Selangor Dredging aims to unveil RM1.2bil worth of properties

KUALA LUMPUR: Selangor Dredging Bhd plans to launch five new property projects, with a total gross development value of RM1.2bil, in the current financial year ending March 31, 2013.

Managing director Teh Lip Kim

Managing director Teh Lip Kim (pic) said one project, the Laman and Bayu residential project in Petaling Jaya, was already launched while the second project, Windows On The Park, in Cheras, was opened for preview.

Three other projects in the pipeline were Jia in Taman Melawati, The Hub in Petaling Jaya and Village in Singapore, and were expected to be launched over the next few months.

“This is the first time Selangor Dredging is slated to launch so many projects within a single year. In the past eight years, since it started out in the property development, the company launched an average of one or two projects a year,” she told reporters after the company AGM yesterday.

Teh also said the company brought forward unbilled sales of RM730mil from the previous financial year and hoped to realise some of the value in the current year.

Saying that the company was optimistic that demand for properties in the Klang Valley would continue to expand, she added that the outlook for the sector remained quite positive.

Infrastructure projects such as the My Rapid Transit project in the Klang Valley and the high-speed rail link between Kuala Lumpur and Johor Baru were also expected to be a boost for the property market.

For the last financial year ended March 31 Selangor Dredging posted a higher pre-tax profit of RM61.99mil from RM44.37mil recorded the previous year.

Revenue for the period also rose to RM354.45mil from RM346mil previously.

By Bernama

Hua Yang plans RM815m property launches

PETALING JAYA: Property developer Hua Yang Bhd will launch RM815mil worth of property projects in the financial year ending March 31, 2013 (FY13) and has allocated over RM300mil for future land acquisition development.

So far, the company has launched a few property projects worth RM212mil in the current financial year across Klang Valley, Johor and Perak.

Chief executive officer and executive director of Hua Yang Bhd Ho Wen Yan said in a statement: “We strive to constantly improve our performance and our revenue has increased four-fold to RM306.4mil in 2012 from 2008.

“This has also improved our net profit attributable to equity holders to RM53mil from merely RM6.6mil over the same period. We are also able to deliver a net return on shareholders’ equity of 20% in 2012 compared with 4% in 2008.”

Ho said the company currently had a total undeveloped land bank of 766 acres with an estimated gross development value (GDV) of RM2.2bil, which can sustain its property development ventures for the next six to eight years.

“We have acquired land banks that are worth a total cumulative GDV value of RM549mil for a total cost of RM72mil in FY12.

By The Star

Nextnation in tie-up with Inovisi

PETALING JAYA: Nextnation Communication Bhd has entered into a memorandum of understanding with PT Inovisi Infracom Tbk with the objective of jointly developing a property project.

Nextnation told Bursa Malaysia in a filing that subsidiaries of both companies would collaborate with the objective of jointly developing a piece of land measuring 5.906 acres in Sepang, Selangor, into a mixed-development project, incorporating a proposed data centre, corporate office and other commercial and retail space.

The project’s first phase, which will have gross development value of about RM80mil, will be developed on a 25:75 basis, with Nextnation’s subsidiary holding the majority portion. There will be two phases in the project.

By The Star

Tradewinds to sell land in Johor via THR

KUALA LUMPUR: Tradewinds Corp Bhd, via its wholly-owned unit THR Hotel (KL) Sdn Bhd, plans to sell a piece of freehold land measuring 109.3ha in Johor to Casa Seroja Sdn Bhd for RM235.47 million.

“The proposed disposal will enable the group to raise cash for working capital for its other development projects undertaken by the group,” Tradewinds Corp said in its filing to Bursa Malaysia.

By Business Times

Property players optimistic on residential segment

PROPERTY players are upbeat on the outlook of the residential segment, despite challenges in the domestic market and global uncertainties.

They also observed the trend in the local residential market, which is moving towards smaller-size units in suburbs.

Among the challenges identified include increasing cost of building materials, high land prices due to scarcity of new areas for development in prime locations, changes in government policies as well as labour shortage.

Property developers and market experts said despite the rise in property prices, there is pent-up demand for new housing, especially for high-rise residences in selected locations within the Klang Valley.

They also said that new launches, especially properties priced above RM500,000, attract foreigners, who are buying to stay because of the low-cost of living and better healthcare facilities in the country.

The Real Estate and Housing Developers' Association Malaysia past president Datuk Ng Seing Liong said the current trend shows that local buyers are shifting to the mid-range affordable segment.

He also observed an increase in the number of new launches, offering smaller-size units in established and popular suburbs, driven by demand for such properties.

Ng said the scarcity of land and high land cost are putting pressure on developers to keep end-pricing affordable, hence the reason to build smaller-size units.

"Buyers seem to prefer projects with smaller units as they are more affordable and easier to maintain. This trend has started and will continue," Ng said at the 15th National Housing and Property Summit 2012 here yesterday.

Ng also said that low-density and large units are not as favourable as smaller units as the former have become more expensive.

Ho Chin Soon Research Sdn Bhd managing director Ho Chin Soon said favourable demographics, urban migration, a booming middle class and improving institutions are all ingredients for a successful property market.

By Business Times

UEM Land pre-tax profit rises

KUALA LUMPUR: UEM Land Holdings Bhd's pre-tax profit for the second quarter ended June 30, rose to RM130.32 million from RM106.03 million in the corresponding quarter last year.

Its revenue increased to RM510.85 million from RM509.4 million previously, it said in a filing to Bursa Malaysia.

UEM said the higher revenue was due to increase in sales and construction progress contributed by developments in East Ledang, Nusa Bayu, Nusa Idaman, MK 28 and Quintet.

By Business Times

No property bubble in M'sia; Sunway chairman says local prices affordable

Great stuff: (From left) Land & General Bhd MD Low Gay Teck, PKNS GM Othman Omar, Asli CEO Tan Sri Michael Yeoh, Housing and Local Government Minister Datuk Seri Chor Chee Heung and Cheah looking at a project model.

PETALING JAYA: The local property industry continues to face many obstacles despite signs of steady economic growth, which was announced recently for the second quarter and the first-half, underpinned among other factors by a jump in construction activity as well as healthy consumption.

Among the challenges the industry faces, according to Asian Strategy & Leadership Institute chairman Tan Sri Jeffrey Cheah, is the market perception that the industry is heading towards a property bubble, which is not backed by reasonable evidence.

“As a developer I'm convinced as of now that we shall not be experiencing any such property bubble, as our property prices are still affordable compared with some of our neighbouring cities in the region,” Cheah, also Sunway Bhd chairman, said at an address during the launch of the 15th National Housing and Property Summit.

He cited Bank Negara's second-quarter gross domestic product data which indicated a 5.4% year-on-year growth despite external challenges as signs that private consumption remained steady. Central bank data showed the construction sector, which includes housing and civil infrastructure activity, surging 22%.

Cheah said it was also untrue that property prices were being driven up due to foreigners' purchases in the country as transactions by foreigners had historically hovered at 3% compared with 20% in Singapore.

He added that 54% of total residential transactions in 2011 were below the RM150,000 range.

Cheah said the other challenge the industry faced was the lack of skilled workers, which caused delays in the completion of projects. He said it was important for the Construction Industry Development Board to continue engaging with both industry players and non-governmental organisations to address this issue in order to improve the quality of finished projects.

Cheah said there needed to be combined efforts by the Govern-ment and industry players to address these issues as well as come up with strategies to overcome them.

He urged the Government not to take “too drastic measures” to cool the property market as this “can kill market sentiment and slow supply of housing further.”

“The Government should not in-crease the real property gains tax. I also hope it will not further restrict lending to the property sector or introduce new measures that will make it more difficult for house buyers to purchase properties,” Cheah said.

He also stressed the sustainability of the industry, which would be important to ensure continued buoyant economic growth and resilience.

Meanwhile, Housing and Local Government Minister Datuk Seri Chor Chee Heung said new fiscal policies might be introduced in Budget 2013, as current measures taken to control house prices had not been very effective.

Despite the Government's measures to curb the rise in house prices, such as the increase in RPGT and a restriction on loan-to-value ratios on third properties and above, there were feelings that the Government has not done enough.

“I will be recommending a review of fiscal policies in the next budget,” Chor said.

Cheah's remarks on the property bubble continue to divide analysts who closely follow the industry with Kenanga Investment Bank research head Chan Ken Yew pointing out that a bubble might exist to a certain extant as prices continued to be above what younger workers were able to afford.

“This is because their salary can't catch up with the current house prices. This problem is not only evident in Malaysia but also in Hong Kong and Singapore,” he said.

Increasing the Employees Provident Fund's (EPF) withdrawal rate to be utilised for the down payment of a member's first home could solve this problem, he added. Currently, the EPF allows for a 30% withdrawal from Account 2. “If the Government allows for a 50% withdrawal, this would help to lower the burden,” he said.

By The Star

Property industry likely to consolidate via M&As, says IOI

PETALING JAYA: IOI Group's chief says the property development landscape in Malaysia will undergo massive changes and there is a high possibility of the industry consolidating through mergers and acquisitions (M&A).

IOI Group executive director Datuk Lee Yeow Chor says there will be a major shift to commercial development and more retirement and nursing homes, private community centres, and performing arts theatres will come on stream.

"Property development will become more and more a property redevelopment business with a lot of old buildings being replaced with new towers. There will be a lot more old buildings undergoing refurbishment.

"We have seen army camps being converted to housing projects and schools turning to malls like The Pavilion," he said yesterday at the 15th National Housing and Property Summit 2012.

Lee said the embassies and high commissions in Kuala Lumpur are also expected to be demolished to make way for new developments, creating more vibrancy in the market place.

One such case is the British High Commission, which will be demolished to make room for a new urban development.

"Overseas, we have seen the Wharf around River Thames in London being converted into an integrated development. Now there is the SP Setia-Sime Darby consortium planning to redevelop the Battersea Power Station in London.

"IOI is also converting an army camp in Singapore into an integrated development known as the South Beach Centre. I believe this will be the way forward for developers worldwide," Lee said.

Meanwhile, on the consolidation of the property sector here, Lee expects some developers to fade away and be replaced with smaller players who will have big ideas through M&A.

The M&A trend started in 2009 with the merger of Pelangi Sdn Bhd, Petaling Garden Sdn Bhd and Island & Peninsular Sdn Bhd to create I&P Group.

In 2010, UEM Land Bhd acquired Sunrise Bhd, creating the biggest property group in Malaysia with a market capitalisation of over RM9 billion.

By Business Times

Confidence in IGB REIT

Tight price range for institutional tranche of IPO is good indication

KUALA LUMPUR: IGB Real Estate Investment Trust has set a tight price range for the institutional tranche of its up to US$266mil (RM823mil) initial public offering (IPO), according to a term sheet seen by Reuters, indicating confidence in demand for the offer.

The IPO, potentially the fourth largest in the South-East Asian country this year, will be offered to institutions at a price range of RM1.15 to RM1.25 per unit, the term sheet showed. IGB REIT launched its retail offer on Monday at a maximum price of RM1.25 per unit.

A wide indicative price range for an IPO would show that the sponsors are testing the strength of demand for the offering, while a narrow range shows they are reasonably certain about the take-up.

The unit of property firm IGB Corp Bhd is offering up to 670 million units in the IPO, comprising 469 million units for sale to institutional investors and another 201 million to employees and the public. Listing is set for Sept 21.

The bookbuilding range translates to a forecast 2013 yield of 5.4% to 5.8%, according to the term sheet. The book opened yesterday and closes no later than Sept 6.

Based on the top end of the IPO price, IGB REIT would have a post-IPO market capitalisation of RM4.25bil, the largest in Malaysia ahead of Pavilion Real Estate Investment Trust's RM4.05bil.

The property trust, which owns two Kuala Lumpur shopping malls the Mid Valley Megamall and the Gardens Mall expects to use the IPO proceeds for future expansion.

It has hired CIMB Investment Bank and Hong Leong Investment Bank as the principal advisers and joint managing underwriters for the IPO.

CIMB, Credit Suisse and Hong Leong are the joint global coordinators, while CIMB, Citigroup, Credit Suisse, DBS, Deutsche Bank, Goldman Sachs, Hong Leong, HSBC, JPMorgan and Maybank are the joint book runners. Joint underwriters are AmInvestment, CIMB, Hong Leong and Maybank.

By Reuters

PNB gets go-ahead for 100-storey tower

It was reported that the development will also include a shopping complex and condominium unit.

PERMODALAN Nasional Bhd (PNB) has obtained the development order from City Hall to build the 100-storey Menara Warisan Merdeka.

The development order was attached with several conditions, including those related to legal matters, said PNB president and chief executive officer Tan Sri Hamad Kama Piah Che Othman.

"We are studying the terms in order to fulfil them. We must ensure proper planning because the development order is approved with conditions," he said after announcing the income distribution for Amanah Saham Wawasan 2020 for the year ended August 31 2012, here, yesterday.

Earlier reports said PNB would be undertaking the RM5 billion Warisan Merdeka development in three phases over 10 years, starting with the 100-storey tower this year.

The tower - touted to be the country's tallest - will cost RM2.5 billion to RM3 billion and will have gross floor space of three million sq ft and net floor space of 2.2 million sq ft. It is scheduled to be completed in 2015.

To another question, Hamad said PNB would announce the disposal of its fifth non-core company to qualified Bumiputera companies by October.

"Four companies have already been divested so far. We hope everything will be settled by the first half of next year," he added.

The four are U-Insurance Sdn Bhd, U-Travelwide Sdn Bhd, Inobel Sdn Bhd and FEC Cables (M) Sdn Bhd.

By Business Times

EPF unit buys RRI land for RM2.28b

The announcement of the finalised purchase price for the Rubber Research Institute land prompts a rebound in Malaysian Resources Corp Bhd share prices.

The Employees Provident Fund's wholly-owned Kwasa Land Sdn Bhd yesterday announced that it has finalised the purchase price of RM2.28 billion for the Rubber Research Institute (RRI) land from the government, prompting a rebound in Malaysian Resources Corp Bhd (MRCB) share prices.

MRCB, which was speculated to play a major role in the development of the land, saw its shares rise to a high of RM1.70, before closing up six sen to RM1.67.

The 932ha site in Sungai Buloh, Selangor, will be developed into a township called Kwasa Damansara with an expected population of 150,000.

The land will be divided into parcels, developed in phases, and sold to developers according to plot ratios, development components and in conformance with the urban design guidelines by Kwasa Land.

"We will soon be calling for the pre-qualification of developers to participate in the creation and building of an iconic township that will be the toast of the town in the coming years," Kwasa Land chairman Tan Sri Samsudin Osman said.

The company is looking for experienced property developers with strong track record and successfully completed developments with a high gross development value (GDV) for the past two to three years.

"The development will incorporate plans that are befitting of a city replete with infrastructure and modern facilities, both residential and commercial that aim to serve the entire Damansara region, if not the Klang Valley," Samsudin said in a statement yesterday.

The development planning is now in an advanced stage with the iconic township development expected to commence in 2013, he added.

Among the key features in the design and layout plan is a development hub comprising modern residential, commercial, recreational and educational facilities.

It will also incorporate an integrated transportation system that links the township via MRT (mass rapid transit) to the rest of Klang Valley.

A 7.5km green park of 64ha will also be among the highlights of the development.

The master plan is being finalised for submission to the Selangor State planning committee for approval.

By Business Times

EPF buys land for RM2.3bil to build iconic township

PETALING JAYA: Employees Provident Fund's (EPF) wholly-owned subsidiary Kwasa Land Sdn Bhd is acquiring the 2,330 acres of Rubber Research Institute (RRI) land in Sungai Buloh from the Malaysian Rubber Board for RM2.28bil or RM22.50 per sq ft, thus confirming reports that the land will cost more than RM2bil.

The land, to be known as Kwasa Damansara, would have a development period spanning 10 to 15 years and would be transformed into a township with a mix of residential and commercial properties, infrastructure and public amenities for an expected population of 150,000.

Kwasa Land's chairman Tan Sri Samsudin Osman said in a statement that the township would “incorporate plans that are befitting of a city replete with infrastructure and modern facilities both residential and commercial that aim to serve the entire Damansara region, if not the Klang Valley.”

Kwasa Land, tasked as the master developer, would be calling for a process to pre-qualify developers for projects in the township. Earlier reports quoting sources had said that this would likely involve tendering out parcels of between 100 acres and 500 acres.

“We will soon be calling for the pre-qualification of developers to participate in the creation and building of an iconic township that will be the toast of the town in the coming years,” Samsudin said.

He said the master plan was now in an advanced stage and was being finalised for submission to the Selangor State Planning Committee for approval as development is expected to commence next year.

Sources have also said the pre-qualification process would start soon but this, according to observers, would take time as EPF and Kwasa Land must still come up with a master plan acceptable to the local authority, which hopefully would include provisions to accommodate changes in the future.

Samsudin said Kwasa Land would be responsible for obtaining all the necessary approvals for the master layout plan and for the construction of the main infrastructure.

“The land will be divided into parcels, developed in phases, and sold to developers according to plot ratios, development components and in conformance with the urban design guidelines by Kwasa Land,” he said, adding that developers who have successfully completed projects with a high gross development value in the past two to three years could participate in the pre-qualification process.

“The design concept plan is to be evaluated first prior to the tender price,” Samsudin said.

He said the master plan would incorporate an integrated transportation system that links the township via the My Rapid Transit to the Klang Valley. “A 7.5km green park of 160 acres will also be among the highlights of this new development,” Samsudin said.

He said that the proposed development components must be aligned to the urban design guidelines determined by Kwasa Land “in which harmony is an important pre requisite to the entire development.”

Meanwhile, VPC Alliance (KL) Sdn Bhd managing director James Wong said in an email reply to StarBiz that the price “does not seem unreasonable given the limited prime land in the Klang Valley for township development.”

Dijaya Corp Bhd had to pay RM26 per sq ft for a 198-acre track in Kajang and Mah Sing Group Bhd paid RM18 per sq ft for a 172-acre site in Bandar Baru Bangi.

Wong said the price was reflective of the market value of the land since Kwasa Land was responsible for the necessary approvals and construction of the main infrastructure.

“In addition, part of the RRI land is within Petaling Jaya and the Petaling Jaya address always commands a premium,” he said.

Another property valuer said besides giving an indication on the tender price, the sale price would indicate the type of projects that the township may incorporate.

“Hopefully Kwasa Land will plan something sensible, we need more green spaces. What I'm worried about is that there'll be too many highrise projects contributing to higher density,” he said.

By The Star

IGB REIT may buy properties in the US and Europe

Mega REIT: IGB REIT Management Sdn Bhd MD Robert Tan with chief financial officer Chai Lai Sim at growth of 15% to 20% this year. the launch of the IGB REIT prospectus. The listing of the largest retail REIT is slated for Sept 21. - THE STAR/FAIHAN GHANI

KUALA LUMPUR: IGB Real Estate Investment Trust (IGB REIT) may consider inorganic expansion opportunities such as acquisitions in the United States or Europe in view of the dire financial situation there.

“In Europe or the United States you can get some properties at way below replacement costs. That is an area we can pursue for potential acquisitions.

“But what we prefer is to construct the mall ourselves and manage it before injecting it into the REIT,” IGB REIT Management Sdn Bhd managing director Robert Tan said at the launch of the IGB REIT prospectus here yesterday.

IGB REIT Management is the company that will manage IGB REIT.

IGB REIT is a unit of IGB Corp Bhd and Tan is also group managing director of IGB Corp.

Based on the retail price of RM1.25 per unit, IGB REIT will provide a distribution yield of 5.1% on an annualised basis for the six-month forecast period ending Dec 31.

“We have to ensure that The Gardens and the Mid Valley Megamall are well-managed. Hopefully these investments will continue to see year-on-year growth and thereafter we will look at acquisitions,” Tan said.

A total of 670 million units of IGB REIT will be offered. Upon listing, IGB REIT will become the largest retail REIT in Malaysia with an asset value of RM4.6bil.

The listing will see the REIT being offered to institutional shareholders (13.8%), eligible IGB shareholders (3.5%), eligible directors and employees (1.4%) while the Malaysian public will have the smallest share allocation of 1%.

The opening date for the institutional offering will be on Aug 28 and the closing date on Sept 6.

Balloting for the retail portion will be conducted on Sept 7 and IGB REIT will be listed on Sept 21.

The Mid Valley Megamall has an appraised value of RM3.44bil with net lettable area of 1.72 million sq ft and an occupancy rate of 99.8%, It has 6,092 car park bays.

The Gardens has an appraised value of RM1.16bil with net lettable area of 817,053 sq ft and an occupancy rate of 99.7%. It has 4,128 car park bays.

By The Star

IGB REIT to grow retail assets

IGB Real Estate Investment Trust (REIT), a unit of property developer IGB Corporation Bhd and en route to a listing on Bursa Malaysia's Main Market, will focus actively on growing its two retail assets as its main strategy in the next few years besides considering potential acquisitions overseas.

IGB Corp's 75 per cent subsidiary KrisAssets Holdings Bhd, which owns the two retail assets under the IGB REIT -- Mid Valley Megamall and The Gardens Mall -- has formed IGB REIT Management Sdn Bhd to manage and set the strategic direction of the trust.

"Both the assets have a long way to go as it takes time for the properties to mature.

"After listing, we have to make sure these properties are well managed and investors see a year-to-year growth of about 5-8 per cent of our revenue given the increasing competition," IGB REIT Management Sdn Bhd Managing Director Robert C M Tan told reporters at the trust's prospectus launch.

However, if any potential opportunities arise for acquisition locally or overseas, the manager would look into it under the REIT, he said.

"At the moment, the Europe and United States markets have good deals and we can look at some properties there for acquisition, preferably completed or mostly conpleted properties," he said adding that it would prefer to construct and manage the properties.

He also said the recent acquisition of Southkey Megamall Sdn Bhd would take about three to five years from now to develop.

IGB REIT is set to be Malaysia's largest retail REIT by asset value with the listing slated on Sept 21.

The trust, which offers 670 million units at an initial retail price of RM1.25 per unit, is expected to raise RM837.5 million from the initial public offering with a forecast 5.1 per cent yield annualised.

"The offer price is a fair deal looking at other REITs' performance, and we are very conservative when it comes to pricing," Tan said.

He said the listing would provide an avenue for investors to invest in one of the largest REITs in Malaysia with a total net lettable area of approximately 2.5 million sq ft (232,258 sq m).

Upon listing, IGB REIT is expected to achieve a market capitalisation of RM4.25 billion.

IGB Corp is optimistic of its retail property market given the continuous earnings growth against the backdrop of uncertainties in the global economy and competition, he added.

By Bernama

IJM Land targets higher property sales in FY13

SUBANG JAYA: IJM Land Bhd looks forward to another year of growth due to the strong demand for properties in the country.

Group chief executive officer and managing director Datuk Soam Heng Choon said that for the current financial year ending March 31, 2013 (FY13), the group aimed to “do better than FY12 sales performance of RM1.35bil.”

The group is aiming to launch about RM2bil worth of properties in FY13. “We have unbilled sales of RM1.2bil. Based on this, we should churn out quite a strong performance this year,” Soam said after the group's AGM.

He said IJM Land had seen strong sales in its projects in the last few months.

“For example, our Seri Riana Residences condominium in Wangsa Maju we have launched two blocks. For Block A, we have close to 90% take-up rate and for Block B, we have 65%. Two weeks ago, we launched more than 190 units of shop offices in Seremban 2. All the non-bumiputra units were taken up on the same day.”

Soam said the group remained optimistic about the Malaysian property market “given the right product and location”.

“In Wangsa Maju, we are selling at RM500 to RM550 per sq ft with absolute values of RM600,000 to RM700,000. There is still very strong demand.”

The group has an undeveloped land bank of 4,800 acres with a gross development value of RM23bil.

Soam said the group's major upcoming property launches included Bandar Rimbayu in Selangor and new phases of The Light waterfront project in Penang.

“We are planning for RM350mil of launches in Bandar Rimbayu, where we have 6,000 registrants for phase one consisting of more than 500 houses.”

He said in Penang, the group planned to launch two residential parcels The Light Collection Three and Four.

“There will also be RM120mil of launches in the Southern Region and RM200mil in Sarawak and Sabah.”

By The Star

IJM Land has funding for London joint venture

IJM Land Bhd has secured the necessary funding for the RM1.4 billion joint-venture property development project in London and expects to start selling the properties within the next 12-15 months.

"We are now in the initial stage of the project and getting the necessary structure in place. In terms of sales, we expect to begin within the next 12-15 months," IJM Land chief executive officer and managing director Datuk Soam Heng Choon said after the company's annual general meeting yesterday.

The company will fund the project via internally generated funds and bank borrowings.

The project, which has a gross development value of STG280 million (RM1.37 billion), comprises a five-star hotel and residential units.

Early this month, IJM Land had entered into a shareholders' agreement with Lite Bell Consolidated Sdn Bhd to form a joint-venture company in Jersey - Mintle Ltd - to acquire a 999-year lease over a 1.09ha site.

The project is part of the company's plan to seek new earnings growth avenues abroad, given its already high earnings base in Malaysia.

For the financial year ending March 31 2013, the company plans to launch some RM2 billion worth of property projects, of which more than RM1.2 billion worth of projects have yet been launched.

These projects are located in Seremban, Shah Alam, Penang, Johor and also East Malaysia.

It also has some 1,944ha of land bank, with the potential gross development value of RM23 billion.

The company, which registered a revenue of RM1.2 billion for the year ended March 31 2012, hopes to grow its revenue this year, helped by continuous strong demand for its properties.

By Business Times

Magna Prima plans RM1b jobs

Magna Prima Bhd, a niche property developer, has lined up several new launches in Kuala Lumpur and Selangor with a projected gross development value (GDV) of more than RM1 billion.

First out of the blocks will be Phase II of a residential tower at the Boulevard Business Park in Jalan Kuching, Kuala Lumpur.

Magna Prima chief executive officer Datuk Rahadian Mahmud Mohammad Khalil said the project will see the construction of 330 units of serviced apartments with a GDV of RM220 million.

"We have not finalised the actual name (for the project). We are just calling it Boulevard Business Park at the moment. We may change the name at a latter stage," he told Business Times.

Rahadian said the company plans to hold a soft-launch for the project soon and, similar to its previous launches, the developer is confident of securing a high take-up rate for the units.

"We have yet to launch the project but a lot of people have already registered their interests, a lot more than the number of units that we offer. So we can tell there will be a high take-up rate," he said.

The units are priced at between RM414,200 and RM832,000 each.
Rahadian said the company is also looking to develop a mixed residential and commercial project on its recently acquired 8ha plot in Shah Alam.

"We will be submitting all the plans for approval this year and hopefully, we can launch the project in the first quarter of next year," he said.

Early in June, Magna Prima announced that its unit, Magna Ecocity Sdn Bhd, was acquiring the 8ha for RM100 million.

The company said the GDV of the proposed development was estimated at RM832.67 million and the total development cost was estimated to be RM624.83 million with an expected gross profit of RM207.84 million.

Apart from this, Rahadian said the company is also planning the development of two blocks of residential apartments in Shah Alam.

"This project, with a projected GDV of RM240 million, is slated to be launched in the third quarter of next year, probably in September," he said.

By Business Times

Demand for industrial properties on the rise in Iskandar Malaysia

JOHOR BARU: Demand for industrial properties in Johor is likely to remain positive based on the state's position as one of the top investment destinations in the country.

Iskandar Regional Development Authority (Irda) chief executive officer Datuk Ismail Ibrahim said the current situation would create demand for industrial properties especially in Iskandar Malaysia.

“Property developers should venture into industrial park projects to cater for the demand apart from the residential properties,” he told StarBiz.

Ismail said Johor was still strong in the manufacturing sector and remained one of the top three destinations for foreign direct investments (FDI) in Malaysia.

Statistics from the Malaysian Industrial Development Authority showed that it had approved 929 manufacturing-related activities for Johor from 2007 until April this year with RM41.48bil in investment.

Of the figure, RM14.99bil (14.4%) came from the domestic investors and RM26.49bil (15.3%) from foreign investors.

He said the manufacturing sector was the top recipient of the cumulative committed investments in Iskandar Malaysia from 2006 until June 30.

It received RM32.71bil contributing 34% out of Iskandar Malaysia's total cumulative committed investments of RM95.45bil.

The property sector came in second with RM29.80bil followed by utilities (RM9.52bil), government (RM7.31bil) and petrochemicals (RM5.10bil).

Other sectors are ports and logistics (RM3.74bil), tourism (RM2.30bil), healthcare (RM1.60bil) education (RM1.55bil), creative (RM0.40bil) and others (RM1.69bil).

“With Iskandar Malaysia moving on the right direction, local and foreign investors are now turning their gaze on us,” added Ismail.

Johor's proximity to Singapore was an added advantage as many of the small and medium enterprises (SMEs) and multinational corporations (MNCs) were looking elsewhere to relocate their operations.

“Logically, Johor Baru is the best choice for many of them as they could have the best of both worlds in two countries,” he said.

He said new industrial parks within Iskandar Malaysia such as Senai Hi-Tech Park, Setia Business Park, Tanjung Langsat, IOI Kempas Utama and Southern Industrial Logistics and Clusters@Nusajaya were doing well.

Ismail said to-date Singapore was the largest foreign investor in Iskandar Malaysia with total cumulative investments of RM4.56bil as at Dec 2011.

Ismail said SMEs from Japan and MNCs from Europe, the United States and those based in China also had shown interest to relocate their operations to Iskandar Malaysia.

He said Johor's manufacturing sector received a shot in the arm with the Government planning to transform Johor into a leading electronic manufacturing services hub in the country and the region.

By The Star

Survey says property sector expected to stay strong

KUALA LUMPUR: PropertyGuru Malaysia, a real estate online portal with over 115,000 property listings, expects the property sector to remain strong, spurred by the quality of products coming into the market.

Although 82 per cent of respondents to its second quarter Property Sentiment Survey 2012 perceived current residential property prices as expensive, those priced RM150,000 to RM500,000 will continue to receive strong response, said its country manager, John Paul Sta Maria.

"Fuelled by liquidity in the market, banks are still willing to lend, albeit with stricter criteria and interest rates are still generally low, supported by population growth and urban migration," he said.

According to the survey, 70 per cent of the responses feel that property prices will increase in the next six months, as compared to 86 per cent in the same survey done in the second quarter of last year.

Some 36 per cent of the responses are holding developers as responsible for pushing the rising construction costs and high land prices to consumers.

Around 20 per cent are blaming buyers as pushing up prices, and 10 per cent say it is due to competition with foreigners.

PropertyGuru Group provides an integrated media platform that property developers and agencies can use to promote their brands and generate sales leads.

The group has direct presence in Singapore, Malaysia, Thailand and Indonesia, with partners in Hong Kong, Vietnam, Australia, India and China.

In Malaysia, its clients include over 60 local property developers, and more than 120,000 buyers and 15,000 agents database.

John Paul said based on the company's website traffic statistics, the majority of people who leverage on propertyguru.com.my are mainly locals, and about 18.4 per cent foreigners, led by Singaporeans.

He said in an interview that the latest trend now is using mobile apps to buy and sell properties.

By Business Times

DRB-Hicom to invest RM1bil and accelerate development of Proton City

PETALING JAYA: The planned RM1bil investment by DRB-Hicom Bhd to accelerate the development of Proton City in Tanjung Malim, Perak over the next five years may be a move to consolidate Proton's manufacturing activities in a single location, automotive analysts say.

They pointed out that news reports had claimed that Proton's manufacturing land bank of 250 acres in Shah Alam could have a gross development value of more than RM1bil.

“We think that a property development play of the Shah Alam land bank would be a good move, as the value of the Shah Alam real estate can be extracted to fund Proton's plans,” said an analyst.

However, other analysts pointed out that DRB-Hicom would need to look at issues such as the costs of moving the production facilities from Shah Alam to Tanjung Malim as well as employees' concerns.

“It would not be easy because employees in Shah Alam are not keen on moving to Tanjung Malim. Also, would DRB-Hicom want to incur the one-time costs and deal with the hassles of moving all the equipment and facilities?” one analyst questioned.

Another analyst said the reported planned RM1bil investment by DRB-Hicom was likely to be more of a property development play in Proton City.

“Based on the news reports, this is not just about investing in machines and vehicle production facilities. Perak Mentri Besar Datuk Seri Dr Zambry Abdul Kadir had spoken about infrastructure development in the area, including better road access to Proton City from the North-South Expressway as well as building commercial areas and schools,” he noted.

OSK Research said in a report late last year that a potential sale of Proton's Shah Alam land bank could fetch at least RM500mil. The research unit also pointed out that DRB-Hicom could be keen on developing Proton's land bank in Shah Alam for its housing development arm.

Automotive conglomerate DRB-Hicom took over and privatised national carmaker Proton earlier this year.

Dr Zambry was recently reported as saying the development of the 4,000-acre Proton City is set to be re-ignited after slowing down since it started 15 years ago.

According to Dr Zambry, DRB-Hicom plans to invest RM1bil in the next five years and make Tanjung Malim the main Proton car manufacturing centre.

Dr Zambry said Tanjung Malim was not fully developed as an automotive city, and only about 30% of the land had been used.

According to the Proton City website, the township consists of residential, commercial, institutional as well as industrial parcels with seven lakes.

It is located about 5km north of Tanjung Malim, and 90km from Kuala Lumpur.

Besides the RM1.8bil Proton car assembly plant, it also houses Universiti Pendidikan Sultan Idris.

On its website, Proton says Proton City is targeted to be fully developed by 2020, and aims to be home to Malaysia's automobile industry.

However, some analysts say the development of Proton City is not a major priority for DRB-Hicom which needs to focus on rectifying the problems in the national carmaker and bringing it to greater heights.

RHB Research analyst Alexander Chia said DRB-Hicom's focus must be to fix issues at Proton.

Chia said Proton's vehicle manufacturing plant in Tanjung Malim presently had a capacity utilisation rate of between 40% and 50%.

“Without economies of scale, Proton cannot make cars cheaply enough to compete. The development of Proton City is a secondary objective.”

“DRB-Hicom needs to bring in a technology partner. Volkswagen is a possibility. Such a deal has to be win-win for all parties involved. Perhaps Volkswagen can use the extra capacity at Proton's facility in Tanjung Malim as an assembly hub to expand its presence in Asean,” said Chia.

The Proton plants in Tanjung Malim and Shah Alam presently have an annual production capacity of 150,000 and 200,000 vehicle units respectively.

Last year the Tanjung Malim plant produced 52,235 units while the Shah Alam facility produced 114,645 units.

However, the Proton plant in Tanjung Malim can be expanded to have a maximum production capacity of up to one million cars per year.

Meanwhile, HwangDBS Vickers Research said in a recent report that Volkswagen's production capacity at DRB-Hicom's Pekan plant would be progressively ramped up to 50,000 units by 2017 or 2018 to pave the way for exports to the Asean market.

“This will be for three variants, Passat (rolled out), Jetta (early 2013) and Polo (second half of 2013) making Malaysia Volkswagen's regional hub for passenger vehicles.”

It also noted that as the Volkswagen Group owned other marques such as Audi, which DRB-Hicom is already distributing in Malaysia, there is potential for similar tie-ups.

“This may help to absorb some capacity at Tanjong Malim.”

The research unit said DRB-Hicom was gearing up for regional expansion and was ready for the eventual saturation of motor vehicle sales locally.

It also noted that with DRB-Hicom's key executives now in Proton, the focus was on procurement to ensure stringent quality control, to migrate the dealerships to a full franchise to reduce costs, and launch a Perdana replacement model within 18 months to fill the void in the D-segment.

“Sales of Proton Preve (pic), launched in April, have been encouraging with 11,310 bookings just two months of launch.”

According to HwangDBS Vickers Research, DRB-Hicom is still discussing with other automotive majors to take strategic stakes in Tanjong Malim.

“We have assumed the acquisition would be dilutive, leaving room for upgrades whenever there are synergies. For now, earnings delivery is vital,” said the research unit.

Meanwhile, OSK Research said recent news reports claiming Volkswagen was still keen on Proton was not entirely surprising, given the former's quest to set up a manufacturing plant catering for the Asean region.

“Proton's plant in Tanjung Malim could be the best fit for Volkswagen in establishing its hub,” said OSK Research.

It also pointed out that Proton's performance in the second quarter of 2012 was dismal, with year-on-year vehicle sales dropping by 6.4% to 37,753 units.

CIMB Research pointed out that Volkswagen presently had less than 1% market share in Asean, which is in stark contrast to its top position in China and in Europe, and its number three position in the United States.

“Therefore, the DRB-Hicom and Volkswagen partnership is essential in plugging the Asean gap in Volkswagen's global market and helping it achieve its target of becoming the world's largest auto manufacturer by 2018,” said CIMB Research.

The research unit also did not rule out the possibility of Volkswagen's equity participation in Proton in the future, going by the German carmaker's past partnership record when it took an initial 30% equity stake in Skoda and a 19.9% stake in Suzuki.

By The Star

WCT impresses analysts

Company deemed good prospects with RM4bil order book and projects

DESPITE WCT Bhd's 19% decline in earnings before interest and taxes year-on-year in the first half of financial year 2012, it is a favourable player in the construction sector, with 87.5% of research analysts calling it a “buy”.

With an outstanding order book of about RM4bil, it is not hard to understand why. On the property front, its gross development value (GDV) was also given a lift to about RM12bil with its latest purchase that came as a “positive surprise”, according to an analyst.

Its latest proposed acquisition announced on Aug 23 is a deal between its indirect subsidiary WCT Hartanah Jaya Sdn Bhd and Idaman Usahamas Sdn Bhd, a unit of Malaysia Building Society Bhd. The 12 acres in Tebrau, Johor Baru that comes with an abandoned shopping podium will be bought for a consideration of RM180mil. The freehold land is proposed for mixed development with a GDV of RM900mil.

About a week before that, it has announced that its tender for the construction and completion of Batinah Expressway Package 2 in Oman was accepted. Winning this bid via its 80:20 joint venture with Oman Roads Engineering Co LLC means it has bagged a contract worth RM1bil and would contribute positively to its earnings for this financial year until the financial year ending 2015. The 44.75km expressway is expected to be completed in three years.

These are two of the latest developments that continue to put the company in a positive light. Looking at some of its other outstanding jobs, it has a government administrative office project and New Doha International Airport in Qatar. Locally, it has PLUS Highway widening works, KL International Airport 2 (KLIA 2) earthworks, the Medini Iskandar contract and others. WCT has also secured contracts from Vale Malaysia Manufacturing Sdn Bhd for jobs at the latter's iron ore hub in Teluk Rubiah, Perak. It also has in hand building projects such as the Kota Kinabalu Medical Centre and Riverson and the International Trade and Industry Ministry headquarters.

That is not all. The company has a order book of about RM4bil. Some of the good prospects, according to analysts, include earthwork packages for Pengerang Rapid in Johor, Tun Razak Exchange projects in Kuala Lumpur, a teaching hospital in Sabah and the United Arab of Emirates expressways. It is also in the running for contracts from the My Rapid Transit and Langat 2 water treatment plant projects.

From its property development arm, projects include its RM4bil mixed development in Overseas Union Garden, Kuala Lumpur. In Rawang, Selangor, it is developing a township with a gross development value of RM1.5bil. Prior to that, it has developed its flagship township development in Bandar Bukit Tinggi, Klang. It chalked up property sales in the first half of RM376mil while its unbilled sales stood at RM563mil.

As for recurring income, it has built pipelines from construction concessions on one hand and rental yield from its shopping malls on the other. The Paradigm Mall which was completed since May is considered a success due to its high occupancy rate of about 97%. Its Premiere Hotel in Klang completed since 2010 has 250 rooms and it is opening up another 350-room hotel at Paradigm which is expected to be ready in 2014.

However, it was not rosy all the way. Just a year ago, WCT's construction business was lacklustre. The company is still in a legal tussle with Meydan LLC over a terminated racecourse in 2009. The financial impact following the outcome of the proceedings remains unknown. Its better performance this year is described as a comeback.

With the opportunities available from the Economic Transformation Programme plus the 10th Malaysia Plan and good take-up rate for its property segment, analysts are bullish about the company. A check from Bloomberg's data showed that 87.5% of the analysts have given it a “buy” call, with RM3.22 as a 12-month consensus target price.

The counter was lowest on Jan 15 at RM2.18 and it reached a peak of RM2.78 on Feb 9 this year. Year to date (YTD), as of Aug 24, the stock increased 18.94% from RM2.27 to RM2.70. At this rate, it is outperforming the FBM KLCI which has increased 8.92% YTD.

By The Star

KLCC Prop ready to stage follow-through rebound

The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) hit an all-time high of 1,655.39 points last Wednesday before easing off to close at 1,648.22 at the end of the holiday-shorterend week. Its lacklustre performance stemmed mainly from the weaknesses on the US and Asian stock markets.

The benchmark index hit an intra-week and all-time high of 1,655.39 on Wednesday before slipping back to an intra-week low of 1,647.90 on Thursday, giving a trading range of 7.49 points.

The FBM KLCI recorded a week-on-week loss of 1.57 points, or 0.10 per cent.

Among other indices, the FTSE Bursa Malaysia Small Cap Index eased 73.29 points, or 0.59 per cent, to 12,308.61 while the FTSE Bursa Malaysia ACE Market Index gained 71.68 points, or 1.58 per cent, to 4,612.68.

On the foreign front, the New York Stock Exchange consolidated its recent gains last week. The Dow Jones Industrial Average shed 0.88 per cent.

The Hong Kong stock market continued to consolidate and the Hang Seng Index fell 1.14 per cent.

In Tokyo, the Nikkei 225 Index posted a week-on-week loss of 1 per cent.

Technical pullbacks in index-linked counters sent the FBM KLCI below its immediate support of 1,650 points when it closed at 1,648.22 on Friday. Selected property counters managed to outperform some of the Main Board counters last week.KLCC Property Holdings Bhd was one of these counters.

KLCC Property staged a technical rebound last week. Its daily price trend closed at RM5.65 on Friday, posting a week-on-week gain of 36 sen, or 6.81 per cent.

The following are the readings of some of the counter's technical indicators:

Moving Averages: KLCC Property's daily price trend stayed above all its 10-, 20-, 30-, 50-, 100- and 200-day moving averages.

Momentum Index: Its short-term momentum index stayed above the support of its neutral reference line last week.

On Balance Volume (OBV): Its short-term OBV stayed above the support of its 10-day moving averages.

Relative Strength Index (RSI): Its 14-day RSI had since stayed above the 50 level. Its technical reading stood at the 71.72 per cent level at the market close on Friday.

Outlook

Chartwise, KLCC Property's monthly price trend staged a technical breakout of its immediate overhead resistance last week. This augurs well for its intermediate- to long-term perspectives.

Its weekly price trend staged a successful technical breakout of the neckline of its double-bottom pattern formation (see KLCC Property's weekly price chart B1:B2) last week. At the market close last Friday, it remained above its intermediate downside support (B1:B2).

KLCC Property's daily price trend traced out a stair-stepped uptrend in a technical breakout of its short-term overhead resistance (see KLCC Property's daily price trend B3:B4). It continued to stay above its intermediate-term uptrend support (B1:B2) at the end of the week.

Its daily fast MACD (Moving Average Convergence Divergence indicator ) traced out a "golden cross" of its daily slow MACD at the market close last Friday. This bodes well for its short-term perspectives.

Its weekly and monthly fast MACDs continued to stay above their respective slow MACDs.

Its 14-day Relative Strength Index (RSI) stood at the 71.72 per cent level. Its 14-week and 14-month RSI were at the 80.98 and 88.61 per cent levels respectively.

Combining the bullish technical breakouts on its weekly and daily charts (B1:B2 on its weekly chart and C3:C4 on its daily chart), KLCC Property's daily price trend is poised to stage a follow-through technical rebound, and rechallenge its immediate overhead resistance (RM5.75-RM6.00) over the intermediate term.

The subject expressed above is based purely on technical analyses and opinions of the writer. It is not a solicitation to buy or sell.

By Business Times

Mah Sing targets to become proxy leader

Artist impression of Mah Sing’s Lagenda@Southbay project.

Mah Sing Group Bhd managing director Tan Sri Leong Hoy Kum has big ambitions, and he's ready to articulate his aspiration for all who want to hear.

First of all, he has a vision of making Mah Sing the next Cheung Kong Holdings of Malaysia. For the uninitiated, Cheung Kong belongs to Hong Kong tycoon Li Ka-shing, and is one of the largest property developers in Hong Kong.

Like Leong, Li also started off Cheung Kong as a plastic manufacturer back in the fifties.

Some may even judge this as being a little presumptive, but Leong wants to work towards being the proxy leader of the property sector in Malaysia.

Leong: ‘I have worked very hard over the past 18 years as I want to leave a legacy.’

After chalking up more than 10 years of double digit growth, 39 projects ongoing and a remaining gross development value (GDV) and unbilled sales of some RM18bil, Mah Sing as a proxy leader of the sector might not be too far fetched a scenario.

Meanwhile sources added that Mah Sing was close to concluding two en-bloc sales from its existing developments in the Klang Valley to a group of foreign investors who are keen to take a bet on the Malaysian property market.

In the past, Mah Sing has concluded six en-bloc deals to both institutional and private investors.

When asked by StarBizWeek, Leong says an appropriate announcement will be made when such developments take place.

Potential proxy leader

The title of proxy leader undisputably belongs to one company over the last decade. Mention property in Malaysia, and the first company that springs to mind is S P Setia Bhd. And, of course, everyone knows S P Setia is what it is today thanks to its leader Tan Sri Liew Kee Sin.

While Liew's Midas touch is growing in its efficacy, much of the company belongs to Permodalan Nasional Bhd (PNB) which made a general offer for S P Setia last year. Today PNB owns some 70% of S P Setia. The takeover has seen S P Setia's sector leadership being increasingly discounted, and this is evident from its share price.

While Liew continues to steer the company for the next three years, his ownership in the company has been reduced to 5.65%.

So here comes Leong, who is focused on steering his company towards pole position by taking the approach of being a professionally-run company with an entrepreneurial spirit.

Mah Sing has delivered every quarter in terms of sales and profits over the last 10 years. As it stands, