eligibility is based on the net income of applicants, and not the gross income, as was done previously.

This new lending guidelines deduct all personal commitments which may include car and computer loans, personal and credit card loans. It also includes contributions to the Employees Provident Funds and other deductions. The loan application is based on the net figure.

Another broad smile came from the fourth financier. No problem! Doable. Unfortunately, the terms and conditions were not attractive. At that point, the question was not how desirable the property may be, but how much does one want it? Does the end justify the means?

When one arrives at such a metaphorical fork in the road, there will be two sets of emotions. The greedy little heart says, “Go on, take the risk”. And there will be all sorts of justifications you've worked long enough and you deserve it. While wisdom says, “Wait! How will you finance it after retirement? Do you want this apartment at all cost?”

The crux of this rigmarole is this, there are always ways to get around rules and regulations in order to have what we perceive as “our prize”.

When it comes to the stage when one wants something at all cost despite the hordes of naysayers and the little barriers to entry, then maybe it is best to just walk away.

A property consultant said he has come across clients who want to buy a property so much that they begin to take all sorts of risks. “Buying a property should not stretch one's resources to the point of having to give up the little treats in life,” he says.

So, there goes the little 700 sq ft to somebody else!

The saying “when there is a will, there's a way” does not sit well with deputy news editor Thean Lee Cheng.

By The Star (by Thean Lee Cheng)

More strategic plan required to meet need for affordable housing

PROPERTY prices are a favourite subject for conversation among Malaysians.

It is to be expected. Everyone is looking to buy a house or apartment, either to have a roof over his head or to sell it for a profit at some point in the future.

To have a house or apartment of your own has become a must for most of us Malaysians today, a condition further encouraged by the Government's home ownership programme.

On the face of it, this is a good policy. Everyone should be given the opportunity to have a place of his own, a home that offers a decent level of comfort and well-being, yet within his means.

However for the average Malaysian, particularly those living in or around urban centres, the prices of property have risen so high that they can no longer afford to buy.

As an expert in the real estate sector in Malaysia pointed out recently, the prices of homes in a city such as Petaling Jaya have risen more than 30 times in the past 40 years. In the same period, salaries have gone up a mere 10 times.

As a result, people are now expected to downgrade from a landed property to an apartment, usually. Even so, people are paying more in monthly instalments and taking longer up to three times to fully repay their home loans. In short, if you buy an apartment today, you will probably spend the rest of your working life paying for it.

As a result, they also end up paying a lot more in interest to the bank, compared with their parents or grandparents 30 or 40 years ago.

Given that 76% or five million households in Malaysia have incomes below RM5,000 a month, many homes on the market today are priced beyond their affordability.

In addressing this issue, the Government has imposed a quota for low-cost housing projects. Private developers are expected to chip in by setting aside a certain percentage of their projects for low or medium cost homes.

More drastic measures have recently been proposed. For instance, the Kedah state government is mulling a proposal to require private developers to allocate up to 60% of their projects for affordable housing, up from 30% now.

Over and above this proposal, the PAS-led government is also mulling the possibility of restricting the sale of property in certain districts in Kedah to Kedahans only. The state believes this move would reduce speculation on property prices, thus ensuring that houses remain affordable for Kedahans.

Such proposals seem ill-conceived, to say the least. On the whole, be it at the federal or state level, a more strategic plan is necessary to meet the housing needs of those in the lower to middle income group.

At the same time, there must be room for a dynamic property market where investors can expect some returns for putting money into property.

Developers are well aware of the need to ensure that all Malaysians have equal access to housing that they can afford, and for the most part are supportive of any move to this end.

However, it must also be noted that for developers, other concerns come into play when planning and deciding on new projects, such as types of houses, price range and location.

As business entities, property development companies have to meet profit expectations of shareholders as well, and building homes and selling them at RM42,000 or below is certainly not going to help meet those expectations, especially in the urban centres where land costs are very high.

