TA Enterprise upbeat on property division Sector is expected to account for 60% of revenue in FY09

KUALA LUMPUR: TA Enterprise Bhd expects revenue contribution from its property development division to reach 60% for the financial year ending Jan 31, 2009 (FY09) from 40% currently.

“We are looking to diversify our property business to markets in Vietnam, China and the US, as well as in countries that we have a presence in and are familiar with, such as Australia and Canada,” managing director and chief executive officer Datin Alicia Tiah told reporters after the company AGM yesterday.

Datin Alicia Tiah

However, the group was adopting a wait-and-see approach for the “right timing” as the current world property market remained lacklustre.

On its proposal to list its real estate investment trust on the Singapore Exchange, Tiah said it had been put on hold due to the softening property market in Singapore now.

Besides, the group was also considering the listing of its property arm as a separate entity in the near future, she said, noting that the stock exchange would be determined by market performance.

According to Tiah, both its overseas properties - the Radisson hotel in Sydney and a commercial building in Vancouver - provided good capital appreciation and high net yield of 8% per annum.

Moreover, she said, TA's strong net cash of RM400mil put the company in a good position for overseas expansion.

“We hope to increase overseas revenue contribution to 50% from the current 25% in three to five years,” Tiah said.

It currently has a presence in Hong Kong, Australia, Canada and South Africa.

The group has unbilled sales of RM234.7mil, of which RM21.9mil is from its current projects at Damansara Idaman and Idaman Villas in Petaling Jaya, and the remaining from the Idaman Residence project.

TA is expected to launch the final phase of Damansara Idaman in September, with the 26 luxury bungalows priced above RM4mil each.

Meanwhile, TA would launch new mixed commercial development projects in Sri Damansara, Bukit Bintang and near the KL City Centre in the near future, Tiah said, noting that it had total land bank in over 1,000 acres currently.

On the stock market's performance, Tiah said the market would remain sluggish due to the US subprime issue, local political uncertainties and rising inflation this year.

Nonetheless, TA hoped to retain at least 30% revenue contribution from the financial sector, she added.

TA registered net profit of RM224.21mil on revenue of RM546.71mil for FY08. It paid a dividend of 10 sen per share for FY08, against 7 sen per share for FY07.

“We are confident of maintaining our FY08 net profit in FY09, barring unforeseen circumstances,” Tiah said, adding that it would retain some of its property projects for recurring income.

By The Star

Housing sector in challenging times

KUALA LUMPUR: The housing and construction industry will soon be facing a “crisis” if oil prices and the current inflationary trend continue to soar unchecked, warns Real Estate & Housing Developers’ Association (Rehda) vice-president Datuk F.D. Iskandar.

Datuk F.D. Iskandar

Iskandar, who is also Glomac Bhd group managing director, said construction costs had increased by more than 30% recently and many projects might be postponed or halted.

“How long can developers hold on as they would eventually have to pass on the higher costs to the consumers. Prices of houses will definitely go up before year-end,” he told StarBiz.

Iskandar said Rehda’s 1,000-plus members were experiencing “very challenging” times and many of them were withholding the tendering of new contracts until prices stabilised.

Contractors, he observed, were also not keen to take on new projects as they too were adopting a “wait-and-see” attitude.

In fact, some of the construction firms were only too happy to get out of an existing contract, as they did not want to be caught by the spiralling prices of raw materials since there was currently no cost fluctuation clause in their contracts.

“They (contractors) are crying out to the developers to revise their contract prices. As many smaller developers cannot revise the prices, the contractors will just walk off while others will not even take part in the tendering of new projects,” he said.

Projects might be stalled, contractors go broke and the market for houses priced at RM300,000 and below would be the hardest hit, he warned.

With shrinking disposal income, many potential house buyers, particularly civil servants who were trying to make ends meet, might postpone their purchase.

Iskandar said unlike in the past, when only one or two items had gone up in price, now everything – from food, petrol to raw materials – was more expensive.

“If the Government does not take positive action now, it will lead to a crisis for the industry. We have to increase the purchasing power of Malaysians.

“We must also re-brand and look at our economic model as we are losing our best brains to countries like Singapore and the Middle East,” he said, adding that Glomac lost two project managers over the past six months.

Iskandar said Malaysia was “very good at starting something like the Multimedia Super Corridor” but failed to follow up and later got beaten by other countries.

Malaysia should also strive to be an Islamic financing hub, he said.

On the Malaysia My Second Home programme, he felt it should not be placed under the Tourism Ministry but directly under the Prime Minister’s Department, as this would make it easier to manage things.

“Malaysia is a beautiful country, is politically stable and our things are cheap. We do not have any natural disasters and our workforce is one of the best. However, we have not done enough to sell Malaysia properly,” he said, adding that the country also needed more foreign investments.

On the “phenomenal” increase in property prices in the Kuala Lumpur City Centre development area, he said the current prices of high-end condominiums of RM1,500 to RM2,000 per sq ft were still relatively cheap compared with other countries.

Iskandar said Glomac’s 10 ongoing projects should increase to 14 by year-end. However, with the current economic situation, it was reviewing and re-strategising its project launches. “Initially, we wanted to launch very fast, but now we want to re-look at our costs and (profit) margins,” he added.

By The Star - StarBiz - (by S.C.Cheah)

Sime expects RM10b in property sales

SIME Darby Bhd’s property unit said nine developments near Kuala Lumpur may generate as much as RM10 billion (US$3.1 billion) in sales in the next five years.

This year’s revenue from the projects, which include the Ara Damansara and Bukit Jelutong developments, might reach RM2 billion, Abd Wahab Maskan, managing director of Sime Darby Properties, told reporters today.

He also said that Sime Darby Properties will not be deferring launches of new projects despite higher costs.

Sime Darby is also the world’s largest palm oil producer. -

By Agencies / By New Straits Times

Tune Hotels aims to set up 100 hotels

TUNE Hotels.com Group aims to set up 100 hotels within the next three years which will include sites outside Malaysia such as Kuta and Legian in Bali as well locations in the Philippines and Thailand.

Today it held the ground-breaking ceremony for Tune Hotels.com LCCT, its third hotel after the launch of the flagship hotel in Kuala Lumpur and the second hotel in Borneo, Kota Kinabalu.

In a statement in Sepang today, it said the new hotel is expected to open early 2009. By then, passenger traffic at the Low-Cost Carrier Terminal is expected to grow to 20 million passengers.

The hotel will have 222 rooms spread over six floors.

The other new hotels in line to be launched will be in Ipoh, Penang, Johor Bahru and Miri.

By Bernama