Hua Yang Bhd plans to launch affordable housing projects with a total gross development value (GDV) of about RM500 million in the Klang Valley in its 2014 financial year.
Chief executive officer Ho Wen Yan said: "We are in the midst of securing land bank for these mixed development projects. The first launch will be in the next financial year."
He told Bernama today that the affordable housing projects would be in Selayang, Seri Kembangan and Desa Pandan.
"The company is constantly looking to replenish its landbank with specific areas in the Klang Valley being considered are Selayang, Seri Kembangan and Desa Pandan," he said.
Ho said the projects would take between three and five years to complete.
He also said that the company planned a gated development with a GDV of RM70 million in Perak in its financial year ending March 31, 2013.
According to Ho, the company was currently in the process of purchasing a piece of land, which was strategically located in Perak for the gated development. The project will comprise affordable terrace houses measuring 22x70 feet with price tags below RM400,000.
Ho said the company would continue to focus on affordable houses, a segment which Hua Yang had been getting tremendous response since it started its property business in 1978.
"We've been selling between 30 per cent and 50 per cent of our properties during our launches,” he said.
Hua Yang is in the midst of developing five projects with a total GDV of about RM983 million of which 85 per cent of the properties worth RM835 million have been sold.
Two of the five projects, namely Symphony Heights and One South with GDV of RM205.7 million and RM515.3 million respectively, are in Selangor.
Another project, Senawang Link which carries a GDV of RM17.8 million, is located in Negeri Sembilan. Its other two ongoing projects, Bandar Universiti Seri Iskandar with a GDV of RM56.3 million is in Perak while Taman Pulai Indah which has a GDV of RM187.8 million is in Johor.
By Bernama
Tuesday, January 31, 2012
Sentora to invest RM48mil to develop safari park
KUALA LUMPUR: Sentoria Group Bhd, en route for listing on Bursa Malaysia Securities Bhd in the first quarter of this year, plans to invest RM48 million from internally-generated funds to develop a safari park.
Joint managing director, Datuk Gan Kim Leong, said the 35.28-hectare Bukit Gambang Safari Park in Bukit Gambang Resort City (BGRC) would commence operations by year-end.
"We are optimistic the safari park will follow the success of our first theme park," he said at the launch of the group's initial public offering (IPO) prospectus here today.
Gan said the company's first park, Bukit Gambang Water Park, has received over a million visitors since BGRC's opening in July 2009. "The addition of the second theme park would stake our place as an up-and-coming leisure and hospitality destination for visitors in Malaysia and the region," he said.
Sentoria is the developer and operator of BGRC in Kuantan, Pahang one of the largest integrated resort cities in Malaysia with 218.8ha.
The group has also carved out a niche in developing affordable housing primarily in Kuantan, Pahang.
Among its ongoing projects are Arabian Bay Resort, safari park and Taman Indera Sempurna 2.
Gan said the IPO would raise RM51.6 million in proceeds, of which RM27.7 million would be used for working capital.
He said RM11.2 million would be used to repay bank borrowings, RM9 million for purchase of property, plant and equipment and RM3.7 million to defray listing expenses.
The IPO entails a public issue of 60 million new ordinary shares and an offer for sale of 40 million promoters' shares at 87 sen apiece.
By Bernama
Joint managing director, Datuk Gan Kim Leong, said the 35.28-hectare Bukit Gambang Safari Park in Bukit Gambang Resort City (BGRC) would commence operations by year-end.
"We are optimistic the safari park will follow the success of our first theme park," he said at the launch of the group's initial public offering (IPO) prospectus here today.
Gan said the company's first park, Bukit Gambang Water Park, has received over a million visitors since BGRC's opening in July 2009. "The addition of the second theme park would stake our place as an up-and-coming leisure and hospitality destination for visitors in Malaysia and the region," he said.
Sentoria is the developer and operator of BGRC in Kuantan, Pahang one of the largest integrated resort cities in Malaysia with 218.8ha.
The group has also carved out a niche in developing affordable housing primarily in Kuantan, Pahang.
Among its ongoing projects are Arabian Bay Resort, safari park and Taman Indera Sempurna 2.
Gan said the IPO would raise RM51.6 million in proceeds, of which RM27.7 million would be used for working capital.
He said RM11.2 million would be used to repay bank borrowings, RM9 million for purchase of property, plant and equipment and RM3.7 million to defray listing expenses.
The IPO entails a public issue of 60 million new ordinary shares and an offer for sale of 40 million promoters' shares at 87 sen apiece.
By Bernama
China investors propose industrial park
Officials from China has proposed to the Malaysian Government to establish a dedicated industrial park for investors from the world's second largest economy.
Deputy Finance Minister Datuk Donald Lim Siang Chai said China was Malaysia's largest trading partner last year, with total trade exceeding US$90 billion.
"Total trade surged by 20 per cent from 2010," he said when launching the prospectus of China Stationery Limited.
China's Ambassador to Malaysia Chai Xi said Chinese investors would come to Malaysia in a big way to participate in the government's economic transformation pogramme.
"Therefore, the setting up of an industrial park in Malaysia solely for Chinese investors will further enhance economic collaborations between the two friendly nations," he said.
Chai Xi said China-Malaysia bilateral trade was in Malaysia's favour.
"Our government is encouraging entrepreneurs to go abroad to invest," he said at the launch in Kuala Lumpur.
China Stationery Limited is the 10th Chinese company listed on Bursa Malaysia.
Lim said as China was Malaysia's major trading partner, there was an agreement for Malaysian and Chinese traders to settle their accounts in ringgit and renminbi.
By Bernama
Deputy Finance Minister Datuk Donald Lim Siang Chai said China was Malaysia's largest trading partner last year, with total trade exceeding US$90 billion.
"Total trade surged by 20 per cent from 2010," he said when launching the prospectus of China Stationery Limited.
China's Ambassador to Malaysia Chai Xi said Chinese investors would come to Malaysia in a big way to participate in the government's economic transformation pogramme.
"Therefore, the setting up of an industrial park in Malaysia solely for Chinese investors will further enhance economic collaborations between the two friendly nations," he said.
Chai Xi said China-Malaysia bilateral trade was in Malaysia's favour.
"Our government is encouraging entrepreneurs to go abroad to invest," he said at the launch in Kuala Lumpur.
China Stationery Limited is the 10th Chinese company listed on Bursa Malaysia.
Lim said as China was Malaysia's major trading partner, there was an agreement for Malaysian and Chinese traders to settle their accounts in ringgit and renminbi.
By Bernama
EPF to channel RM1.5bil to fund FT special housing scheme
KUALA LUMPUR: The Employees Provident Fund (EPF) will channel RM1.5bil to the Federal Territories Foundation as part of a special funding scheme to help eligible buyers purchase public housing units in the city.
Federal Territories and Urban Well-being Minister Datuk Raja Nong Chik Raja Zainal Abidin said the loan would be guaranteed against the housing unit itself.
He stressed that people should not be worried that EPF would be the “loser” should tenants default on monthly payments as the property was worth double or triple the price.
“We are not worried about not being able to pay EPF. If someone doesn’t pay up after six months, DBKL will buy it back. For DBKL to recover its costs, it has the right to sell off the unit to those on the waiting list.
“What’s important is that they (the buyers) can afford to pay. If they can’t, they should continue renting,” he said after meeting taxi drivers here yesterday.
The scheme, which starts on March 1, comes under the National Economic Action Council’s (NEAC) People Housing Programme (PPR-MTEN) as well as DBKL public housing.
Raja Nong Chik said the fund would be handled by the Federal Territories Foundation, which would offer the scheme to eligible buyers in stages.
“The first stage involves 10,000 buyers. They will have to pay back between RM150 and RM300 a month if they get the loan. Interest will be charged but at a much lower rate than banks,” he said, adding that the loan must be repaid within 25 years.
Prime Minister Datuk Seri Najib Tun Razak announced the scheme’s inception after launching the 2012 Federal Territories’ Day last week.
Regarding the issue of taxi drivers lobbying for the abolishment of the coupon system, Raja Nong Chik said he would raise their concerns with the Transport Ministry and the Land Public Transport Commission (SPAD).
By The Star
Federal Territories and Urban Well-being Minister Datuk Raja Nong Chik Raja Zainal Abidin said the loan would be guaranteed against the housing unit itself.
He stressed that people should not be worried that EPF would be the “loser” should tenants default on monthly payments as the property was worth double or triple the price.
“We are not worried about not being able to pay EPF. If someone doesn’t pay up after six months, DBKL will buy it back. For DBKL to recover its costs, it has the right to sell off the unit to those on the waiting list.
“What’s important is that they (the buyers) can afford to pay. If they can’t, they should continue renting,” he said after meeting taxi drivers here yesterday.
The scheme, which starts on March 1, comes under the National Economic Action Council’s (NEAC) People Housing Programme (PPR-MTEN) as well as DBKL public housing.
Raja Nong Chik said the fund would be handled by the Federal Territories Foundation, which would offer the scheme to eligible buyers in stages.
“The first stage involves 10,000 buyers. They will have to pay back between RM150 and RM300 a month if they get the loan. Interest will be charged but at a much lower rate than banks,” he said, adding that the loan must be repaid within 25 years.
Prime Minister Datuk Seri Najib Tun Razak announced the scheme’s inception after launching the 2012 Federal Territories’ Day last week.
Regarding the issue of taxi drivers lobbying for the abolishment of the coupon system, Raja Nong Chik said he would raise their concerns with the Transport Ministry and the Land Public Transport Commission (SPAD).
By The Star
Aye to new housing loans
KUALA LUMPUR: The proposed new housing loan scheme for those in the low and middle income group here can keep the city “thriving, vibrant and youthful,” said the Real Estate and Housing Developers Association (Rehda).
Its president Datuk Seri Michael Yam said Prime Minister Datuk Seri Najib Tun Razak and the Federal Territories and Urban Well-being Ministry should be complimented for proposing the scheme.
However, he stressed that the scheme’s terms and conditions would have to be well drafted if the proposal was to be a success.
Factors such as geographic boundaries and income limits would also have to be properly defined, Yam said.
“Another thing that should be considered is risk management.
“This scheme will be very attractive to people who are otherwise unable to obtain bank loans due to the lack of steady income or personal reasons. We have to be able to properly deal with these high credit risks.”
Najib had announced on Saturday a special funding scheme to help low and middle income families own homes in the city.
The scheme, which comes into effect on March 1, will cover units built under the National Economic Action Council’s People Housing Programme as well as City Hall’s public housing programme.
“In Kuala Lumpur, many young people are now moving to other places because of high costs of living, and transportation issues. This scheme can attract people from elsewhere to live and work in the capital, and retain those already living here,” said Yam.
Many young Malaysians have expressed positive views about the proposed scheme.
“It can improve living standards for those in the city,” said university student Asyraf Syahir, 20.
“I hope the scheme’s terms will be favourable because houses in Kuala Lumpur are expensive. I would like to own a house here some- day,” said IT specialist Christine Leong, 24.
Marketing executive Lee Kim Kong, 25, said although the initiative was good, more holistic solutions were needed to address rising house prices.
By The Star
Its president Datuk Seri Michael Yam said Prime Minister Datuk Seri Najib Tun Razak and the Federal Territories and Urban Well-being Ministry should be complimented for proposing the scheme.
However, he stressed that the scheme’s terms and conditions would have to be well drafted if the proposal was to be a success.
Factors such as geographic boundaries and income limits would also have to be properly defined, Yam said.
“Another thing that should be considered is risk management.
“This scheme will be very attractive to people who are otherwise unable to obtain bank loans due to the lack of steady income or personal reasons. We have to be able to properly deal with these high credit risks.”
Najib had announced on Saturday a special funding scheme to help low and middle income families own homes in the city.
The scheme, which comes into effect on March 1, will cover units built under the National Economic Action Council’s People Housing Programme as well as City Hall’s public housing programme.
“In Kuala Lumpur, many young people are now moving to other places because of high costs of living, and transportation issues. This scheme can attract people from elsewhere to live and work in the capital, and retain those already living here,” said Yam.
Many young Malaysians have expressed positive views about the proposed scheme.
“It can improve living standards for those in the city,” said university student Asyraf Syahir, 20.
“I hope the scheme’s terms will be favourable because houses in Kuala Lumpur are expensive. I would like to own a house here some- day,” said IT specialist Christine Leong, 24.
Marketing executive Lee Kim Kong, 25, said although the initiative was good, more holistic solutions were needed to address rising house prices.
By The Star
Tebrau Teguh to develop land in Johor
Tebrau Teguh Bhd has been appointed the developer for 167.13 hectares of land in Mukim Pantai Timur, Johor, which will complement Petronas' US$20 billion refinery and petrochemicals integrated development (Rapid).
The company said the land would be developed into a comprehensive mixed development which would complement the Rapid project.
The company is currently negotiating the technical, financial and legal aspects of the appointment with the Johor State Government's
Economic Planning Unit, it said in a filing to Bursa Malaysia.
The project is expected to contribute positively to the company's future earnings and net tangible assets.
By Bernama
The company said the land would be developed into a comprehensive mixed development which would complement the Rapid project.
The company is currently negotiating the technical, financial and legal aspects of the appointment with the Johor State Government's
Economic Planning Unit, it said in a filing to Bursa Malaysia.
The project is expected to contribute positively to the company's future earnings and net tangible assets.
By Bernama
Monday, January 30, 2012
Another bumper year for mall deals in Malaysia?
After a record number of deals valued at RM5 billion involving shopping complexes in 2011, this retail asset will continue to
be on the radar of funds and real estate investment trusts (REITs) in 2012.
Allan Soo, managing director of CB Richard Ellis Malaysia, said that since there are not many quality malls to go around, buyers will look at alternative methods of growing their asset portfolio.
“Funds or companies may develop a shopping complex on their own or enter into a joint venture. They could also buy assets that are close to completion,” Soo told Business Times.
If in 2011 we witnessed virtually all major mall deals taking place in Peninsular Malaysia, Soo expects 2012 to see deals also being done for mall assets in Sabah and Sarawak.
And if a mall is available for purchase, Soo said: “It continues to be a seller’s market this year.”
Meanwhile, vice president of Royal Institution of Surveyors Malaysia (Property Management, Estate Agency and Valuation Division) Adzman Shah Mohd Ariffin agrees that 2012 is
a seller’s market.
High prices are also a result of higher land value and costlier construction costs, he added. “Prices are already higher naturally due to higher land values and cost of construction.
Given lower passing rental levels, especially for malls opened in the past two to three years, the yields are likely to be low.
“Even the recent deals in Klang Valley showed yields of about 5.5 per cent to 6.5 per cent only, which is already much lower than most investors’ target of 7 per cent,” Adzman said.
However, he said that malls are dynamic and capable of generating better income if operated well with strong corporate governance and good retail mix. This makes it a good resilient investment in weathering global economic uncertainties.
According to Adzman, it could cost more to build a mall from scratch. As such, it would make better sense to purchase existing malls which are in good condition, location, population
catchment and potential for enhancement and repositioning.
"Purchasers must look beyond the yield at the time of purchase and be prepared to work on the assets for capital appreciation and bettering the income stream in the long term," he said.
Adzman, meanwhile, reckons that purchasers will be from private funds to focus on assets to "warehouse" rather than REITs, which would look for yield-accretive assets.
"Warehouse" is when an asset is held for a period of time in order to nurture it until it produces a better income stream.
After about a dozen deals in 2011, could there be another record set this year?
It is expected to be vibrant but not a repeat of 2011, but deals this year may very well thump last year's in terms of value.
Already, there have been indication that KrisAssets Holdings Bhd, which owns the Mid Valley Mega Mall and The Gardens, will spin off the asset into a REIT. These assets alone are valued at RM3 billion.
We have also yet to hear the outcome of the Bandar Raya Development Bhd (BRDB)'s plan to call for a tender for the sale of the Bangsar Shopping Centre and CapSquare Retail Centre in Kuala Lumpur, and Permas Jusco Mall in Johor. These three malls may be valued at another RM800 million.
By Business Times
BSG Property to replicate Precinct 10's success in Malacca
GEORGE TOWN: Boon Siew Group's property arm BSG Property, is looking at replicating its new commercial property development project Precinct 10 in Penang down south at its Melaka Straits City project.
BSG Property's business development manager Koay Wei Loong said the proposed street mall comprising food and beverage offerings in Malacca is likely to be ready by the end of 2013 and the company has earmarked some RM40 million.
"The positive response we have received from tenants of Precinct 10 and customers since we opened in Penang has been encouraging and we see no reason why the same model cannot be successful in Malacca," he told Business Times.
Precinct 10 is located at Tanjung Tokong on Penang island and consists of 2-storey shop offices and F and B outlets.
Since its soft opening last month, the project has seen the entry of Burger King, Chez Weng, Winter Warmers, Old Town White Coffee, Sushi Zento and HSBC Bank as tenants.
"We are looking at potentially bringing in one more financial institution, an Italian food-dominated wine house, and a Chinese restaurant chain here," added Koay.
"With the surface parking offered to customers at Precinct 10, our plan is to enable the medium to upscale eateries transform this location into a Penang version of Bangsar in Kuala Lumpur."
Precinct 10 sits on a 1.7ha area and boasts a net lettable area of 47,000 sq ft.
BSG Property invested RM16 million in the project.
By Business Times
BSG Property's business development manager Koay Wei Loong said the proposed street mall comprising food and beverage offerings in Malacca is likely to be ready by the end of 2013 and the company has earmarked some RM40 million.
"The positive response we have received from tenants of Precinct 10 and customers since we opened in Penang has been encouraging and we see no reason why the same model cannot be successful in Malacca," he told Business Times.
Precinct 10 is located at Tanjung Tokong on Penang island and consists of 2-storey shop offices and F and B outlets.
Since its soft opening last month, the project has seen the entry of Burger King, Chez Weng, Winter Warmers, Old Town White Coffee, Sushi Zento and HSBC Bank as tenants.
"We are looking at potentially bringing in one more financial institution, an Italian food-dominated wine house, and a Chinese restaurant chain here," added Koay.
"With the surface parking offered to customers at Precinct 10, our plan is to enable the medium to upscale eateries transform this location into a Penang version of Bangsar in Kuala Lumpur."
Precinct 10 sits on a 1.7ha area and boasts a net lettable area of 47,000 sq ft.
BSG Property invested RM16 million in the project.
By Business Times
New condo project in Bukit Dumbar open for registration
A condominium with a panoramic view is the latest property offering in Bukit Dumbar in Penang.
The exclusive project — Quattro 360 by Marvellous Land Sdn Bhd — features a total of 38 units with only two units per floor.
Each unit has a built-up space of 1,900sq ft, and comes with four bedrooms, two of which are master bedrooms.
The condo units also come with private lifts and lobbies as well as a double security system.
Marvellous Land director Yeow Jing Hooi said the project was expected to be open for sales by mid-June.
“So far, the response has been good as we have received about 1,000 enquiries already,” said Yeow, adding that the project was now open for registration.
For enquiries, call 04-6605555 or visit its sales office at 8, Jalan Mas, Penang (behind Caltexin Green Lane).
By The Star
The exclusive project — Quattro 360 by Marvellous Land Sdn Bhd — features a total of 38 units with only two units per floor.
Each unit has a built-up space of 1,900sq ft, and comes with four bedrooms, two of which are master bedrooms.
The condo units also come with private lifts and lobbies as well as a double security system.
Marvellous Land director Yeow Jing Hooi said the project was expected to be open for sales by mid-June.
“So far, the response has been good as we have received about 1,000 enquiries already,” said Yeow, adding that the project was now open for registration.
For enquiries, call 04-6605555 or visit its sales office at 8, Jalan Mas, Penang (behind Caltexin Green Lane).
By The Star
Saturday, January 28, 2012
Retail space challenge
Growth of retail sector depends on balance in demand and supply of retail space
IT might be the year of the dragon – a Chinese astrological symbol that is said to be synonymous with power and good fortune – but for property developers of new shopping malls in the country, the ongoing uncertainty in the global economy and oversupply of retail space might just douse their burning business plans.
Tan: ‘When export-oriented manufacturing sector slows down due to low external demand, it will affect local employment market and retail spending.’
According to Henry Butcher Retail managing director Tan Hai Hsin, about 10 new shopping malls are expected to be opened this year in the Klang Valley alone.
“The total retail space for Klang Valley in 2011 was more than 52 million sq ft. For this year, it is expected to increase by at least 3.5 million sq ft, he tells StarBizWeek.
“This sub-sector is growing, based on the number of new shopping centres that will be completed. However, it will be a challenge to fill up all the retail shops upon opening. It will take them at least a year to do so.”
Tan says the growth of this sub-sector is highly dependent on consumers’ spending power this year.
Elvin: ‘Lenders and regulators should continuously insist on detailed market and feasibility studies and updates of those studies from time to time.’
Khong & Jaafar Sdn Bhd managing director Elvin Fernandez points out that this sub-sector was relatively strong in 2011 and will likely continue to be strong based on continued robust consumer spending and support from tourism spending.
“Despite the global turmoil, consumer spending has not slowed down. Oversupply for the retail sector is usually less of a concern because owners or developers usually do a lot of pre-development research and planning before bringing a shopping centre into the market.
“However, it is still important for more information flow through the media to ensure that the numbers hitting the market are known by all – investors, developers, regulators and the general public and this critical flow of information in itself helps to balance supply and demand.”
Elvin says that there are “shadows of looming oversupply” in the next two to five years as more of the bigger property projects, many of them under the Economic Transformation Programme (ETP), get under way.
“Lenders and regulators should continuously insist on detailed market and feasibility studies and updates of those studies from time to time and not dispense with them for reasons of cost.
“They must also be perused by the user of the reports and not done just as a matter to satisfy compliance,” he says.
Elvin adds that in the retail industry, a shopping centre maintains its attractiveness by sustained astute mall management over a long period of time.
“Location is important but it is not everything. Mall management is more important. Positioning the mall, (having) the right tenant mix and the myriad of small details count in drawing shoppers in.”
Tan reckons that the success of a shopping mall is not location-specific but, project-specific.
“For example, Suria KLCC, Mid Valley Megamall, Pavilion KL, Plaza Sungei Wang, Berjaya Times Square, One Utama, Sunway Pyramid and a few more will remain as popular shopping centres in Klang Valley.
“At the same time, shopping centres that have been suffering from low shopping traffic will continue to face challenges in attracting crowds,” he says.
Tan says that there is still a clear disparity between success and failure.
“Popular shopping centres throughout the country continue to attract shoppers and quality tenants despite intense retail competition and weak economy. On the other hand, poorly occupied shopping centres continue to suffer.
“Last year, some shopping centres were giving long rent-free period to their retailers,” he says.
According to Tan, average rental growth for Klang Valley shopping-centre market should be not more than 5% this year.
“Average occupancy rate for Klang Valley shopping centres should remain at around 85%,” he says.
Elvin says the continued economic growth will underlie the growth of the retail sector.
“Will the global economy sink further? The European sovereign debt crisis continues and there is sluggish economic growth in the US despite a prolonged period of pump-priming.
“Will China and India slow down, although inflation in both countries is abating, which will allow them to stimulate further their economies.
Elvin notes that with Malaysia being an open economy and dependent on exports, he says that “it would not look good for us” if the global economy does not recover.
“The economy will have knock-on effects on the property market and may affect consumer spending.
“The authorities are also trying to slow or bring down household debt and this may crimp to an extent consumer spending. On the positive side, the rollout of the ETP projects may add buoyancy to consumer spending and this may also be an election year, which usually results in increased activity and spending.”
Tan concurs that the unresolved eurozone debt crisis, the potential US double dip recession and the recent decline in China export market will affect the Malaysian economy in 2012.
“When export-oriented manufacturing sector slows down due to low external demand, it will affect local employment market. Some Malaysians may be out of jobs this year, many will not get salary increments and graduates will not be able to find jobs. All these will affect retail spending.
“In addition, the uncertain world economy will indirectly lead to Malaysian consumers being cautious in their spending because they are worrying about their future job prospects. They will wait for a sale before they buy. They will look out for value-for-money promotions.”
Tan notes however that the 1.2 million government servants that were given salary increment and bonus recently will boost consumer spending.
“RM100 cash for the purchase of school books and related items has been given out to each student from standard one to form five in Malaysia. A one-off RM500 has also been given out in phases to families with income of less than RM3,000 per month.
“These will boost retail spending to a certain extent this year.”
According to the Valuation and Property Services Department’s Property Market Report for the first half of 2011, the retail market recorded substantially increased take-up space of 258,462 sq meters during the period.
All states except Kelantan recorded positive take-up, with Kuala Lumpur leading the take-up with 54,653 sq meters.
“As at end-June 2011, the country has nearly 2.05 million sq meters of space available for occupation,” the report said.
On the construction front, there were 15 completions in the first half of 2011 with 191,078 sq meters of new retail space entering the market, bringing up the country’s total existing space to 10.78 million sq meters.
The report also said rentals in shopping complexes in most states were generally stable in the first half of 2011.
It said rentals of retail space of shopping complexes in Kuala Lumpur were largely stable with isolated movements recorded in few buildings.
“Suria KLCC obtained premium rentals at RM592 to RM753 per sq meter for its lower ground floor units while retail units in KL Pavilion breached more than RM1,000 per sq meter.
“Bukit Bintang Plaza recorded a double digit increase of 11.5% for its ground floor units but those in the lower ground and second floor recorded slight decreases of 3.6% and 3.0% respectively.”
In Selangor, it was disclosed that rentals of retail space in shopping complexes were also stable with increases recorded in selected buildings.
“The Curve saw the rental of its ground and first floor units increased by 12.4% to 36.6% due to rental review, with rentals ranging from RM79.11 per sq meter to RM114.74 per sq meter.
“Rental in AEON Taman Equine recorded gains of 4.5% to 11.8% while AEON Bukit Tinggi in Klang saw higher gains of 7.6% to 40.0% in the review period. However, there were slight declines of 2.8% to 3.6% in the latter for its second floor units,” said the report.
By The Star
IT might be the year of the dragon – a Chinese astrological symbol that is said to be synonymous with power and good fortune – but for property developers of new shopping malls in the country, the ongoing uncertainty in the global economy and oversupply of retail space might just douse their burning business plans.
According to Henry Butcher Retail managing director Tan Hai Hsin, about 10 new shopping malls are expected to be opened this year in the Klang Valley alone.
“The total retail space for Klang Valley in 2011 was more than 52 million sq ft. For this year, it is expected to increase by at least 3.5 million sq ft, he tells StarBizWeek.
“This sub-sector is growing, based on the number of new shopping centres that will be completed. However, it will be a challenge to fill up all the retail shops upon opening. It will take them at least a year to do so.”
Tan says the growth of this sub-sector is highly dependent on consumers’ spending power this year.
Khong & Jaafar Sdn Bhd managing director Elvin Fernandez points out that this sub-sector was relatively strong in 2011 and will likely continue to be strong based on continued robust consumer spending and support from tourism spending.
“Despite the global turmoil, consumer spending has not slowed down. Oversupply for the retail sector is usually less of a concern because owners or developers usually do a lot of pre-development research and planning before bringing a shopping centre into the market.
“However, it is still important for more information flow through the media to ensure that the numbers hitting the market are known by all – investors, developers, regulators and the general public and this critical flow of information in itself helps to balance supply and demand.”
Elvin says that there are “shadows of looming oversupply” in the next two to five years as more of the bigger property projects, many of them under the Economic Transformation Programme (ETP), get under way.
“Lenders and regulators should continuously insist on detailed market and feasibility studies and updates of those studies from time to time and not dispense with them for reasons of cost.
“They must also be perused by the user of the reports and not done just as a matter to satisfy compliance,” he says.
Elvin adds that in the retail industry, a shopping centre maintains its attractiveness by sustained astute mall management over a long period of time.
“Location is important but it is not everything. Mall management is more important. Positioning the mall, (having) the right tenant mix and the myriad of small details count in drawing shoppers in.”
Tan reckons that the success of a shopping mall is not location-specific but, project-specific.
“For example, Suria KLCC, Mid Valley Megamall, Pavilion KL, Plaza Sungei Wang, Berjaya Times Square, One Utama, Sunway Pyramid and a few more will remain as popular shopping centres in Klang Valley.
“At the same time, shopping centres that have been suffering from low shopping traffic will continue to face challenges in attracting crowds,” he says.
Tan says that there is still a clear disparity between success and failure.
“Popular shopping centres throughout the country continue to attract shoppers and quality tenants despite intense retail competition and weak economy. On the other hand, poorly occupied shopping centres continue to suffer.
“Last year, some shopping centres were giving long rent-free period to their retailers,” he says.
According to Tan, average rental growth for Klang Valley shopping-centre market should be not more than 5% this year.
“Average occupancy rate for Klang Valley shopping centres should remain at around 85%,” he says.
Elvin says the continued economic growth will underlie the growth of the retail sector.
“Will the global economy sink further? The European sovereign debt crisis continues and there is sluggish economic growth in the US despite a prolonged period of pump-priming.
“Will China and India slow down, although inflation in both countries is abating, which will allow them to stimulate further their economies.
Elvin notes that with Malaysia being an open economy and dependent on exports, he says that “it would not look good for us” if the global economy does not recover.
“The economy will have knock-on effects on the property market and may affect consumer spending.
“The authorities are also trying to slow or bring down household debt and this may crimp to an extent consumer spending. On the positive side, the rollout of the ETP projects may add buoyancy to consumer spending and this may also be an election year, which usually results in increased activity and spending.”
Tan concurs that the unresolved eurozone debt crisis, the potential US double dip recession and the recent decline in China export market will affect the Malaysian economy in 2012.
“When export-oriented manufacturing sector slows down due to low external demand, it will affect local employment market. Some Malaysians may be out of jobs this year, many will not get salary increments and graduates will not be able to find jobs. All these will affect retail spending.
“In addition, the uncertain world economy will indirectly lead to Malaysian consumers being cautious in their spending because they are worrying about their future job prospects. They will wait for a sale before they buy. They will look out for value-for-money promotions.”
Tan notes however that the 1.2 million government servants that were given salary increment and bonus recently will boost consumer spending.
“RM100 cash for the purchase of school books and related items has been given out to each student from standard one to form five in Malaysia. A one-off RM500 has also been given out in phases to families with income of less than RM3,000 per month.
“These will boost retail spending to a certain extent this year.”
According to the Valuation and Property Services Department’s Property Market Report for the first half of 2011, the retail market recorded substantially increased take-up space of 258,462 sq meters during the period.
All states except Kelantan recorded positive take-up, with Kuala Lumpur leading the take-up with 54,653 sq meters.
“As at end-June 2011, the country has nearly 2.05 million sq meters of space available for occupation,” the report said.
On the construction front, there were 15 completions in the first half of 2011 with 191,078 sq meters of new retail space entering the market, bringing up the country’s total existing space to 10.78 million sq meters.
The report also said rentals in shopping complexes in most states were generally stable in the first half of 2011.
It said rentals of retail space of shopping complexes in Kuala Lumpur were largely stable with isolated movements recorded in few buildings.
“Suria KLCC obtained premium rentals at RM592 to RM753 per sq meter for its lower ground floor units while retail units in KL Pavilion breached more than RM1,000 per sq meter.
“Bukit Bintang Plaza recorded a double digit increase of 11.5% for its ground floor units but those in the lower ground and second floor recorded slight decreases of 3.6% and 3.0% respectively.”
In Selangor, it was disclosed that rentals of retail space in shopping complexes were also stable with increases recorded in selected buildings.
“The Curve saw the rental of its ground and first floor units increased by 12.4% to 36.6% due to rental review, with rentals ranging from RM79.11 per sq meter to RM114.74 per sq meter.
“Rental in AEON Taman Equine recorded gains of 4.5% to 11.8% while AEON Bukit Tinggi in Klang saw higher gains of 7.6% to 40.0% in the review period. However, there were slight declines of 2.8% to 3.6% in the latter for its second floor units,” said the report.
By The Star
Al-Hadharah REIT net profit soars 273pc
KUALA LUMPUR: Al-Hadharah Boustead REIT (Al-Hadharah REIT) turned in a historically strong performance for the final quarter of its year ended December 31 2011.
It posted a net profit of RM239 million compared with RM32 million in the corresponding quarter last year.
The significant jump was mainly due to fair value gains and an increase in rental income, Al-Hadharah said in a statement yesterday.
This boosts Al-Hadharah's full-year net profit to RM306 million compared with RM82 million last year, up a whopping 273 per cent.
Group revenue rose 33 per cent to RM100 million from RM75 million in 2010.
The realised operating profit for the year was RM93 million, a substantial jump of 37 per cent from RM68 million last year.
The remaining profit was derived from fair value gains, the company said.
"We are pleased to maintain our position as a leader in the REIT sector with an exceptional performance for financial year 2011," Al-Hadharah chairman Tan Sri Lodin Wok Kamaruddin said in the statement.
"Despite the uncertain global economic climate, by building on our established track record and exploring further opportunities in the market, we were able to continue to deliver greater value to our unitholders with improved earnings," he added.
Lodin said in line with its accounting policy, the company had undertaken a revaluation of its assets, recording a fair value gain of RM213 million.
This contributed to its total profit for the year and resulted in an increase in the closing net book value of its investment properties to RM1.3 billion, he added.
Al-Hadharah REIT's unit price closed at RM1.54 per unit (2010: RM1.44 per unit) on December 31 last year.
Its net asset value for the 12-month period rose to RM1.81 per unit (2010: RM1.42 per unit).
At the close of the financial year, the fund's market capitalisation grew to RM965.4 million, up substantially a significant jump compared with RM802.1 million in the previous year.
To reflect the strong performance, Al-Hadharah has announced a final dividend of eight sen, bringing the total dividend for the year to 12 sen. This represents a strong yield of eight per cent based on the closing unit price of the year.
"Moving forward, we look forward to further cultivating our portfolio of assets and enhancing our earnings potential.
"Given our unique position as Malaysia's only plantation-based REIT coupled with the steady demand for commodities, we are confident that we are poised for greater growth in the year ahead," Lodin said.
By Business Times
It posted a net profit of RM239 million compared with RM32 million in the corresponding quarter last year.
The significant jump was mainly due to fair value gains and an increase in rental income, Al-Hadharah said in a statement yesterday.
This boosts Al-Hadharah's full-year net profit to RM306 million compared with RM82 million last year, up a whopping 273 per cent.
Group revenue rose 33 per cent to RM100 million from RM75 million in 2010.
The realised operating profit for the year was RM93 million, a substantial jump of 37 per cent from RM68 million last year.
The remaining profit was derived from fair value gains, the company said.
"We are pleased to maintain our position as a leader in the REIT sector with an exceptional performance for financial year 2011," Al-Hadharah chairman Tan Sri Lodin Wok Kamaruddin said in the statement.
"Despite the uncertain global economic climate, by building on our established track record and exploring further opportunities in the market, we were able to continue to deliver greater value to our unitholders with improved earnings," he added.
Lodin said in line with its accounting policy, the company had undertaken a revaluation of its assets, recording a fair value gain of RM213 million.
This contributed to its total profit for the year and resulted in an increase in the closing net book value of its investment properties to RM1.3 billion, he added.
Al-Hadharah REIT's unit price closed at RM1.54 per unit (2010: RM1.44 per unit) on December 31 last year.
Its net asset value for the 12-month period rose to RM1.81 per unit (2010: RM1.42 per unit).
At the close of the financial year, the fund's market capitalisation grew to RM965.4 million, up substantially a significant jump compared with RM802.1 million in the previous year.
To reflect the strong performance, Al-Hadharah has announced a final dividend of eight sen, bringing the total dividend for the year to 12 sen. This represents a strong yield of eight per cent based on the closing unit price of the year.
"Moving forward, we look forward to further cultivating our portfolio of assets and enhancing our earnings potential.
"Given our unique position as Malaysia's only plantation-based REIT coupled with the steady demand for commodities, we are confident that we are poised for greater growth in the year ahead," Lodin said.
By Business Times
Berjaya Land mulling hotel divestment?
OVERSEAS ASSETS: Properties earmarked for sale are in Sri Lanka, Seychelles, Singapore and Vietnam, which could fetch US$170m, says source
TYCOON Tan Sri Vincent Tan Chee Yioun’s Berjaya Land Bhd (BLand) is looking to divest a majority of its existing hotel properties abroad, sources say.
The hotel assets in Sri Lanka, Seychelles, Singapore and Vietnam, if sold, could fetch some US$170 million (RM517 million) in value, a source told Business Times.
It is believed that an agent may have been appointed as potential purchasers have been approached for the sale of a couple of the company’s hotel assets.
Berjaya, when contacted to confirm if some of its hotels abroad were up for sale and if it had hired an agent to execute the sale, said: “We are not aware of any sale of our properties at this juncture and there are no further comments on this issue”.
The asking price for Berjaya Hotels Singapore is around S$40 million (RM97 million) and the Intercontinental Hanoi Westlake in Vietnam was offered for an estimated US$80 million (RM243 million).
Other resorts identified for sale include two hotels in Seychelles (Berjaya Praslin Resort andBerjaya Beau Vallon Bay Resort and Casino) and one in Sri Lanka (Berjaya Hotel Colombo).
While it is unclear if the Sheraton Hanoi Hotel will be sold, a source said that the group is not looking to sell Berjaya Eden Park London in the UK.
BLand, in its annual report for the period ended April 30 2011, said performance of its overseas properties was mixed, registering gross revenue of RM64.2 million, representing a 4.7
per cent drop from RM67.4 million recorded in the previous year.
Room occupancy, however, had improved to 67 per cent from 64 per cent but the average room rate dropped by 9.8 per cent from a year ago.
In Seychelles, Berjaya Beau Vallon Bay Resort and Casino and Berjaya Praslin Resort posted marginally lower gross revenue due to stiff competition from a newly-opened resort on the island and lower arrivals, the annual report added.
“The InterContinental Hanoi recorded an occupancy of 61 per cent from 53 per cent in the previous year, but the overall market recovery in Vietnam was slow and competition from new hotels in the city was intense,” it added.
Berjaya, meanwhile, will continue to own the Long Beach Resort in Phu Quoc, Vietnam, and will be building a new hotel including a 280-room hotel in Bien Hoa City Square in Ho Chi Minh City.
By Business Times
TYCOON Tan Sri Vincent Tan Chee Yioun’s Berjaya Land Bhd (BLand) is looking to divest a majority of its existing hotel properties abroad, sources say.
The hotel assets in Sri Lanka, Seychelles, Singapore and Vietnam, if sold, could fetch some US$170 million (RM517 million) in value, a source told Business Times.
It is believed that an agent may have been appointed as potential purchasers have been approached for the sale of a couple of the company’s hotel assets.
Berjaya, when contacted to confirm if some of its hotels abroad were up for sale and if it had hired an agent to execute the sale, said: “We are not aware of any sale of our properties at this juncture and there are no further comments on this issue”.
The asking price for Berjaya Hotels Singapore is around S$40 million (RM97 million) and the Intercontinental Hanoi Westlake in Vietnam was offered for an estimated US$80 million (RM243 million).
Other resorts identified for sale include two hotels in Seychelles (Berjaya Praslin Resort andBerjaya Beau Vallon Bay Resort and Casino) and one in Sri Lanka (Berjaya Hotel Colombo).
While it is unclear if the Sheraton Hanoi Hotel will be sold, a source said that the group is not looking to sell Berjaya Eden Park London in the UK.
BLand, in its annual report for the period ended April 30 2011, said performance of its overseas properties was mixed, registering gross revenue of RM64.2 million, representing a 4.7
per cent drop from RM67.4 million recorded in the previous year.
Room occupancy, however, had improved to 67 per cent from 64 per cent but the average room rate dropped by 9.8 per cent from a year ago.
In Seychelles, Berjaya Beau Vallon Bay Resort and Casino and Berjaya Praslin Resort posted marginally lower gross revenue due to stiff competition from a newly-opened resort on the island and lower arrivals, the annual report added.
“The InterContinental Hanoi recorded an occupancy of 61 per cent from 53 per cent in the previous year, but the overall market recovery in Vietnam was slow and competition from new hotels in the city was intense,” it added.
Berjaya, meanwhile, will continue to own the Long Beach Resort in Phu Quoc, Vietnam, and will be building a new hotel including a 280-room hotel in Bien Hoa City Square in Ho Chi Minh City.
By Business Times
Chaotic traffic situation at RM10mil temporary bus terminal
The Federal Government should consider calling a fresh tender for the RM2.7bil Penang Sentral transportation hub project, a consumer group said.
Penang Consumer Protection Association president K. Koris said this should be done as it has been more than four years since the project’s groundbreaking ceremony which was performed by former Prime Minister Tun Abdullah Ahmad Badawi in 2007.
He said if the appointed contractor was incapable of handling the mega project, then the Government should re-tender it in an open tender.
He said the Government had announced that the project, which would be similar to KL Sentral, would serve as an integrated traffic dispersal system for the northern region.
“Sadly, work on the project has yet to start except for the construction of a RM10mil temporary bus terminal and hawker centre nearby back in 2008,” Koris said in an interview.
He claimed that the situation at the temporary terminal was often chaotic and that the narrow one-way stretch on Jalan Pantai leading to the terminal was choked with traffic daily.
“The contractor should have constructed a proper lane with roofing to enable cars to drop off and pick up commuters at the temporary site.
“Now, motorists have to jostle with express buses and local stage buses as well as with petrol tankers, that frequent the nearby petrol plants, to drop off commuters,” Koris said.
Bagan Barisan Nasional co-ordinator David Chua said the project was vital to give Seberang Prai a major boost in terms of economic development.
“Rapid Penang has also committed to increase its fleet of buses in Seberang Prai by December but, with limited space at the temporary terminal, it may not be possible for fear of worsening the traffic congestion there,” he said.
Chua also said the project contractor must give due attention to the safety of commuters, including the disabled, by providing necessary amenities for them at the bus terminal.
Penange Public Works, Utilities and Transport Committee chairman Lim Hock Seng said the contractor had yet to submit the project’s planning permission application to the Seberang Prai Municipal Council.
“It has been over a year since the state helped the Transport Ministry acquire a parcel of state land to be merged with other parcels of land belonging to the Penang Port Commission, Malaysian Highway Authority and Rail Authority Commission to make way for the project.
“We will help ensure that the council expedite the project’s planning permission and building plans once we receive the necessary applications,” Lim said.
Last November, Northern Corridor Implementation Authority chief executive officer Datuk Redza Rafiq had said that the project, which has a gross development value of RM3.1bil, would be built in three phases and scheduled for completion by 2020.
He said the transportation hub would be able to accommodate up to 180,000 passengers a day.
The project, developed by Malaysian Resources Corporation Berhad (MRCB) in partnership with Pelaburan Hartanah Bumiputera Berhad over 12.8ha, is part of the Northern Corridor Economic Region initiative. Both companies formed a joint venture company called Penang Sentral Sdn Bhd which will undertake the development of the transport and commercial hub.
MRCB Selborn Corporation Sdn Bhd, a subsidiary of MRCB, has been appointed to manage the development, design, construction, completion and maintenance of Penang Sentral.
By The Star
Friday, January 27, 2012
Saujana Rawang offers an out-of-the-city abode
For aspiring homeowners who wish to avoid the saturated city market, the Saujana Rawang Township, developed by Glomac, may offer a viable alternative.
The project will be developed under Phase 11 of the township, with intermediate units measuring 22’ x 70’.
Assistant general manager Gary Goh said there would be a total of 160 units built under this phase, although it would be broken up into further sub-phases.
“Right now, we are already fully booked for Phase 11A, which comprises the first 30 units of Botania homes. Phase 11B which was recently launched will have another 27 homes,” said Goh.
He added that the sub-phases 11C and 11D, which comprised 52 units each, could possibly be launched together.
“It will be 160 units in total, and we are expecting this phase to be completed two years from now, by the end of 2013,” Goh said.
The two-storey units are built in modern contemporary style, with four bedrooms, a utility room and three bathrooms.
“The intermediate units are priced at RM419,882, while corner units will of course cost more. This makes Botania an ideal solution for people looking to buy property with a budget of RM500,000.
“They will be able to afford landed property even though it is some distance away from the city,” said sales and marketing manager Ezwan Zainal.
Ezwan noted that there were eight more development phases left for Saujana Rawang as the township had more commercial and residential areas to develop, including medium-to-high priced apartments as well as two lakes which allowed for recreational activities.
“We are also building another access road into the township as the current one can get too congested at times. So the new road we are building will allow residents and visitors to enter Saujana Rawang without traffic problems,” said Ezwan.
It was estimated by Ezwan and Goh that the future development phases would take another five years for completion.
“Our first buyers were primarily bumiputras but we are also seeing many Chinese buyers now showing interest in this township as well,” Ezwan noted.
He explained that recent developments in the area, such as the opening of an Aeon Jusco shopping centre in Rawang had contributed to the influx of buyers into Saujana Rawang, and that the township’s own phased development would further increase the already encouraging take-up rate.
By The Star
All set for a lasting impact
The Belleview Group is undertaking the development of RM1.724bil worth of property this year for Penang island and Kedah.
Its managing director Datuk Sonny Ho said some RM360mil worth of property projects including All Seasons Park’s final phase, Moulmein Rise and W Residence were planned for the island.
“The remaining RM1.364bil worth of property included the third and fourth phases of the Kulim-Techno City (KTC) project, Amansuri Residences, Aman Central and Star Centro in Kedah.
“Kicking off the launch for Penang island in April is the RM200mil Moulmein Rise project in Pulau Tikus, Penang, a 27-storey iconic structure comprising 84 life-style suites and a two-level podium of retail shoplots, with views of the sea-fronting Gurney Drive,” he said.
Designed architecturally to be a modern building, it would include a host of desirable amenities with five-star features and state-of-art security system, he added.
In May, Belleview will launch the RM100mil Autumn Tower comprising 220 condominium units for the All Seasons Park project in Bandar Baru Air Itam (popularly known as Farlim), Penang.
The built-up area for the units ranges between 850sq ft and 1,323sq ft. The project also features a full range of modern recreational facilities.
Ho said the sales of the Summer, Spring and Winter Towers had been a roaring success, with only a handful of units available.
“The third project launching on the island in June is the RM60mil W Residence on Jalan Utama.
“W Residence comprises eight freehold bungalows with a gated community that provides a safe and secure environment, monitored by closed circuit television cameras and protected by a two-tiered security electronic card system,” he said.
For Kedah, Belleview kicked off with the launch of the RM180mil Amansuri Residences in Alor Setar on Tuesday.
The Amansuri Residences, Ho said, comprised 277 condominiums with built-up areas of 1,248sq ft onwards.
“Equipped with an advanced three-tiered security system, the project has extensive water features, landscaped greenery and a grand guest drop-off atrium,” he said.
Belleview will then launch the RM34mil third and fourth phases of the KTC project at the Kulim Hi-Tech Park in the second half of this year.
Ho said both phases comprised 1 1/2 storey and double storey terraced houses, single-storey and 1 1/2 storey semi-detached houses, and single storey bungalows.
“The KTC project is about 20 minutes away from the Penang Bridge, and is a self-contained township with schools, hospitals, a hypermarket, a recreational park, a golf course and multi-national factories nearby,” he said.
In June, Belleview will launch the RM150mil Star Centro in Alor Setar, a multi-functional commercial centre with 32 units of three-level shop offices and a leading hypermarket as the anchor tenant.
The project is located at the intersection of Jalan Tambang and Jalan Gangsa near the edge of the city on the west side which is accessible from all directions.
Ho said the project would offer a vibrant retail mix of restaurants, lifestyle cafes, banks, telecommunication centres, pharmacy, and personal care outlets.
Belleview Group recently started the construction of the RM1bil Aman Central, the largest shopping mall in Kedah.
The project, located along the busy Lebuhraya Darulaman, will have six floors of retail outlets, providing food and beverage services, entertainment, fitness centre, and bowling alley. All the projects, he added, had received overwhelming response and enquiries.
Meanwhile, Henry Butcher Malaysia (Penang) director Dr Teoh Poh Huat said the sentiments in the property market would remain cautiously optimistic.
“However, there are still a strong propensity to buy in preferred locations and an interest in well conceptualised schemes with good quality finishes and security.
“Presently, foreigners comprise less than 8% of the property buyers in Penang. The foreign segment is expected to grow in tandem with Penang’s popularity as a second home paradise,” he said.
By The Star
Its managing director Datuk Sonny Ho said some RM360mil worth of property projects including All Seasons Park’s final phase, Moulmein Rise and W Residence were planned for the island.
“The remaining RM1.364bil worth of property included the third and fourth phases of the Kulim-Techno City (KTC) project, Amansuri Residences, Aman Central and Star Centro in Kedah.
“Kicking off the launch for Penang island in April is the RM200mil Moulmein Rise project in Pulau Tikus, Penang, a 27-storey iconic structure comprising 84 life-style suites and a two-level podium of retail shoplots, with views of the sea-fronting Gurney Drive,” he said.
Designed architecturally to be a modern building, it would include a host of desirable amenities with five-star features and state-of-art security system, he added.
In May, Belleview will launch the RM100mil Autumn Tower comprising 220 condominium units for the All Seasons Park project in Bandar Baru Air Itam (popularly known as Farlim), Penang.
The built-up area for the units ranges between 850sq ft and 1,323sq ft. The project also features a full range of modern recreational facilities.
Ho said the sales of the Summer, Spring and Winter Towers had been a roaring success, with only a handful of units available.
“The third project launching on the island in June is the RM60mil W Residence on Jalan Utama.
“W Residence comprises eight freehold bungalows with a gated community that provides a safe and secure environment, monitored by closed circuit television cameras and protected by a two-tiered security electronic card system,” he said.
For Kedah, Belleview kicked off with the launch of the RM180mil Amansuri Residences in Alor Setar on Tuesday.
The Amansuri Residences, Ho said, comprised 277 condominiums with built-up areas of 1,248sq ft onwards.
“Equipped with an advanced three-tiered security system, the project has extensive water features, landscaped greenery and a grand guest drop-off atrium,” he said.
Belleview will then launch the RM34mil third and fourth phases of the KTC project at the Kulim Hi-Tech Park in the second half of this year.
Ho said both phases comprised 1 1/2 storey and double storey terraced houses, single-storey and 1 1/2 storey semi-detached houses, and single storey bungalows.
“The KTC project is about 20 minutes away from the Penang Bridge, and is a self-contained township with schools, hospitals, a hypermarket, a recreational park, a golf course and multi-national factories nearby,” he said.
In June, Belleview will launch the RM150mil Star Centro in Alor Setar, a multi-functional commercial centre with 32 units of three-level shop offices and a leading hypermarket as the anchor tenant.
The project is located at the intersection of Jalan Tambang and Jalan Gangsa near the edge of the city on the west side which is accessible from all directions.
Ho said the project would offer a vibrant retail mix of restaurants, lifestyle cafes, banks, telecommunication centres, pharmacy, and personal care outlets.
Belleview Group recently started the construction of the RM1bil Aman Central, the largest shopping mall in Kedah.
The project, located along the busy Lebuhraya Darulaman, will have six floors of retail outlets, providing food and beverage services, entertainment, fitness centre, and bowling alley. All the projects, he added, had received overwhelming response and enquiries.
Meanwhile, Henry Butcher Malaysia (Penang) director Dr Teoh Poh Huat said the sentiments in the property market would remain cautiously optimistic.
“However, there are still a strong propensity to buy in preferred locations and an interest in well conceptualised schemes with good quality finishes and security.
“Presently, foreigners comprise less than 8% of the property buyers in Penang. The foreign segment is expected to grow in tandem with Penang’s popularity as a second home paradise,” he said.
By The Star
Thursday, January 26, 2012
RM650mil Hunza projects
GEORGE TOWN: Hunza Properties Bhd is launching about RM650mil of residential properties in Kepala Batas in Seberang Prai and Tanjung Bungah on Penang island this year.
Group executive chairman Datuk Khor Teng Tong told StarBiz that residential properties worth about RM300mil in gross development value (GDV), comprising double-storey semi-detached, terraced, and low-medium cost houses, had been planned for Kepala Batas.
“We have already started work on the houses and will launch the properties for sale in the second half of 2012,” Khor said. “After the launch, the group will still have about 350 acres of undeveloped land-bank in Kepala Batas, which will be used for residential development.”
In Tanjung Bungah, Khor said the group would launch Alila 2, a 265-unit condominium project, in the second half of this year. It would have a GDV of about RM350mil.
“The condominium units will have built-up areas ranging from 1,700 to 3,000 sq ft,” he said.
On the group's proposed mixed-development project with an approximate GDV of RM6bil to RM7bil on a 16.2ha site in Bayan Baru, Khor said the group had engaged two internationally renowned architect consultants to advise on the master plan.
He said the group had just acquired a 2ha land to develop 1,000 low-cost homes for the households currently occupying the over 16.2ha site. “We have initiated steps to obtain approval from the local authorities to develop the low-cost homes.”
Khor also said the group was targeting to complete the Gurney Paragon shopping mall in November 2012.
“So far we have committed to lease out about 45% of the over 700,000 sq ft of nettable area of the shopping mall,” he said.
On the preservation of St. Joseph's Novitiate building in Gurney Paragon, now known as St. Jo's, Khor said the group had spent RM10mil to restore the heritage structure and a further RM3.5mil to transform it into a new dining and entertainment hub in Penang.
“Hunza will work hard to continue to bring in established names that have yet to set up a presence in Penang to open their businesses in Gurney Paragon,” he said.
Khor said the multi-purpose hall of St. Jo's would be used for hosting events such as meetings, conventions, and weddings.
St. Jo's was completed and formally opened in 1918 by the De La Salle Brothers, who pioneered education in Malaysia and around the world.
By The Star
SP Setia climbs to 6-month high
State investor Permodalan Nasional Bhd (PNB) roped in Liew as a joint bidder and improved on its last September solo bid of RM3.90 a share for the property developer last Friday.
The joint bidders are now offering RM3.95 for each SP Setia share and 96 sen for each warrant, instead of 91 sen before.
The stock rose by 1.5 per cent to close at RM3.94 yesterday, off an intra-day high of RM3.97.
Analysts from RHB Research Institute and MIDF Research said the offer was "fair" and advised minority shareholders to accept it.
Both raised their target price for SP Setia to RM3.95 to match the offer price.
"The revised offer will be a win-win situation for both parties as PNB could leverage on Liew's expertise in the running of SP Setia while SP Setia will have the backing of a strong shareholder," MIDF said in a note to clients yesterday.
HwangDBS Vickers Research, meanwhile, raised its target price to RM4.50 from RM3.90 and said investors were better off holding on to the shares given that there will be management continuity for three years.
Under the new deal, Liew will keep his 8.56 per cent stake in SP Setia and remain as its group president and chief executive officer for three years, during which he will have sole responsibility for the mana-gement and general conduct of the business.
No changes will be made to the board, and PNB will keep its two board seats.
"We welcome this news as it removes uncertainty over the future of SP Setia, particularly with regard to Liew's involvement," Hong Leong Investment Bank Bhd (HLIB) .
With PNB's backing, analysts believe SP Setia stands an even better chance when bidding for government land parcels.
MIDF Research said the offer is fair given the current uncertainty in the world economy and the normalising growth rate of the property sector.
"From last week's briefing, Liew indicated that SP Setia is soon signing the Bangsar land deal, which is estimated to yield a gross development value of RM10 billion.
"However, in the near term, outlook for the overall property sector will still be rather challenging, and we thus advise investors to accept the offer," RHB Research said.
The deal is expected to be completed by end-March.
By Business Times
SP Setia at 6-month high
PETALING JAYA: SP Setia Bhd rose six sen, or 1.5%, to close at RM3.94, its highest level in almost six months and one sen short of the revised offer price jointly proposed by its president and chief executive officer Tan Sri Liew Kee Sin and Permodalan Nasional Bhd (PNB).
Meanwhile, analysts have hailed the revised takeover offer as a “win-win” deal for all parties as it would enable Liew to stay at the helm of the property developer with full control over the next three years.
“This is close to our best-case scenario where there is incentive for top management to stay on and take SP Setia to greater heights. It is a win-win situation for all parties and a share price catalyst,” CIMB Research analyst Terence Wong said in a note to clients.
Liew’s commitment to stay on in SP Setia has been viewed positively by analysts.
SP Setia had on Friday notified Bursa Malaysia about the revised offer, which raised the offer price by five sen each for the shares and warrants to RM3.95 and 96 sen, respectively.
Liew, PNB and SP Setia would also enter into a management agreement for Liew to remain in his current position for three years following the close of the revised offer.
Among others, Liew would continue to oversee and manage the operations of SP Setia within the ordinary course of its business and enter into contracts or arrangements for and on behalf of the company.
As a joint offeror, Liew is not allowed to sell his 8.6% direct shareholding of 158.2 million shares, or 8.6% stake, in SP Setia, but he would be given a put option to sell the shares to PNB in tranches over three years at an exercise price of RM3.95.
Under the terms of the put option, Liew can choose to sell his stake to PNB at RM3.95 or in the open market at the then prevailing market price, which thus acts as an incentive for him to continue to grow the value of the company.
However, Liew's wife, who has a 2.3% stake in SP Setia, will be accepting the revised offer.
PNB and its related parties currently hold 38.6% of SP Setia while Liew has a direct and indirect stake of 10.9%, which adds up to a combined 49.5% interest.
“We view positively Tan Sri's (Liew) commitment to stay on and retain his direct stake without getting any premium even though he will only be allowed to exercise the put option gradually over three years.
“This signals his commitment and confidence that he can take SP Setia to the next level and add value to the company and share price,” CIMB Research said.
Kenanga Research said in a report that the slightly higher offer price is a show of good faith to minority shareholders, adding that SP Setia would have more bargaining chips to bid for government land with the backing of a shareholder like PNB.
As PNB intends to retain the company's listing status, RHB Research Institute noted that post-takeover, the joint offerrors might have to pare down their stakes via a placement exercise to maintain the stock's mandatory 25% free float.
Kenanga Research said investors with a 12-month view should accept the revised offer as there might be cheaper entry points when the stock succumbed to an expected downtrend in the property sector. However, it said longer-term shareholders might want to stay invested as liquidity could tighten up in the future, preventing substantial accumulation.
By The Star
Meanwhile, analysts have hailed the revised takeover offer as a “win-win” deal for all parties as it would enable Liew to stay at the helm of the property developer with full control over the next three years.
“This is close to our best-case scenario where there is incentive for top management to stay on and take SP Setia to greater heights. It is a win-win situation for all parties and a share price catalyst,” CIMB Research analyst Terence Wong said in a note to clients.
SP Setia had on Friday notified Bursa Malaysia about the revised offer, which raised the offer price by five sen each for the shares and warrants to RM3.95 and 96 sen, respectively.
Liew, PNB and SP Setia would also enter into a management agreement for Liew to remain in his current position for three years following the close of the revised offer.
Among others, Liew would continue to oversee and manage the operations of SP Setia within the ordinary course of its business and enter into contracts or arrangements for and on behalf of the company.
As a joint offeror, Liew is not allowed to sell his 8.6% direct shareholding of 158.2 million shares, or 8.6% stake, in SP Setia, but he would be given a put option to sell the shares to PNB in tranches over three years at an exercise price of RM3.95.
Under the terms of the put option, Liew can choose to sell his stake to PNB at RM3.95 or in the open market at the then prevailing market price, which thus acts as an incentive for him to continue to grow the value of the company.
However, Liew's wife, who has a 2.3% stake in SP Setia, will be accepting the revised offer.
PNB and its related parties currently hold 38.6% of SP Setia while Liew has a direct and indirect stake of 10.9%, which adds up to a combined 49.5% interest.
“We view positively Tan Sri's (Liew) commitment to stay on and retain his direct stake without getting any premium even though he will only be allowed to exercise the put option gradually over three years.
“This signals his commitment and confidence that he can take SP Setia to the next level and add value to the company and share price,” CIMB Research said.
Kenanga Research said in a report that the slightly higher offer price is a show of good faith to minority shareholders, adding that SP Setia would have more bargaining chips to bid for government land with the backing of a shareholder like PNB.
As PNB intends to retain the company's listing status, RHB Research Institute noted that post-takeover, the joint offerrors might have to pare down their stakes via a placement exercise to maintain the stock's mandatory 25% free float.
Kenanga Research said investors with a 12-month view should accept the revised offer as there might be cheaper entry points when the stock succumbed to an expected downtrend in the property sector. However, it said longer-term shareholders might want to stay invested as liquidity could tighten up in the future, preventing substantial accumulation.
By The Star
Wednesday, January 25, 2012
Developers advised to look into location, cost and design to make sale
JOHOR BARU: Property developers in Johor must be prepared to face tougher times this year and next if the eurozone debt crisis prolongs and the United States continues to experience economic slowdown.
Johor Real Estate and Housing Developers Association (Rehda) branch chairman Simon Heng expected 2012 property outlook to be not as good as 2011.
"Hopefully, our members are ready to brace the hard times and should carefully plan their launches to avoid a property overhang," he told StarBiz.
Heng said the sign was already there with developers chalking lower sales in the Malaysia Property Expo (Mapex) held in November last year.
Developers who took part in the four-day event raked in about RM256mil in sales over a month-period lower from RM384mil in Mapex in May 2011 and RM331mil in November 2010.
Heng pointed out that the 30-day period starting from the first day of Mapex was the benchmark used by Rehda to determine the value of sales by participating developers.
He said the last five to six years were considered good for most Johor property developers as they were able to keep the number of unsold properties to a minimal.
Heng said local developers had learnt their lesson well from the 1997-1998 Asian financial crisis as they were caught unaware resulting in many abandoned projects and unsold properties.
He advised developers not to be overly ambitious and more realistic when launching a project this year and their focus should be more on products that could sell in view of the unfavourable property market.
"Go for affordable residential properties as demand for them is good especially in the Johor Baru district as there are many potential first time house owners out there," said Heng.
He said first time house buyers normally went for houses priced within their budget and with no-frills designs as what was important was to have a roof over their heads.
Heng said areas like Gelang Patah, Kempas, Kulaijaya, Mount Austin, Nusajaya, Senai and Tebrau would be the property hot spots and many projects were expected to be launched this year and 2013.
"For instance, land in Tebrau has been sold for RM4 per sq ft on average the last few years but now the asking price is RM20 per sq ft or even higher," he said.
Heng said the completion of the New Coastal Highway, Eastern Dispersal Link Expressway and Southern Link this year would improve accessibility and connectivity within Iskandar Malaysia.
Leisure Farm Corp Sdn Bhd senior project manager Siew Fook Wah said that he always believed there would be a silver lining despite uncertainties in the property market.
He said the ruling introduced by Singapore last December to foreigners buying private residential properties in the republic was likely to benefit property developers in Iskandar Malaysia.
Foreigners have to pay an additional 10% stamp duty when buying a private home there; effectively raising the purchase price by 10%.
The move is seen to cool the private residential prices in the island state which are on the uptrend despite a slowing economy.
Siew said Johor's close proximity with the republic was an added advantage and prices of private properties here were lower than those in Singapore and to some extend in places like Kuala Lumpur and Penang.
"Iskandar Malaysia will continue to drive the growth of the property market in Johor in many years to come with demand for high-end properties likely to remain good," he said.
Siew said that with Iskandar Malaysia progressing well since its inception on Nov 4, 2006, these buyers (foreigners and Singaporeans) were most probably looking at Johor Baru.
A subsidiary of Mulpha International Bhd, Leisure Farm is developing the RM2.1bil Leisure Farm Resort on 714.27ha in Gelang Patah. The residential and gated resort development project offers 11 architectural design themes.
The villas are built on lots of 3,000 to 18,000 sq ft and priced from RM2mil and above. The scheme is now home to international communities from 35 countries.
SP Setia Bhd executive vice-president (property division) Datuk Chang Khim Wah said the company was still upbeat on the Johor property market as demand for properties had gone up steadily in the last few years.
"Take up rate for our properties in South Johor has been good over the years as we don't only cater for locals but also Singaporeans," he said.
Chang concurred with Siew that Iskandar Malaysia was one of the strong factors that would help to mitigate the slow growth in the Johor's property market this year and next if there was one.
He said Singapore would play a significant role in the development of Iskandar Malaysia as when people talked about Iskandar Malaysia, they would look at the bigger picture and include Singapore as well.
He said compared with other economic-growth corridors in the country, Iskandar Malaysia had the competitive edge due to its close proximity with Singapore.
"Investors, especially foreigners, will be attracted to invest in Iskandar Malaysia as they have the best of both worlds Johor and Singapore," said Chang.
By The Star
Johor Real Estate and Housing Developers Association (Rehda) branch chairman Simon Heng expected 2012 property outlook to be not as good as 2011.
"Hopefully, our members are ready to brace the hard times and should carefully plan their launches to avoid a property overhang," he told StarBiz.
Heng said the sign was already there with developers chalking lower sales in the Malaysia Property Expo (Mapex) held in November last year.
Developers who took part in the four-day event raked in about RM256mil in sales over a month-period lower from RM384mil in Mapex in May 2011 and RM331mil in November 2010.
Heng pointed out that the 30-day period starting from the first day of Mapex was the benchmark used by Rehda to determine the value of sales by participating developers.
He said the last five to six years were considered good for most Johor property developers as they were able to keep the number of unsold properties to a minimal.
Heng said local developers had learnt their lesson well from the 1997-1998 Asian financial crisis as they were caught unaware resulting in many abandoned projects and unsold properties.
He advised developers not to be overly ambitious and more realistic when launching a project this year and their focus should be more on products that could sell in view of the unfavourable property market.
"Go for affordable residential properties as demand for them is good especially in the Johor Baru district as there are many potential first time house owners out there," said Heng.
He said first time house buyers normally went for houses priced within their budget and with no-frills designs as what was important was to have a roof over their heads.
Heng said areas like Gelang Patah, Kempas, Kulaijaya, Mount Austin, Nusajaya, Senai and Tebrau would be the property hot spots and many projects were expected to be launched this year and 2013.
"For instance, land in Tebrau has been sold for RM4 per sq ft on average the last few years but now the asking price is RM20 per sq ft or even higher," he said.
Heng said the completion of the New Coastal Highway, Eastern Dispersal Link Expressway and Southern Link this year would improve accessibility and connectivity within Iskandar Malaysia.
Leisure Farm Corp Sdn Bhd senior project manager Siew Fook Wah said that he always believed there would be a silver lining despite uncertainties in the property market.
He said the ruling introduced by Singapore last December to foreigners buying private residential properties in the republic was likely to benefit property developers in Iskandar Malaysia.
Foreigners have to pay an additional 10% stamp duty when buying a private home there; effectively raising the purchase price by 10%.
The move is seen to cool the private residential prices in the island state which are on the uptrend despite a slowing economy.
Siew said Johor's close proximity with the republic was an added advantage and prices of private properties here were lower than those in Singapore and to some extend in places like Kuala Lumpur and Penang.
"Iskandar Malaysia will continue to drive the growth of the property market in Johor in many years to come with demand for high-end properties likely to remain good," he said.
Siew said that with Iskandar Malaysia progressing well since its inception on Nov 4, 2006, these buyers (foreigners and Singaporeans) were most probably looking at Johor Baru.
A subsidiary of Mulpha International Bhd, Leisure Farm is developing the RM2.1bil Leisure Farm Resort on 714.27ha in Gelang Patah. The residential and gated resort development project offers 11 architectural design themes.
The villas are built on lots of 3,000 to 18,000 sq ft and priced from RM2mil and above. The scheme is now home to international communities from 35 countries.
SP Setia Bhd executive vice-president (property division) Datuk Chang Khim Wah said the company was still upbeat on the Johor property market as demand for properties had gone up steadily in the last few years.
"Take up rate for our properties in South Johor has been good over the years as we don't only cater for locals but also Singaporeans," he said.
Chang concurred with Siew that Iskandar Malaysia was one of the strong factors that would help to mitigate the slow growth in the Johor's property market this year and next if there was one.
He said Singapore would play a significant role in the development of Iskandar Malaysia as when people talked about Iskandar Malaysia, they would look at the bigger picture and include Singapore as well.
He said compared with other economic-growth corridors in the country, Iskandar Malaysia had the competitive edge due to its close proximity with Singapore.
"Investors, especially foreigners, will be attracted to invest in Iskandar Malaysia as they have the best of both worlds Johor and Singapore," said Chang.
By The Star
SP Setia jumps on improved PNB offer
SP Setia Bhd, Malaysia's biggest listed property developer by sales, advanced to its highest level in almost six months after Permodalan Nasional Bhd raised its buyout offer.
The stock gained 1.6 per cent to RM3.94 ringgit at 11:35 a.m. local time in Kuala Lumpur trading, bound for its highest close since Aug. 2.
Three brokerages raised their price estimates today, including HwangDBS Vickers Research Sdn. which forecast in a report that SP Setia could rise to as much as RM4.50.
Permodalan Nasional, the country's largest state asset manager better known as PNB, boosted its offer by 5 sen per share to RM3.95 for the remaining stock it doesn't already own and brought in SP Setia's Chief Executive Officer Liew Kee Sin as a bidding partner, according to an exchange filing on Jan. 20. Liew will stay on to run the developer as part of a deal struck almost four months after PNB's initial bid.
“This proposal is a win-win solution for PNB, the management and shareholders," Loong Kok Wen, an analyst at RHB Capital Bhd., wrote in a report today. The revised offer is "fair," she said, advising investors to accept.
The new bid values SP Setia at RM7.3 billion (US$2.4 billion). Liew, who currently owns 10.9 per cent of SP Setia, will keep his post for three years after the buyout is completed, according to the statement.
Investors are "better off holding on given management continuity for three years," HwangDBS Vickers said in its report. "Strong execution track record and solid balance sheet should help SP Setia weather challenging outlook."
Hong Leong Investment Bank Bhd. and RHB Capital Bhd. increased their share estimates to match the new offer price, according to separate reports today.
The developer reported net income of RM82.5 million for its fiscal fourth quarter ended October, 9.7 per cent growth from a year earlier. That brought its full-year profit to RM328 million, its highest annual income since 1994, according to data compiled by Bloomberg.
The benchmark FTSE Bursa Malaysia KLCI Index fell 0.1 per cent today. The stock market resumed trading after a two-day break for the Lunar New Year holidays.
By Bernama
The stock gained 1.6 per cent to RM3.94 ringgit at 11:35 a.m. local time in Kuala Lumpur trading, bound for its highest close since Aug. 2.
Three brokerages raised their price estimates today, including HwangDBS Vickers Research Sdn. which forecast in a report that SP Setia could rise to as much as RM4.50.
Permodalan Nasional, the country's largest state asset manager better known as PNB, boosted its offer by 5 sen per share to RM3.95 for the remaining stock it doesn't already own and brought in SP Setia's Chief Executive Officer Liew Kee Sin as a bidding partner, according to an exchange filing on Jan. 20. Liew will stay on to run the developer as part of a deal struck almost four months after PNB's initial bid.
“This proposal is a win-win solution for PNB, the management and shareholders," Loong Kok Wen, an analyst at RHB Capital Bhd., wrote in a report today. The revised offer is "fair," she said, advising investors to accept.
The new bid values SP Setia at RM7.3 billion (US$2.4 billion). Liew, who currently owns 10.9 per cent of SP Setia, will keep his post for three years after the buyout is completed, according to the statement.
Investors are "better off holding on given management continuity for three years," HwangDBS Vickers said in its report. "Strong execution track record and solid balance sheet should help SP Setia weather challenging outlook."
Hong Leong Investment Bank Bhd. and RHB Capital Bhd. increased their share estimates to match the new offer price, according to separate reports today.
The developer reported net income of RM82.5 million for its fiscal fourth quarter ended October, 9.7 per cent growth from a year earlier. That brought its full-year profit to RM328 million, its highest annual income since 1994, according to data compiled by Bloomberg.
The benchmark FTSE Bursa Malaysia KLCI Index fell 0.1 per cent today. The stock market resumed trading after a two-day break for the Lunar New Year holidays.
By Bernama
CapitaMalls Malaysia REIT chalks up higher profit
KUALA LUMPUR: CapitaMalls Malaysia REIT Management Sdn Bhd (CMRM) posted a higher pre-tax profit of RM179.814 million for the financial year ended December 31 2011 compared with RM109.396 million previously.
In a statement, the company said the better performance was attributable to revenue growth at the mall level and savings in financing costs.
CMRM's acquisitions last year of Gurney Plaza Extension and East Coast Mall contributed to earnings, it said.
The manager of CapitaMalls Malaysia Trust's (CMMT) said revenue rose to RM230.887 million from RM94.636 million in the same period a year earlier.
It said CMMT achieved a distribution per unit (DPU) of 7.87 sen during the year, 8.4 per cent higher than the annualised DPU of 7.26 sen previously.
CMMT recorded net property income (NPI) of RM162.4 million, 1.6 per cent higher than the forecast NPI of RM159.8 million.
The total distributable income was RM118.3 million, eight per cent higher than the forecast distributable income of RM109.5 million for the year, CMRM said.
By Bernama
In a statement, the company said the better performance was attributable to revenue growth at the mall level and savings in financing costs.
CMRM's acquisitions last year of Gurney Plaza Extension and East Coast Mall contributed to earnings, it said.
The manager of CapitaMalls Malaysia Trust's (CMMT) said revenue rose to RM230.887 million from RM94.636 million in the same period a year earlier.
It said CMMT achieved a distribution per unit (DPU) of 7.87 sen during the year, 8.4 per cent higher than the annualised DPU of 7.26 sen previously.
CMMT recorded net property income (NPI) of RM162.4 million, 1.6 per cent higher than the forecast NPI of RM159.8 million.
The total distributable income was RM118.3 million, eight per cent higher than the forecast distributable income of RM109.5 million for the year, CMRM said.
By Bernama
Monday, January 23, 2012
L&G set to shine again
Last week, Land & General Bhd (L&G) soft-launched its condominium project, Damansara Foresta, in Bandar Sri Damansara, Petaling Jaya. That launch was significant in many ways.
L&G is an old brand that became a casualty of the 1997/98 Asian financial crisis. Bandar Sri Damansara is its old turf, having made a name for itself when it built the township with some 14,000 households decades ago.
The company fell victim to the crisis because it had a cashflow problem and became insolvent. It also had massive debts. It was also involved in a variety of businesses and owned properties in different parts of the world that it was not able to fully concentrate on.
Like other companies that fell during that period, L&G’s fall from grace revealed its many weaknesses, which had earlier went unnoticed.
The whole unfortunate affair culminated with the resignation of its captain, Tan Sri Wan Azmi Wan Hamzah, in 2002 from the debt-laden property group.
In 2007, Hong Kong-based property tycoon Tan Sri David Chiu became a substantial shareholder of L&G with an 8.35% stake through Mayland Parkview Sdn Bhd. That stake has grown to 16.94% today. His entry sparked speculation of a possible asset injection or takeover exercise. It pushed the stock up from 20 sen to over 80 sen in six months.
But there was no asset injection. Instead, the new management under managing director Low Gay Teck spent the last several years quietly cleaning house and strengthening the foundations of the company.
When L&G, under Low, launched commercial project 8trium in Bandar Sri Damansara, buyers were sceptical about the company. Does it has the financial muscle to pull it off? Today, that project is more than 95% sold and in about three months, it will be completed.
When it launched its Damansara Foresta condominium project (with gross development value of RM700mil), this skepticism was not evident anymore.
Low is a property man. He was with Mayland with Chiu for many years and has helped build up Mayland’s name in the Plaza Damas area in Sri Hartamas. But while Mayland concentrates on studio units of about 500 sq ft, L&G prefers the 1,400 to 1,600 sq ft range as can be seen in the recent launch.
While property development will remain its core business, contributing about 70% to the group’s revenue, L&G also inherited the education business in the form of private school Sri Bistari.
The last several years has seen student enrolment double to about 1,100. Low has never been in the education business but he seems willing to take what the company has inherited and to make the most of it. Today, revenue from its education business amounted to about RM5.7mil (19% of total revenue of RM28.7mil) for the six-month period ended Sept 30, 2011, according to filings with Bursa Malaysia.
Total contribution from the property division amounted to RM17mil (66% of total revenue) and looking ahead, property will be the company’s main business for the next decade or so.
L&G also has a bit of oil palm plantation (about 1,010ha) which it inherited from the previous management in the Lembah Beringin area, its previous township development during its heyday. There are plans to fully make use of that piece of land with new plantings.
The company has other sources of revenue of about RM7mil but at press time, it is uncertain whether this RM7mil is a contribution from the plantation business.
The recent launch of Damansara Foresta is interesting because that project is only one part of that 40 over acres in Sri Damansara. The entire gross development value of the 40-odd acres will be about RM2bil. As mentioned earlier, L&G made its name in Bandar Sri Damansara and it looks like it will continue to rebuild its name and branding in that location.
With that land size, the project will take several years to complete and the profit margins should be good as it owns the land, having bought it decades ago. Its recent launch was priced between RM500 and RM600 per sq ft.
L&G also has two other pieces of land, including about 25 acres in the Bandar Sri Damansara clubhouse area, but it will have to solve the membership issue of that clubhouse first.
Last year, it bought about 200 acres in Seremban and has to date submitted its development plans to the local authorities there. The Seremban land will be used for a mixed residential project with terraced, semi-detached and cluster homes priced at about RM300,000 for the terraced houses.
Although it plans to have predominantly landed housing for the Seremban land, L&G will very probably focus on condominium projects for its overall property business in order to slowly get back on its feet. It also has a joint-venture development with the Mayland group at Jalan Ampang known as Elements@Ampang with a GDV of RM700mil.
The company’s total borrowings amounted to RM68.58mil, while its cash and cash equivalents totalled about RM140mil as at Sept 30, 2011. It took a bridging loan of about RM90mil for Damansara Foresta, which is about 50% sold to date.
As mentioned earlier, when the new management came in in 2007, speculation drove L&G’s share price up to about 80 sen a share. Today, it is between 30 and 40 sen. Its shareholding seems rather fragmented, with Wan Azmi having a 2.13% stake.
Now that Low and his team have cleaned up the company, things are moving again.
By The Star
Legoland Malaysia expects a million visitors in first year
JOHOR BARU: Legoland Malaysia is projecting its nearly-completed theme park to attract a million visitors during its first year of operation.
Its general manager Siegfried Boerst said the theme park will be officially opened in the second quarter of this year.
"We are looking at more than one million visitors for the first 12 months of operation, and we hope it increases all the time," he told reporters after the unveiling of Legoland Malaysia's dragon mascot made entirely of Lego bricks called "Ollie The Dragon" at Thistle Hotel here on Friday.
The model took 50-man hours to build from approximately 10,000 Lego bricks.
Boerst said construction of the RM700 million theme park is progressing well despite the rainy season affecting Johor, adding he is confident it will be completed on time.
Legoland Malaysia, he said, is planning public relations activities in Malaysia and several other East Asian countries including Singapore and Indonesia leading up to the theme park's official opening, adding it is also developing Johor as a tourist destination.
On the annual pass ticket sales, he said Legoland Malaysia is happy with the response, with its counters selling more than 300 passes daily, with Malaysians making up 80 per cent of the buyers, although the operator is hoping to attract more Singaporean buyers.
"We have registered several thousand annual pass sales, and we intend to keep it open for a few more weeks," he said.
The annual passes, sold at a discounted price of RM195 (adult) and RM150 (children), are valid right into the end of 2013.
Tickets are available online through the AirAsia RedTix and Legoland Malaysia websites.
Legoland Malaysia, the world's sixth Legoland and Asia's first, is located in Iskandar Malaysia and will feature more than 40 interactive rides, shows and attractions when it opens.
Other Legoland theme parks across the world are in Denmark, the UK, Germany and Florida and California in the US.
By Bernama
Its general manager Siegfried Boerst said the theme park will be officially opened in the second quarter of this year.
"We are looking at more than one million visitors for the first 12 months of operation, and we hope it increases all the time," he told reporters after the unveiling of Legoland Malaysia's dragon mascot made entirely of Lego bricks called "Ollie The Dragon" at Thistle Hotel here on Friday.
The model took 50-man hours to build from approximately 10,000 Lego bricks.
Boerst said construction of the RM700 million theme park is progressing well despite the rainy season affecting Johor, adding he is confident it will be completed on time.
Legoland Malaysia, he said, is planning public relations activities in Malaysia and several other East Asian countries including Singapore and Indonesia leading up to the theme park's official opening, adding it is also developing Johor as a tourist destination.
On the annual pass ticket sales, he said Legoland Malaysia is happy with the response, with its counters selling more than 300 passes daily, with Malaysians making up 80 per cent of the buyers, although the operator is hoping to attract more Singaporean buyers.
"We have registered several thousand annual pass sales, and we intend to keep it open for a few more weeks," he said.
The annual passes, sold at a discounted price of RM195 (adult) and RM150 (children), are valid right into the end of 2013.
Tickets are available online through the AirAsia RedTix and Legoland Malaysia websites.
Legoland Malaysia, the world's sixth Legoland and Asia's first, is located in Iskandar Malaysia and will feature more than 40 interactive rides, shows and attractions when it opens.
Other Legoland theme parks across the world are in Denmark, the UK, Germany and Florida and California in the US.
By Bernama
Saturday, January 21, 2012
Sara-Timur expands
KUCHING-based construction and property development company Sara-Timur Sdn Bhd is building its presence in Peninsular Malaysia with a number of projects in the pipeline.
The company has an order book of RM2bil worth of construction projects and RM1.8bil of development projects.
Sara-Timur has two development projects in the peninsular KB Sentral at Bandar Baru Tunjong in Kota Bahru, Kelantan; and Mersing Laguna in Johor. It is also undertaking construction projects at KL Sentral and Utama Lodge Condo in OUG, Kuala Lumpur; and Teliti Data Centre in Nilai, Negeri Sembilan.
Sara-Timur managing director John Loi says with the company's successful venture to Peninsular Malaysia, it has established a platform to grow into a better known industry player.
“There are more opportunities here in Peninsular Malaysia for us and we intend to build up the company's presence here,” he tells StarBizWeek.
KB Sentral project in Kota Bahru which is to kick off around the middle of this year for completion in five years, will have a gross development value of RM1.2bil.
The project is a joint-venture urban development between Perbadanan Menteri Besar Kelantan, Tunjong Development Corporation Sdn Bhd and Sara-Timur Urban Development Sdn Bhd.
The 42 acres of new lifestyle project in Kota Bahru is part of the 2,000 acres of new urban redevelopment project of Bandar Baru Tunjong by the Kelantan state government.
Located about 6km from the Kota Bharu town, the new business hub is to meet the growing needs of the local populace.
Loi says the development is based on the Intelligent City concept of cosmopolitan community living where occupants will get to enjoy high-speed broadband connectivity.
Meanwhile, Mersing Laguna is a multi-billion ringgit integrated resort development on three reclaimed islands totalling over 2,000 acres set in the South China Sea off the town of Mersing in Johor.
The islands are designed as an oasis dotted by premier residential, commercial and tourism-related developments encased in an eco-friendly environment.
The developer of Mersing Laguna, Radiant Starfish Development Bhd, has awarded one of the construction packages, parcel 12 to Radiant Sara-Timur International Sdn Bhd.
Loi says the award is based on a turnkey design and build contract valued at RM360mil for the construction of an integrated resort development comprising a 5-star 216-room hotel, 70 service apartments, and 73 villas.
Radiant Sara-Timur has also been awarded another turnkey design and build package for an estimated sum of RM370mil by the same developer that involves the redevelopment of the existing Mersing township. Also known as the “Mersing Urban Renewal Development Project”, Loi says the company will apply its experience in the urban renewal project of the Sandakan Harbor Front project to help revitalise Mersing.
“The urban renewal program that includes the building of new business class hotels, recreational parks, cultural centres, medical centres, and commercial and business areas, will cater to the growing population by meeting their aspirations and needs. There will also be provision for the recovery of the foreshore around Mersing, allowing for the development of landscaped boulevards and recreational amenities for the local population,” he explains.
Sara-Timur also has two projects in Kota Kinabalu Jade Residence and the Jesselton Point Hotel comprising 140 rooms, 118 hotel suites and 25 business suites.
Projects it has completed to-date include the Sandakan Harbour Square, Sutera Harbour Hotel and Resort, Sarawak State Stadium, and Taman Tiong Ung Siew in Sibu.
Loi says Sara-Timur will increase its hotel assets from one in Sandakan currently to other assets in Mersing, Kota Bahru and Kota Kinabalu.
Despite the challenging external front, he says the outlook for the local construction and property sectors looks quite stable.
“In the past three years, the company's turnover has doubled to RM350mil for the financial year (FY) ending May 31. We are confident the performance will get better going forward.”
Loi says the company hopes its revenue from property development will increase to 50% in the next three years from less than 15% in financial year 2011.
Sara-Timur has recently set up its corporate headquarters at Solaris Dutamas in Kuala Lumpur, and is looking to increase its paid-up capital to RM18mil from RM10mil now.
He says the company's forte lies in urban renewal projects to give a new lease of life to old dilapidated townships around the country.
“Sara-Timur has the resources to deliver sustainable solutions in both single-use and mixed-use developments and urban redevelopments. Its capabilities include building and civil engineering contracts comprising project management, turnkey design and construction, and project partnering.
“We choose to support new development and urban redevelopment because of the incredible impact they make on the lives of the families and the communities.
“New developments also provide attractive investment opportunities. They form the main elements of a new strategy by our local governments to see to the implementation of both new development and urban redevelopment plans through the attraction of private capital,” Loi points out.
To finance the company's expansion, Loi does not discount the possibility of Sara-Timur making an initial public offering on the Main Market of Bursa Malaysia.
“We are looking at the option and hopefully our listing plans will materialise by this year,” he says.
By The Star
SP Setia must take possession of Pisa first
The timing of property developer SP Setia Bhd's new launches for its 2012 fiscal year in Penang appears to hinge on whether the company is given vacant possession of the Penang International Sports Arena (Pisa) by the first quarter of this year to build the RM300 million Subterranean Penang International Convention and Exhibition (sPICE) Centre.
Business Times has learnt that the property giant's application for planning approval to proceed with its upmarket Setia V Residences project along Gurney Drive cannot be deliberated as yet by the Penang Island Municipal Council, until the time SP Setia takes over Pisa officially.
Three other projects in the pipeline for its fiscal year ending October 31 2012 are located in the Relau and Sungai Ara areas.
The company on January 3 took over as operator of the building and it has already ploughed in RM1 million to spruce it up, sources say.
"The problem now lies in the fact that SP Setia is unable to avail itself yet of the increased density privilege it was accorded as part of the sPICE deal," one source said.
SP Setia was granted the right to build an additional 1,500 residential units over and above the density limit of its existing and future projects in Penang over a 30-year period when it inked an agreement with the Penang authorities last year to build the convention centre.
The project includes 2.8ha public park and an upgraded and refurbished Pisa.
The move for SP Setia to be granted additional density was viewed positively by analysts who noted that it would enhance the gross development value of some of the company's proposed high-rise projects.
Based on the existing density limit, it is learnt, Setia V Residences can only build about 50 units on the 0.8ha site, which has a dual frontage of the sea-fronting Gurney Drive and Jalan Kelawai in Pulau Tikus.
Analysts had also hailed the fact that with the additional density, SP Setia would now have a competitive edge over other developers in bidding for land in Penang, since it would be in a position to pay higher land costs, given the company's ability to build beyond the "normal" allowed density.
SP Setia officials could not be reached for comment.
Under the agreement signed in August last year between Penang island Municipal Council and SP Setia's subsidiary, Eco Meridian, the proposed sPICE Centre will feature a basement car park and a green park on the roof top. The project, which is expected to be completed by 2014, includes a 2.8ha public park, refurbishing, repairing and upgrading Pisa and the Aquatic Centre as well as construction of a new hotel, retail outlets and a car park.
By Business Times
Business Times has learnt that the property giant's application for planning approval to proceed with its upmarket Setia V Residences project along Gurney Drive cannot be deliberated as yet by the Penang Island Municipal Council, until the time SP Setia takes over Pisa officially.
Three other projects in the pipeline for its fiscal year ending October 31 2012 are located in the Relau and Sungai Ara areas.
The company on January 3 took over as operator of the building and it has already ploughed in RM1 million to spruce it up, sources say.
"The problem now lies in the fact that SP Setia is unable to avail itself yet of the increased density privilege it was accorded as part of the sPICE deal," one source said.
SP Setia was granted the right to build an additional 1,500 residential units over and above the density limit of its existing and future projects in Penang over a 30-year period when it inked an agreement with the Penang authorities last year to build the convention centre.
The project includes 2.8ha public park and an upgraded and refurbished Pisa.
The move for SP Setia to be granted additional density was viewed positively by analysts who noted that it would enhance the gross development value of some of the company's proposed high-rise projects.
Based on the existing density limit, it is learnt, Setia V Residences can only build about 50 units on the 0.8ha site, which has a dual frontage of the sea-fronting Gurney Drive and Jalan Kelawai in Pulau Tikus.
Analysts had also hailed the fact that with the additional density, SP Setia would now have a competitive edge over other developers in bidding for land in Penang, since it would be in a position to pay higher land costs, given the company's ability to build beyond the "normal" allowed density.
SP Setia officials could not be reached for comment.
Under the agreement signed in August last year between Penang island Municipal Council and SP Setia's subsidiary, Eco Meridian, the proposed sPICE Centre will feature a basement car park and a green park on the roof top. The project, which is expected to be completed by 2014, includes a 2.8ha public park, refurbishing, repairing and upgrading Pisa and the Aquatic Centre as well as construction of a new hotel, retail outlets and a car park.
By Business Times
PNB, Liew raise offer for SP Setia to RM3.95 a share
KUALA LUMPUR: Permodalan Nasional Bhd (PNB)’s takeover bid for property developer SP Setia Bhd’s shares has takena new turn, and closure.
The country’s largest fund manager has revised upwards its offer price to RM3.95 for every SP Setia share, up from RM3.90 previously.
Equally interesting, SP Setia founder Tan Sri Liew Kee Sin will now be joining the governmentlinked asset manager in making the revised offer.
In a statement yesterday, SP Setia said PNB and Liew will also now pay 96 sen per SP Setia warrant they do not already own, instead of the earlier 91 sen offered by PNB alone.
“The joint offer enables a closure to be arrived at finally on uncertainties over takeover matters.
More importantly, it will provide a fresh launching pad for SP Setia to continue pursuing its quest to create greater value to
all stakeholders,”Liew said in the statement.
As a joint offeror, SP Setia said Liew will not be accepting
the revised offer. Instead, he will hold on to his direct eight per cent stake amounting to 158.2 million shares.
It also noted that PNB had given Liew an option to sell his stake progessively in tranches after three years at RM3.95 a share.
Liew said he is “highly appreciative” of PNB’s put option offer as it will enable him to focus on doing his best to grow the underlying value of the company.
“After many months’ work, I am happy that we have managed to come up with what I believe is a win-win solution for everyone, especially our customers, employees and all shareholders of SP
Setia,” he added.
SP Setia said a management agreement would also be signed between the company, PNB and Liew for the latter to remain as group president and chief executive officer for three years, after the close of the revised offer.
By Business Times
The country’s largest fund manager has revised upwards its offer price to RM3.95 for every SP Setia share, up from RM3.90 previously.
Equally interesting, SP Setia founder Tan Sri Liew Kee Sin will now be joining the governmentlinked asset manager in making the revised offer.
In a statement yesterday, SP Setia said PNB and Liew will also now pay 96 sen per SP Setia warrant they do not already own, instead of the earlier 91 sen offered by PNB alone.
“The joint offer enables a closure to be arrived at finally on uncertainties over takeover matters.
More importantly, it will provide a fresh launching pad for SP Setia to continue pursuing its quest to create greater value to
all stakeholders,”Liew said in the statement.
As a joint offeror, SP Setia said Liew will not be accepting
the revised offer. Instead, he will hold on to his direct eight per cent stake amounting to 158.2 million shares.
It also noted that PNB had given Liew an option to sell his stake progessively in tranches after three years at RM3.95 a share.
Liew said he is “highly appreciative” of PNB’s put option offer as it will enable him to focus on doing his best to grow the underlying value of the company.
“After many months’ work, I am happy that we have managed to come up with what I believe is a win-win solution for everyone, especially our customers, employees and all shareholders of SP
Setia,” he added.
SP Setia said a management agreement would also be signed between the company, PNB and Liew for the latter to remain as group president and chief executive officer for three years, after the close of the revised offer.
By Business Times
PNB and Liew in Joint offer for SP Setia
KUALA LUMPUR: Tan Sri Liew Kee Sin and the country's largest asset manager, Permodalan Nasional Bhd (PNB), are making a joint revised offer for SP Setia Bhd in a bid to safeguard the interests of all shareholders and maintain management continuity in the company.
This new turn of events followed the move by PNB to raise its stake in property developer SP Setia via a conditional offer made last September to gain control of the company.
The new offer price has been revised to RM3.95 per share from RM3.90 while the offer for the warrants has been revised to 96 sen per warrant from 91 sen.
According to sources, the joint offer was arrived at following meetings between Liew, who is president and chief executive officer of SP Setia, and PNB president-cum-group chief executive Tan Sri Hamad Kama Piah Che Othman.
SP Setia board of directors said in an announcement to the stock exchange that they received the notice of revised offer from Maybank Investment Bank Bhd issued on behalf of PNB and Liew. The company had earlier asked for the trading of its shares to be suspended, with the last traded price at RM3.88.
As part of the offer, Liew, PNB and SP Setia would enter into a management agreement for Liew to remain at the helm for a period of three years following the close of the revised offer.
He would continue to oversee and manage the operations of SP Setia within the ordinary course of the company's business, appoint and remunerate managers and employees as well as enter into contracts or arrangements for and on behalf of the company.
Liew told StarBizWeek that the key point of the joint offer was the strong marriage that would arise, with SP Setia able to lean on the support of cash-rich PNB for expansion and growth while PNB would have invested in a trusted brand with a regional presence.
“It's a win-win situation and there'll be no change in management,” Liew said, adding that PNB had remained supportive of the company's ventures abroad, including SP Setia's failed bid for the Battersea power station in Great Britain, even during the period of the first offer.
He said the previous offer caused a bit of confusion as the company's management was in the dark as to PNB's intentions. “But the management agreement shows that PNB recognises that without a strong team, SP Setia's future will not be so bright,” Liew pointed out.
He said the revised offer was also to “appease ruffled feathers out there” while his role as a party acting in concert was to overcome the Securities Commission's objections as well as the rules on takeovers and mergers.
Liew, who has an 8% direct stake in the company, would not accept the revised offer but would be given a put option in the three years following the close of the takeover offer. This would give him the right to sell his stake to PNB in tranches at the same price of RM3.95 per share.
He said the revised offer and the conditions attached to it, including retaining the current management team, showed PNB's genuine interest and sincerity as an investor.
Hamad had taken the step of reassuring the company and stakeholders in a joint statement with Liew last October that the latter would continue to lead SP Setia and manage its day-to-day operations.
“On our part, we'll now have to prove ourselves worthy as they've been supportive of all the key thrusts of the company, be it in eco-homes, township development, luxury condominiums, high-rise residentials and integrated commercial projects,” Liew said.
By The Star
This new turn of events followed the move by PNB to raise its stake in property developer SP Setia via a conditional offer made last September to gain control of the company.
The new offer price has been revised to RM3.95 per share from RM3.90 while the offer for the warrants has been revised to 96 sen per warrant from 91 sen.
According to sources, the joint offer was arrived at following meetings between Liew, who is president and chief executive officer of SP Setia, and PNB president-cum-group chief executive Tan Sri Hamad Kama Piah Che Othman.
SP Setia board of directors said in an announcement to the stock exchange that they received the notice of revised offer from Maybank Investment Bank Bhd issued on behalf of PNB and Liew. The company had earlier asked for the trading of its shares to be suspended, with the last traded price at RM3.88.
As part of the offer, Liew, PNB and SP Setia would enter into a management agreement for Liew to remain at the helm for a period of three years following the close of the revised offer.
He would continue to oversee and manage the operations of SP Setia within the ordinary course of the company's business, appoint and remunerate managers and employees as well as enter into contracts or arrangements for and on behalf of the company.
Liew told StarBizWeek that the key point of the joint offer was the strong marriage that would arise, with SP Setia able to lean on the support of cash-rich PNB for expansion and growth while PNB would have invested in a trusted brand with a regional presence.
“It's a win-win situation and there'll be no change in management,” Liew said, adding that PNB had remained supportive of the company's ventures abroad, including SP Setia's failed bid for the Battersea power station in Great Britain, even during the period of the first offer.
He said the previous offer caused a bit of confusion as the company's management was in the dark as to PNB's intentions. “But the management agreement shows that PNB recognises that without a strong team, SP Setia's future will not be so bright,” Liew pointed out.
He said the revised offer was also to “appease ruffled feathers out there” while his role as a party acting in concert was to overcome the Securities Commission's objections as well as the rules on takeovers and mergers.
Liew, who has an 8% direct stake in the company, would not accept the revised offer but would be given a put option in the three years following the close of the takeover offer. This would give him the right to sell his stake to PNB in tranches at the same price of RM3.95 per share.
He said the revised offer and the conditions attached to it, including retaining the current management team, showed PNB's genuine interest and sincerity as an investor.
Hamad had taken the step of reassuring the company and stakeholders in a joint statement with Liew last October that the latter would continue to lead SP Setia and manage its day-to-day operations.
“On our part, we'll now have to prove ourselves worthy as they've been supportive of all the key thrusts of the company, be it in eco-homes, township development, luxury condominiums, high-rise residentials and integrated commercial projects,” Liew said.
By The Star
KrisAssets plans REIT exercise
PETALING JAYA: KrisAssets Holdings Bhd is likely to inject its two retail assets in Mid Valley City the Mid Valley Megamall and The Gardens shopping mall into a retail real estate and investment trust (REIT) this year.
An industry source said the company had already engaged a merchant bank to look into the REIT exercise.
“The two assets have an estimated total asset value of close to RM4bil which makes KrisAssets a strong candidate to sponsor a REIT to unlock the value of its assets for its shareholders,” an analyst with a local brokerage told StarBizWeek.
The Mid Valley Megamall, which opened in 1999, has a net lettable area of 1.7 million sq ft on 5 floors that are occupied by about 400 stores. It also has a convention centre and two hotels Cititel and Boulevard. Its retail space is 100% occupied and commands average rental rates of RM10.50 to RM10.60 per sq ft.
The Gardens at Mid Valley City, which opened in September 2007, is the second phase of Mid Valley City. The Gardens contains a high-end shopping mall with branded labels. Its 830,000 sq ft of retail space is about 97% occupied with average rental rates of RM9.40.
The analyst said KrisAssets would be able to take advantage of the low prevailing tax structure accorded to REITs.
The REIT would be exempted from corporate tax if it distributes at least 90% of its total annual income to unit holders.
He said retail REITs had proven to be popular among the investing public but good retail assets had become a scarce commodity now.
Financing for such REITs was still available and the onus was on the sponsor companies to plan for more holistic retail projects that could cater to the changing needs of city folks, he added.
Another bank-backed analyst said the strong market response to the recent listing of Pavilion REIT, which has been oversubscribed by about 28 times, as well as the yield compression on select well-managed REITs including CapitaMall Trust, could have triggered KrisAssets' plan to expedite its REIT plan.
“Furthermore, in an environment where bank interest rates are expected to remain flat at best, we expect sustained buying interests on the REITs. This means that the company's parent, IGB Corp, which owns 75% of KrisAssets, would be able to extract generous valuations for its assets by divesting them to the REIT,” he added.
He said the REIT would be able to raise enough funds for IGB to undertake a mixed development project in London. IGB is said to be bidding for the project in west London, believed to be its first development project there.
In a recent report, RHB Research said it was positive on retail REITs although on average, they offered slightly lower yields compared with other sub-segment REITs.
“A strategic combination of asset acquisitions, asset-enhancement initiatives and creative events to drive shopper footfalls is crucial to deliver sustainable distribution per unit (DPU) growth.
“Retail REITs offer the highest earnings per unit (EPU) and DPU growth within our coverage. The office segment continues to experience massive oversupply, while industrial production is generally more sensitive to GDP growth.
“Apart from buying for the REIT's yield, investors should also ride on the rising valuations of scarced quality retail properties,” the report noted.
DTZ Research noted that retail REITs were subject to macro-economic risk and any downturn in the economy would have an impact on their performance.
“Notwithstanding the cautious consumer spending, the outlook for the retail sector remains positive with sales growth forecast to move upwards to 6.5% in 2012 from 6.0% for 2011,” it added.
By The Star
An industry source said the company had already engaged a merchant bank to look into the REIT exercise.
“The two assets have an estimated total asset value of close to RM4bil which makes KrisAssets a strong candidate to sponsor a REIT to unlock the value of its assets for its shareholders,” an analyst with a local brokerage told StarBizWeek.
The Mid Valley Megamall, which opened in 1999, has a net lettable area of 1.7 million sq ft on 5 floors that are occupied by about 400 stores. It also has a convention centre and two hotels Cititel and Boulevard. Its retail space is 100% occupied and commands average rental rates of RM10.50 to RM10.60 per sq ft.
The Gardens at Mid Valley City, which opened in September 2007, is the second phase of Mid Valley City. The Gardens contains a high-end shopping mall with branded labels. Its 830,000 sq ft of retail space is about 97% occupied with average rental rates of RM9.40.
The analyst said KrisAssets would be able to take advantage of the low prevailing tax structure accorded to REITs.
The REIT would be exempted from corporate tax if it distributes at least 90% of its total annual income to unit holders.
He said retail REITs had proven to be popular among the investing public but good retail assets had become a scarce commodity now.
Financing for such REITs was still available and the onus was on the sponsor companies to plan for more holistic retail projects that could cater to the changing needs of city folks, he added.
Another bank-backed analyst said the strong market response to the recent listing of Pavilion REIT, which has been oversubscribed by about 28 times, as well as the yield compression on select well-managed REITs including CapitaMall Trust, could have triggered KrisAssets' plan to expedite its REIT plan.
“Furthermore, in an environment where bank interest rates are expected to remain flat at best, we expect sustained buying interests on the REITs. This means that the company's parent, IGB Corp, which owns 75% of KrisAssets, would be able to extract generous valuations for its assets by divesting them to the REIT,” he added.
He said the REIT would be able to raise enough funds for IGB to undertake a mixed development project in London. IGB is said to be bidding for the project in west London, believed to be its first development project there.
In a recent report, RHB Research said it was positive on retail REITs although on average, they offered slightly lower yields compared with other sub-segment REITs.
“A strategic combination of asset acquisitions, asset-enhancement initiatives and creative events to drive shopper footfalls is crucial to deliver sustainable distribution per unit (DPU) growth.
“Retail REITs offer the highest earnings per unit (EPU) and DPU growth within our coverage. The office segment continues to experience massive oversupply, while industrial production is generally more sensitive to GDP growth.
“Apart from buying for the REIT's yield, investors should also ride on the rising valuations of scarced quality retail properties,” the report noted.
DTZ Research noted that retail REITs were subject to macro-economic risk and any downturn in the economy would have an impact on their performance.
“Notwithstanding the cautious consumer spending, the outlook for the retail sector remains positive with sales growth forecast to move upwards to 6.5% in 2012 from 6.0% for 2011,” it added.
By The Star
Scanwolf unit undertakes property project in bidor
KUALA LUMPUR: Scanwolf Corp Bhd's subsidiary, Scanwolf Development Sdn Bhd, signed a joint-venture agreement with SQ Land Sdn Bhd yesterday to undertake the proposed development of 128 plots of mixed development land into five units of shop houses and 123 units of terrace houses in Bidor, Perak.
Scanwolf told Bursa Malaysia yesterday the joint venture allowed the company to venture into the property development business with minimum capital investment.
By Bernama
Scanwolf told Bursa Malaysia yesterday the joint venture allowed the company to venture into the property development business with minimum capital investment.
By Bernama
China’s housing slowdown to cut big hole in GDP growth
China’S cooling property market could shave more than 2 percentage points off 2012 growth, forcing Beijing to decide just how badly it wants to keep the economy expanding at more than 8% a year.
Even if the world’s second-biggest economy avoids a housing crash, slower property investment is almost certain to constrain growth. That assumption was built into economists’ predictions that the economy will slow in 2012, but data released this week suggests housing may take an even bigger chunk out of growth.
China’s investment in real estate development rose 28% to 6.17 trillion yuan (US$977.67bil) in 2011 a full US$200bil more than the United States put into residential real estate at the peak of its housing bubble in 2005.
Unlike the United States, China does not have an oversupply of housing. In fact, the government has pledged to build 7 million units of public housing in 2012 after an estimated 10 million in 2011.
But in order for property investment to add to GDP growth, it has to keep getting even larger each year, and with real estate prices falling and developers scrounging for credit, China will be hard pressed to outdo 2011’s strong showing.
“If they build the same amount (in 2012) that they did last year, which is still a phenomenal rate of construction, then it would take GDP down to 6.6%,” said Patrick Chovanec, an economist who teaches at Tsinghua University’s School of Economics and Management in Beijing.
That would be a dramatic slowdown from 2011’s 9.2% growth, and it doesn’t even include potential indirect impacts that typically come with a housing slowdown, such as falling demand for building materials or a rise in banks’ bad debts.
Worthy projections
China’s latest economic plan targets GDP growth of 7%, but economists widely consider 8% as the minimum needed to generate sufficient job growth and support social stability top priorities for the Communist Party.
The Chinese phrase “bao ba”, or protect 8, is a commonly used line, illustrating Beijing’s unwritten imperative to keep annual growth above that threshold.
“It’s something that’s almost ingrained within the (Communist) party,” said Alistair Thornton, an economist with IHS Global Insight in Beijing.
Thornton thinks 2012 growth will dip to the 7.5% to 8% range, largely because of the housing slowdown. But he said it could easily drift down to 7% if China chooses not to prop up the property market.
UBS economist Tao Wang predicted property investment growth would halve in 2012, less dire than Chovanec’s prediction for a flat reading. That leaves GDP right around the 8% mark.
“We continue to hold the view that property investment will slow sharply but will not collapse in 2012,” she said.
Data released on Wednesday showed Chinese house prices have fallen for three consecutive months as of December, and property developers are bracing for a brutal 2012. A Reuters poll released on Jan 10 found economists expected property prices to fall 10% to 20% this year.
Chinese officials have spent the past 18 months cracking down on property speculation to try to keep the market from overheating, and it appears to be in no hurry to change course now. A housing bubble and bust would inflict far more economic damage than a policy-induced slowdown.
In Beijing, which enjoyed one of the country’s biggest price gains in 2010 but is now feeling the pinch of the government’s tightening measures, property developers were still hoping that policymakers will loosen their grip.
“It totally depends on whether the government will relax policies or not,” said a young sales agent surnamed Cui, when asked about the likely direction of property prices.
It would take something more severe than weak property sales to alter the policy course.
Beijing seems willing to accept that some developers will go out of business, but rising unemployment or a steep drop in growth would probably prompt Beijing to lift some of the real estate purchase restrictions put in place since 2010.
“While the central government does not generally sympathise with developers, rapidly decelerating real estate investment growth is a major concern,” analysts at Macquarie wrote in a Jan 17 note to clients.
Holding the line
There is little doubt that China has the policy tools available to keep growth above 8%, but it is not clear that policymakers are willing to live with the consequences. Real estate investment accounted for 13% of China’s GDP in 2011, according to government data released on Tuesday, bigger than the 10% estimate that some economists had assumed. That means a slowdown will weigh more heavily on growth, and the remaining 87% of the economy will have to pull even harder to take up the slack.
Net exports subtracted from GDP growth in 2011 and will probably do so again this year, so that leaves consumption and government spending as the two main economic drivers.
China could offer incentives to spur demand for big-ticket items such as cars or appliances, which it did with good success during the 2009 downturn.
But that strategy must be used sparingly. Incentive schemes tend to pull forward demand, essentially borrowing sales from later periods.
“You just can’t force people to spend more money,” Global Insight’s Thornton said.
As for government spending, China went on stimulus binge to combat the global recession in 2009, but local government debt soared to US$1.7 trillion and problem loans are growing. China’s audit office said in December it had identified US$84bil worth of irregularities with local government debt.
“They could pump a lot of money into this economy and keep the investment boom going,” Tsinghua’s Chovanec said. “All of those things have a cost and the cost might be pretty steep.”
By Reuters
Even if the world’s second-biggest economy avoids a housing crash, slower property investment is almost certain to constrain growth. That assumption was built into economists’ predictions that the economy will slow in 2012, but data released this week suggests housing may take an even bigger chunk out of growth.
China’s investment in real estate development rose 28% to 6.17 trillion yuan (US$977.67bil) in 2011 a full US$200bil more than the United States put into residential real estate at the peak of its housing bubble in 2005.
Unlike the United States, China does not have an oversupply of housing. In fact, the government has pledged to build 7 million units of public housing in 2012 after an estimated 10 million in 2011.
But in order for property investment to add to GDP growth, it has to keep getting even larger each year, and with real estate prices falling and developers scrounging for credit, China will be hard pressed to outdo 2011’s strong showing.
“If they build the same amount (in 2012) that they did last year, which is still a phenomenal rate of construction, then it would take GDP down to 6.6%,” said Patrick Chovanec, an economist who teaches at Tsinghua University’s School of Economics and Management in Beijing.
That would be a dramatic slowdown from 2011’s 9.2% growth, and it doesn’t even include potential indirect impacts that typically come with a housing slowdown, such as falling demand for building materials or a rise in banks’ bad debts.
Worthy projections
China’s latest economic plan targets GDP growth of 7%, but economists widely consider 8% as the minimum needed to generate sufficient job growth and support social stability top priorities for the Communist Party.
The Chinese phrase “bao ba”, or protect 8, is a commonly used line, illustrating Beijing’s unwritten imperative to keep annual growth above that threshold.
“It’s something that’s almost ingrained within the (Communist) party,” said Alistair Thornton, an economist with IHS Global Insight in Beijing.
Thornton thinks 2012 growth will dip to the 7.5% to 8% range, largely because of the housing slowdown. But he said it could easily drift down to 7% if China chooses not to prop up the property market.
UBS economist Tao Wang predicted property investment growth would halve in 2012, less dire than Chovanec’s prediction for a flat reading. That leaves GDP right around the 8% mark.
“We continue to hold the view that property investment will slow sharply but will not collapse in 2012,” she said.
Data released on Wednesday showed Chinese house prices have fallen for three consecutive months as of December, and property developers are bracing for a brutal 2012. A Reuters poll released on Jan 10 found economists expected property prices to fall 10% to 20% this year.
Chinese officials have spent the past 18 months cracking down on property speculation to try to keep the market from overheating, and it appears to be in no hurry to change course now. A housing bubble and bust would inflict far more economic damage than a policy-induced slowdown.
In Beijing, which enjoyed one of the country’s biggest price gains in 2010 but is now feeling the pinch of the government’s tightening measures, property developers were still hoping that policymakers will loosen their grip.
“It totally depends on whether the government will relax policies or not,” said a young sales agent surnamed Cui, when asked about the likely direction of property prices.
It would take something more severe than weak property sales to alter the policy course.
Beijing seems willing to accept that some developers will go out of business, but rising unemployment or a steep drop in growth would probably prompt Beijing to lift some of the real estate purchase restrictions put in place since 2010.
“While the central government does not generally sympathise with developers, rapidly decelerating real estate investment growth is a major concern,” analysts at Macquarie wrote in a Jan 17 note to clients.
Holding the line
There is little doubt that China has the policy tools available to keep growth above 8%, but it is not clear that policymakers are willing to live with the consequences. Real estate investment accounted for 13% of China’s GDP in 2011, according to government data released on Tuesday, bigger than the 10% estimate that some economists had assumed. That means a slowdown will weigh more heavily on growth, and the remaining 87% of the economy will have to pull even harder to take up the slack.
Net exports subtracted from GDP growth in 2011 and will probably do so again this year, so that leaves consumption and government spending as the two main economic drivers.
China could offer incentives to spur demand for big-ticket items such as cars or appliances, which it did with good success during the 2009 downturn.
But that strategy must be used sparingly. Incentive schemes tend to pull forward demand, essentially borrowing sales from later periods.
“You just can’t force people to spend more money,” Global Insight’s Thornton said.
As for government spending, China went on stimulus binge to combat the global recession in 2009, but local government debt soared to US$1.7 trillion and problem loans are growing. China’s audit office said in December it had identified US$84bil worth of irregularities with local government debt.
“They could pump a lot of money into this economy and keep the investment boom going,” Tsinghua’s Chovanec said. “All of those things have a cost and the cost might be pretty steep.”
By Reuters
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