Penang raises density for property development

GEORGE TOWN: The state government has raised the density for property development in Penang, which will bring down land cost and stabilise property prices, said Hunza Properties Bhd executive chairman Datuk Khor Teng Tong.

Datuk Khor Teng Tong says it will help arrest the escalation of property prices.

“The state government recently decided to increase the density to 280,000 sq ft in built-up area from 90,000 sq ft per 100,000 sq ft of land.The decision to increase density will allow developers to build more, hence giving consumers more choices.

“It will also help arrest the escalation of property prices over the next few years,” he said at a company briefing for the media, analysts and bankers.

On the group’s projects on the island, Khor said Hunza would finalise the design plans for a “green” apartment building project on a 4ha site soon.

The apartments would have built-up areas ranging between 1,300 and 1,800 sq ft

The project was expected to contribute strongly to the bottom line of the group for the financial years ending 2011 and 2012, Khor said.

On the Gurney Paragon project, Khor said the designs and plans for the shopping mall had been finalised and submitted to the relevant authorities for approval.

“We hope to start work by early 2010,” he said.

The seven-storey shopping mall will have a gross built-up area of 1 million sq ft, of which 650,000 to 700,000 sq ft would be lettable.

On the property market in Penang, Khor said property was currently in short supply.

“The shortage of supply is mainly due to a slowdown by developers. Not many new housing projects have started in the past one year.

“Furthermore, work on projects in the state has to stop at 6pm, which will delay the delivery of units, resulting in lower supply and the increase of property prices,” he said, adding that the local authorities needed to speed up approvals for new housing projects to meet market demand.

For the fiscal year ended June 30 (FY09), the group posted RM27.6mil net profit on revenue of RM91.8mil compared with RM48.4mil and RM245mil respectively in FY08.

By The Star

UM Land ties up with Tradewinds Johor

PETALING JAYA: United Malayan Land Bhd (UM Land) has proposed a joint venture with Tradewinds Johor Sdn Bhd to govern Extreme Consolidated Sdn Bhd (ECSB), and to participate in a property development project in Kulai, Johor.

Tradewinds Johor is an indirect wholly-owned subsidiary of Tradewinds Corp Bhd.

In a filing with Bursa Malaysia yesterday, UM Land proposed to purchase the remaining 49% of the total issued and paid-up share capital of ECSB in a call option agreement with Tradewinds Johor.

And UM Land – through wholly-owned subsidiary ECSB – has proposed to acquire a piece of freehold 629.25-acre land in Kulai from Ambang Budi Sdn Bhd and Hartaplus Realty Sdn Bhd for RM233mil cash upon the terms and conditions in the sale and purchase agreement dated Feb 12.

UM Land will hold an EGM in respect of the proposed joint venture and acquisition on Sept 10 in Kuala Lumpur.

By The Star

Malaysia's Renexus proposes to build houses in Pakistan

Local construction firm, Renexus, has submitted a formal proposal to the Pakistan government for the construction of 20,000 low-cost houses in each of its eight major towns.

Pakistan High Commissioner to Malaysia Lt-Gen (Rtd) Tahir Mahmud Qazi said the state land in major towns - Lahore, Rawalpindi, Multan, Bahawalpur, Faisalabad, Sargodha, Gujaranwala and Sialkot - would be used to build quality houses through private sector participation and financial institutions.

Describing Renexus' proposal as the beginning of a mutually beneficial cooperation between the two countries in the housing sector, Tahir is inviting other Malaysian companies to take full advantage of the Pakistan government's vision to provide decent housing to its low-and middle-income families.

"The supply and demand gap in the housing sector will be met by public and private partnerships and the government will serve as enabler, regulator and facilitator," he said in a statement recently.
For major investments, Tahir said it would be tapped from the private sector, both local and foreign and financial institutions.

Commercial Counsellor at the Pakistan High Commission, Waijullah Kundi, said the proposal titled "Green Township for the Future" envisages each satellite township complete with commercial, educational, institutional recreation, spiritual, healthcare, and infrastructure services.

Waijullah said the development would incorporate Renexus' latest state-of-the-art smart building system and other industrialised building methods to ensure good quality workmanship and speedier construction time.

The Punjab province, with a population of 82 million, is facing a shortage of five million houses.

It has an incremental demand for 700,000 units a year against the annual construction of 150,000 units, leaving a huge gap and as a result creating immense opportunities for construction firms.

By Business Times (by Rupinder Singh)

World housing market showing signs of recovery

KUALA LUMPUR: The world's housing markets are showing signs of recovery, with seven countries having emerged from the house price slump, according to Global Property Guide.

After experiencing declines in 2008, house prices in China, Portugal, Australia, New Zealand, France, Sweden and Hong Kong rebounded during the latest reported quarter, 2Q 2009.

In its survey of world-wide house price indices, issued on Aug 26, it said however, most countries suffered sharp house price falls during the year to end-Q2 2009, hence the general situation remains negative.

The Global Property Guide uses price-changes after inflation, giving a more realistic picture than the (more upbeat) nominal figures usually preferred by real estate agents.

In Shanghai, China, house prices rose 1.96% during the year to end-2Q09, with most of these gains entirely during 2Q when Shanghai's house prices rose 2.09%.

China's house prices started falling in 2Q08, but a strong increase in government spending revived the housing market and the economy. This saw the country recording a 7.1% growth in GDP in 1H09. Chinese property prices are widely expected to increase further.

Average house prices in the Algarve, Portugal, at €1,429 per square metre, were up by 2% in 2Q09. House prices in Portugal as a whole rose 1.01% in 2Q and were down only 0.43% on the year to end-2Q09, compared to minus 7.24% during the year to end-2Q08. New CONSTRUCTION [] orders in Portugal increased 12.3% in 2Q09.

Global Property Guide said in Australia and New Zealand saw house price increases of 3.73% and 3.31% respectively in 2Q09. All regional capital cities in Australia registered quarterly house price increases, ranging from 2% to 5%. However, over the year to Q2 2009, there was a price decline of 2.80% in Australia.

In New Zealand, the annual change was still negative at minus 3.07% in the year to end-2Q09. But in July 2009, New Zealand had the first yearly house price increase since 2008.

After falling for the last five quarters, house prices in France were up by 3.31% during Q2 2009, thanks to government subsidies. In Sweden, house prices were up by 3.16% during Q2 2009. Hong Kong's house prices increased by an average of 8.9% during Q2 2009.

As for the US housing market, it was stronger, as reflected in the Case-Shiller house price index, which rose 0.35% in 2Q09, from a decline 6.46% in 1Q09.

Year-to-date in 2Q, house prices were down 13.96%, an improvement from 18.51% decline on-year to 1Q09.

The FHFA's purchase-only index was however down by 1.74% during 2Q09, somewhat worse than the 0.04% drop in 1Q09, so the signals in the US are mixed.

Year-to-date in 2Q, seasonally-adjusted prices fell 5.03%.This was a lesser fall than in the year to end-Q1 (down 9.16%) and than in the year to end 4Q08 (down 9.69%) (all figures inflation-adjusted).

However, the Global Property Guide said some countries avoided the crunch.

Israel's housing market has continued to sail through the global recession. The average price of houses rose 8.40% on-year to end-2Q09. But the quarterly increase in 2Q09 was down to 1.02%, a drop from 5.52% in 1Q09.

Switzerland saw an increase of 4.90% over the year to end-2Q09. However, house prices barely increased during 2Q09.

A key indicator of improvement is the market's momentum, that is the number of countries that did better this year, than during the previous year.

Nine countries improved their on-year performance to end 2Q09, compared with a year ago. In contrast during the year to end-1Q09, only six countries did better than the previous year.

But many countries are still suffering. The house price index for Dubai, UAE, fell 49.9% during the year to end-2Q09. But quarterly data indicates Dubai's downward house price spiral is moderating.

House prices fell 8.92% in Q2 2009, much less than the 42% drop in 1Q09.

Double digit year-on-year declines were also experienced in Bulgaria, Singapore, Iceland, UK, Japan, Denmark and South Africa. Most recent quarter declines in these countries range from 2% to 10%.

By The EDGE Malaysia (by Joseph Chin)

IJM expects to keep orderbook above RM4b

Malaysia's second biggest construction firm aims to bid for infrastructure projects that will be rolled out under government stimulus packages in Asia

IJM Corp Bhd, the country's second biggest construction company, expects to maintain an order book of more than RM4 billion as it bids for sizeable government contracts locally and abroad.

It aims to bid for infrastructure projects that will be rolled out under government stimulus packages in Asia. Governments around the world are spending more money to pull their economies out of recession.

"We would replenish the order book so that we maintain about RM4 billion plus at any one time. Since our chewing rate is about RM200 million a month, we have to (replenish) about RM2 billion plus a year," said IJM Corp managing director and chief executive officer Datuk Krishnan Tan Boon Seng.

He was speaking to reporters after the group's annual and extraordinary general meetings in Subang Jaya yesterday.
Some projects IJM Corp is eyeing include the new permanent low-cost carrier terminal in Sepang and the light rail transit (LRT) extension works in Kuala Lumpur.

"We do a broad range of work from civil engineering works to building. You will see us participating where there are sizeable jobs," said Tan, adding that the company was bidding for works here and abroad.

Tan said tenders for both the LCCT and LRT projects have yet to be called.

"For the LCCT, the pre-qualification process has been called and we have also submitted. We will look to bid for the sizeable packages (once the tender is open)," he said.

Tan also said that there will be other tenders from the Pahang-Selangor Water Transfer project, including the dams, intakes, ancillary infrastructure and the treatment plant.

On IJM Corp's property division, Tan said there are strong property sales yet to be billed and expects the division to perform decently given the wide range of products - retail, industrial, medium- and high-cost developments - in high density locations.

Meanwhile, the group saw its first quarter net profit decline 22.5 per cent to RM70.8 million while revenue slipped 5 per cent to RM1.16 billion.

In a Bursa Malaysia announcement, it said the lower earnings for the three-month period to June 30 2009 was due to lower contributions from its plantation division as crude palm oil prices fell.

Also, the construction division suffered lower margins from old contracts affected by higher costs in the previous year and higher financing costs incurred in India.

The plantation division earnings dipped as the group expedited its fertiliser application and repair cost for infrastructure due to heavy rainfall and floods.

"We don't think that the first quarter is reflective of the following quarters," said Tan. He added that the current fiscal year ending March 31 2010 would be similar to 2007, where the first quarter was lower but later quarters showed improvements.

By Business Times (by Jeeva Arulampalam)

Sunway bidding for deals worth US$5.7b

Sunway Holdings is bidding for foreign and local contracts worth about US$5.7 billion (RM20 billion) as big spending plans by governments boost construction activity globally.

"Including what we are going to bid, it's about RM20 billion," managing director Yau Kok Seng said on Monday.

"Our past track record (for successful bids) is about 10 per cent, which means over the next six to 12 months, we should be able to win at least RM2 billion (worth of jobs)," Yau said in an interview.

Sunway has submitted bids for construction jobs worth about RM1 billion in India. The company, the seventh-largest builder in the country with market value of US$224 million (RM785 million), is also confident of obtaining repeat jobs within the US$25 billion (RM87.75 billion) Arzanah Development in Abu Dhabi.
"We have been shortlisted to tender for Phase 2 which will be launched in the near future," said Yau.

In May, Sunway said 75 per cent-owned Sunway Construction has been awarded a RM326 million contract for the Arzanah Development.

In Malaysia, the company is bidding for jobs under a multi-billion ringgit low-cost carrier terminal project, said Yau.

Construction stocks are the best performers on the local bourse so far this year, as investors bet that massive government pump-priming will boost builders' earnings.

Malaysia has one of Asia's largest stimulus plans, worth RM67 billion.

The government is expected to launch later this year major infrastructure projects including a light rail line extension and the RM2 billion low-cost carrier terminal project.

Shares in Sunway have more than doubled so far this year, outpacing its larger rivals such as Gamuda and WCT. The Kuala Lumpur Construction Index, made up of 42 stocks, has risen 36 per cent.

Sunway, which also has interests in property development and quarrying, is one of three bidders for German cement maker HeidelbergCement's Malaysian assets.

HeidelbergCement is looking to sell the Malaysian assets, which have also drawn interest from private equity firms, for at least US$250 million (RM877 million), two sources said in June.

"They have not officially informed us yet, but we should know soon," said Yau. The potential acquisition is not expected to stretch Sunway's balance sheet as it seeks to further reduce debts by selling off non-core assets, he said.

"The way we structure the acquisition, there is a minimum capital requirement," he said.

Sunway wants to cut its gearing ratio to 0.5 times over the next two years from about 0.8 times currently, said Yau.

"Although it's our vision to regain our pole position (in the quarry business), we are not keen to compete with someone who's prepared to pay (a) ridiculous price," said Yau when asked if he was confident of securing the assets.

By Reuters