Another consideration is mobility. For the lower income group in particular, the ability to get around for work, school and other daily necessities at an affordable price is essential.

For the most part, it does not make sense for them to buy a low or medium cost home in a locality that is not served adequately by cheap public transportation to enable them to go to work or for their children to go to school.

For them, buying a car may not be an option, and taking the taxi to work is a luxury many cannot afford.

For these reasons, it makes sense for the Government to build affordable housing for the lower income group, with contributions to subsidise these projects funded by private developers.

Developers would have had to spend money anyway if they are to meet the quota of affordable housing in their respective projects. The money would be better used if it is channelled to the Government for a more strategically planned housing programme.

The Government could also ensure that the right infrastructure be put in place to ensure that those who buy into the low or medium cost homes that it is building also have access to affordable public transport and other facilities. With almost unlimited land bank, the Government could easily build a school within the development as well, thus meeting another essential need.

By taking full responsibility for affordable housing, the Government could also ensure that they are well maintained. For the most part, low-cost apartments in Malaysia are not well maintained.

If residents or owners fail to pay the monthly service charges regularly, there would not be sufficient funds to ensure proper maintenance. As a result, many of such apartment blocks end up looking like slums in just a few years.

Any attempt to control property prices runs against the free-market concept that we practise. For most of us, even those who buy a house to live in for the long term, putting money into property is a form of investment.

When we were younger and had just been married, we struggle to pay the mortgage for a house that we believe is reasonably big enough for our spouse and two or three children.

When our children are grown up and on their own, we may decide to sell the house and opt for a small apartment instead. Hopefully the house would have appreciated in value and there would be a decent sum left for our retirement.

Is that too much to expect?

Teh Lip Kim is the MD of SDB Properties Sdn Bhd, a lifestyle property company. Bouquets and brickbats are welcomed. Send by email to md@sdb.com.my.

By The Star (by Teh Lip Kim)

MK Land to build more affordable housing, hopes to counter recession

IPOH: MK Land Holdings Bhd will build more affordable housing next year to counter the potential recession, its chairman Tan Sri Mustapha Kamal Abu Bakar said.

He said affordable housing was particularly saleable during recession and that the company would concentrate its projects in Selangor, Perak and Kedah.

"We have gone through three recessions since we started 28 years ago and we are still around. The secret is to have a basket of projects," he said.

Speaking to reporters after handing over keys to house owners at Meru Perdana here yesterday, Mustapha Kamal said the company would not concentrate on upmarket or commercial development next year. Although the focus is on affordable housing, the company will not compromise on structural integrity, sound proofing, termite resistance and quick completion.

"I am not worried," he said when asked on how the company would face a possible recession. He added that only when the market recovers, the company would build more upmarket projects.

"We own large land bank which allows us to build 114,000 units of various types of projects," he said, adding that critical mass was created from building affordable housing.

"We get our profits from shop lots that are built near affordable housing projects," he said.

By Business Times

Sepang Goldcoast inks deal with Chinese firm

CHINA'S Zhejiang Zhongxia Investment Co Ltd has inked a deal with Sepang Goldcoast Sdn Bhd (SGSB) to develop tourism properties worth RM1 billion at the Sepang GoldCoast develop-ment in Bagan Lalang, Sepang, Selangor.

Zhejiang executive director Xu Yong said the company will build beach residences, comprising six 18-storey towers with over 1,000 units.

Zhejiang will also develop a Fisherman Wharf commercial street, modelled after the Fisherman Wharf in San Francisco and Hong Kong.

"The Fisherman Wharf and residences will bring attention to the whole Goldcoast development.

"Already we have interest from Asian investors who want to buy the properties and invest in the development," Xu Yong told reporters after signing the cooperation agreement yesterday,

Xu Yong said the total investment in the project will be around RM700 million, with the financing coming from China.

He added that the project will be developed in four phases over five to six years, starting early next year.

"We will form a consortium to undertake the project. It will comprise Zhejiang, SGSB and several local construction firms. We will be calling for tenders to help build the properties.

"There will be a lot of local involvement in the project," he said.

Xu Yong said this will be the first of many investments that Zhejiang is considering in Malaysia.

"We hope there will be many more cooperations with SGSB, and the Selangor state government," he said.

SGSB is a 70:30 joint venture between Sepang Bay Sdn Bhd, which is majority controlled by shareholders of CNI Group, a multi-level marketing outfit in Indonesia, and Permodalan Negeri Selangor Bhd, the Selangor state investment arm.

The company owns 2,084ha of coastal land in Sepang.

Completed projects at Sepang Goldcoast include the Golden Palm Tree water villas and the Golden Palm Tree Resort & Spa.

SGSB executive vice-president Wong Mun Chong said the company is at the tail end of finalising the masterplan for the 2,084ha land.

The Goldcoast development is divided into three areas - north coast, central coast and south coast.

SGSB is currently developing the south coast where the partnership with Zhejiang comes in.

By Business Times

Sepang GoldCoast enters JV with Chinese firm

SHAH ALAM: Sepang GoldCoast Sdn Bhd has signed a memorandum of understanding (MoU) with China-based Zhejiang Zhongxia Investment Co Ltd for the joint development of a new project in Sepang Gold Coast.

Sepang GoldCoast Sdn Bhd is a joint-venture company between Permodalan Negeri Selangor Bhd (PNSB) and Sepang Bay Sdn Bhd.

PNSB is the Selangor state investment arm while Sepang Bay is the Malaysian property arm of the Istana Group, a major property developer in Indonesia.

Sepang Gold Coast is an international holiday resort in Sepang.

Zhejiang Zhongxia Investment, based in Shanghai, is engaged in investment and development of leisure and commercial real estate, biotechnology and cultural artifacts.

Zhejiang Zhongxia Investment executive director Xu Yong said the company would be involved in the construction and marketing of the new project in Sepang Gold Coast, comprising residential, hotel and commercial units with a gross development value of about RM1bil.

“The planned construction of about 200,000 sq m is targeted to commence next year,” he told a media briefing after the MoU signing yesterday.

Xu said that construction covering a total area of 47ha was expected to be completed within five to six years.“We are looking at Asian investors or buyers for the project,” he added.

Sepang GoldCoast executive vice-president Wong Mun Chong said: “We are now finalising the master plan for the whole 2,023ha.”

By Bernama

Far East REIT bets on yield demand with IPO

HONG KONG: Far East REIT, a hospitality trust launched by Singapore's largest privately owned property developer, started pre-marketing yesterday an up to S$700 million (RM1.76 billion) initial public offering (IPO), betting on demand from yield-hungry investors burnt by volatile global markets.

With interest rates around the world hovering near record-lows, the fixed return on real estate investment trusts (REITs) are helping lure investors amid an uncertain outlook for equities.

The MSCI World Index has fallen nearly seven per cent since its March peak because of concerns over Europe's debt crisis and China's economic slowdown.

The REIT, which owns hotels and serviced residences in Singapore, is being marketed at a yield of 6-6.5 per cent, said a source with knowledge of the deal who was not authorised to speak publicly on the matter. The yield is slightly below the 6.63 per cent average for all REITs listed in Singapore.

The IPO is set to be the biggest in the city-state so far this year.

"It's still a relatively risk-averse environment, so REITs are something that people are looking at because they give good yields," said Wee Liat Lee, head of property research at BNP Paribas Securities (Asia) here.

"Sentiment has been pretty sizeably affected by the slowdown in China recently, so the interest is diverted to Southeast Asia and Singapore as a capital-raising platform."

The yield for the Far East REIT compares with about 7.9 per cent offered for Ascendas Hospitality Trust's deal this week and six per cent for CDL Hospitality Trust.

By comparison, so-called specialized REITs that also bundle hotel properties traded at an average 6.6 per cent yield in Singapore, 6.7 per cent in Hong Kong and 7.4 per cent in Malaysia, according to Asia Pacific Real Estate Association (APREA) data.

The REIT, sponsored by Far East Organisation, comprises seven hotels and four serviced residences in Singapore with about 2,500 rooms, the source added.

The deal will come on the heels of Ascendas Hospitality Trust's US$304 million (RM957.6 million) offering, which had to be relaunched this week after the company was forced to remove one of the hotels from its portfolio.

It will be a welcome development for equity capital markets in Singapore, where issuance plunged 74 per cent to US$4.7 billion in the first half of the year from the same period of 2011.

The slump was much steeper than the 30 per cent decline in stock sales in Asia ex-Japan, according to Thomson Reuters data.

Far East REIT and its bankers will start taking orders for the IPO on August 6, with pricing slated for August 15. The REIT is set to debut on the Singapore stock exchange on August 27.

About half of the orders for the offering are expected to be covered by cornerstone investors, the source added.

DBS Group, Goldman Sachs and HSBC were hired as joint global coordinators and joint bookrunners on the deal.

By Reuters

China property stocks rally begins to wobble

This year's rally in stocks and bonds of mainland Chinese real estate developers looks set to peter out, analysts say, as valuations have become less attractive and hopes have dwindled for any rollback of steps taken to dampen home prices.

The tide appeared to start turning during the past week, though China's property sector remains among the best performers across Asia this year, easily outpacing benchmarks.

"The best performance for the China property sector is behind us and further gains will be difficult because of rich valuations and economic headwinds in the second half of 2012,' said Owen Gallimore, ANZ head of credit strategy in Singapore.

"It is doubtful if people want to buy beyond the top-tier names and into the mid-tier after such a strong rally," he said.

An index of property shares in Shanghai is up 17 per cent this year in contrast to the Shanghai Composite, which has drifted into negative territory and is currently near the year's lows.

Valuations for the MSCI China real estate stock index have nearly doubled since the fourth quarter in 2011 when they hit a record low of just four times forward price-to-earnings.

According to Deutsche Bank, a weighted index of 45 bonds from 32 property companies produced a return of 25 per cent in the first half of 2012, easily beating the 6.7 per cent total return for the overall JP Morgan Asian Composite bond Index.

Some individual bonds have even beaten that. Shimao Properties' bond prices maturing in 2017 rose 66 per cent from the October lows.

A rebound in transactions mainly from first time home buyers came as a relief for the property sector earlier this year, lifting it out of the funk it had fallen into by the end of 2011.

According to Macquarie Capital Securities sales volumes in China's tier-1 and tier-2 cities on a four-week average basis bottomed out around February this year and have gathered pace after June.

But as house prices were still in decline through this period and there was growing unease over China's economic slowdown, hopes grew that Beijing would rethink measures taken in the past two years to cool off an overheating property market.

But now, with signs that home prices have bottomed out, the thinking is that Beijing is more likely to leave controls in place to forestall any rebound in home prices.

After data released on Wednesday showed that China home prices broke eight straight months of declines in June, shares in the property sector began retreating faster.

Investors are worried over how the government would respond should sales volumes stay strong and prices begin rising.

By Reuters

Eurozone woes spur UK property bargain hunt, says Lloyds

LONDON: UK property businesses are hunting for bargains in the country’s battered real estate market, encouraged by heavy discounts that show how the eurozone crisis has hit confidence in the sector, Lloyds Banking Group said.

Data from the bank’s quarterly Commercial Property Confidence Monitor showed the net balance of major businesses intending to make purchases in the next six months rose to 57 in May, from 52 in February, while the net balance of fund managers keen to invest rose to 38 from 36 over the same period.

A net balance is the sum of all positive and negative survey responses which ignores the middle ground. A positive number, for instance, would indicate that there were more bullish responses than bearish ones.

One survey respondent, a small company, told Lloyds that “property is so cheap people are starting to buy,” the bank said in the report.

Lloyds managing director of corporate real estate, Lynda Shillaw, said there was clearly pessimism about the market’s near-term prospects.

“Investors are nevertheless seeing the opportunity for longer term value growth when buying at today’s prices,” she said in a statement.

UK property values fell 2% in the first half of 2012 and recovery was expected to be still far off due to the uncertain economic outlook, Investment Property Databank said last week.

Despite the broader growth in investment appetite, Lloyds said most businesses expected activity in the UK property market to slow over the next six months, with the number of pessimists outweighing the number of optimists among small and medium-to-large businesses.

A Reuters poll of economists predicted on Thursday that the eurozone has sunk back into its second recession since 2009 while a second poll said the British economy would stay in recession three months longer than previously expected.

By Reuters

Medini Iskandar to build condos with Chinese firm

ISKANDAR Investment Bhd (IIB)'s subsidiary, Medini Iskandar Malaysia Sdn Bhd, has teamed up with China's Zhuoda Real Estate Group to build 2,600 units of high-end condominiums in Medini, Johor.

The condos, with an estimated gross development value of RM2.6 billion, will be developed over two phases and completed in five years.

The project, Zhuoda's maiden overseas venture, will be undertaken by a joint-venture company - Zhouyuan Iskandar Sdn Bhd in which Medini Iskandar has a 20 per cent stake.

The project, tentatively named Medini International, will be built at a cost of between RM600 million and RM700 million, said Wang Bin Wu, chief executive officer of Zhouyuan Iskandar.

The Chinese group was attracted to invest in the area due to Medini-specific incentives such as tax exemption and no restriction of sales to foreigners, he added.

Sales of the units, the cheapest of which in Phase One is expected to be sold at around RM1 million, will be targeted mainly at Singaporeans, Chinese, Malaysians, Koreans and the Japanese.

IIB's president and chief executive officer Datuk Syed Mohamed Syed Ibrahim is confident the units will have a good take-up rate, given that recent property launches in Iskandar Malaysia have been well received, especially after the completion of some infrastructure projects under the 9th Malaysian Plan.

"There is, in fact, now upside potential for new quality offerings in the market with the completion of the infrastructure projects," he told reporters here yesterday after formalising the joint-venture agreement with Zhuoda's Beijing-based unit, Qingdao Zhuoyuan Investment Holdings.

Medini, located in the Nusajaya development zone, is envisioned to be the central busiest district of Nusajaya.

By Business Times

Iskandar still offers potential for price upside

KUALA LUMPUR: There is still an upside potential for residential property prices in Iskandar Malaysia, Johor, as the infrastructure is being completed and catalytic projects to lure more investments are still coming in.

Medini chairman Jamil Muttalib (left) exchanging documents with Wang.

Iskandar Investment Bhd president cum chief executive officer Datuk Syed Mohamed Ibrahim said locations that did not have immediate development potential would have better capacity and capital value with the completion of infrastructure projects such as highways.

He said the average price of a high-rise residential unit, which has not risen much in the last 10 years, hovering in the region of RM300 to RM350 per sq ft (psf), was now seeing higher prices.

Syed Mohamed said when UEM Land Holdings Bhd launched their first waterfront project and Imperia (condominium), the value of the unit was about RM750 psf.

“Following this success, Dijaya Corp Bhd launched their project near Danga Bay at an average of RM650 psf,” he said, indicating that capital value of real estate in Nusajaya had appreciated. “It is not true that there is an oversupply of residential properties in Johor. (Otherwise) these developers would not achieve this kind of success.”

“The upside potential is just the prices alone. When you develop, you are assured of a good take-up (rate) of all your products. With better infrastructure, you will be able to fetch a premium of the prices of your products,” Syed Mohamed said after a signing ceremony between Iskandar Investment Bhd's subsidiary, Medini Iskandar Malaysia Sdn Bhd and Qingdao Zhuoyuan Investment Holding's Square Stone Holdings Sdn Bhd to build high-end condominium with an estimated gross development value (GDV) of RM2.6bil.

The high-rise property proposed to be known as Medini International starts from an average price of RM750 psf targeting buyers from Singapore, China, Malaysia, Japan and Korea.

The joint-venture company Zhouyuan Iskandar Sdn Bhd would develop the project in three different phases. Phase one and two covers a 16-acre land that is estimated to be completed within seven years. The project would take off at the end of this year.

Meanwhile, Zhuoyuan will be the sole developer of phase three with an estimated GDV of RM1.5bil.

Square Stone Holdings Sdn Bhd and Zhuoyuan Iskandar Sdn Bhd chief executive officer Wang Bin Wu said it was Zhuoyuan maiden foreign venture and the China company was attracted to incentives such as tax exemption and no sales restriction to foreigners to invest in Iskandar.

“We are also fascinated with the presence of catalytic projects like Legoland and EduCity which would add value to the entire development,” Wang added.

By The Star

Office rentals in KL suburbs seen rising

KUALA LUMPUR: Rentals for purpose-built offices in suburban areas outside Kuala Lumpur are expected to rise with vibrant business activities, good information and communications technology (ICT) and government projects there, said the valuation and property services Department (JPPH) of the Finance Ministry.

“Domestic and foreign investors in the region will also make it attractive,” said Dr Zailan Mohd Isa, director of the National Property Information Centre (NAPIC), a unit under JPPH.

She was speaking to reporters after the launch of the Purpose-Built Office Rent Index (PBO-RI) for Federal Territory of Kuala Lumpur for the first to fourth quarters 2011 by Deputy Finance Minister Datuk Dr Awang Adek Hussin.

The first rent index of its kind in South-East Asia was developed by NAPIC to provide a guide on current office rentals in Kuala Lumpur besides being a benchmark of the country's financial stability.

It comprises sub-indexes for four main regions - the KLCC-Golden Triangle (KLCC-GT), central business District (CBD), within city centre (WCC), and selected suburban areas.

According to the index, the KLCC-GT region was the most sought after location in the city in 2010, with the highest average rentals among the four regions.

In the fourth quarter of 2011, average office building rental per sq ft was RM4.66 in KLCC-GT, RM3.27 in CBD, RM3.36 in WCC and RM3.51 in the suburbs.

JPPH director-general Datuk Abdullah Thalith Md Thani said the department intends to produce the index every half-year for the country's main cities including George Town and Johor Baharu.

By Bernama

Setia Haruman to focus on purpose-built buildings

SETIA Haruman Sdn Bhd, the master developer of Cyberjaya, will focus on purpose-built buildings to generate recurring income.

Purpose-built buildings are developed according to a prospective tenant's requirement.

Setia Haruman chairman Tan Sri Mustapha Kamal said such types of buildings can be part of a real estate investment fund (REIT) portfolio.

Mustapha was speaking to reporters after a tour of Cyberjaya with Minister of Internationl Trade and Industry (Miti) Datuk Seri Mustapa Mohamed.

Setia Haruman officials also had a meeting with Mustapha to further promote Cyberjaya as an IT hub among world-class companies.

Mustapha said Cyberjaya offices are attractive for investors as they have between seven per cent and eight per cent yield. Average rental there, including service charges, is about RM5.50 per sq ft.

Setia Haruman plans to build more residential, commercial and entertainment units in the coming years for its current 50,000 strong community. There are over 300 firms, including HSBC, Hewlett Packard, Shell and Dell operating in Cyberjaya at the moment.

Over the next five years, 16 major developers will build properties with an estimated gross development value of RM20 billion. A total of RM10 billion worth of projects have been completed.

By Business Times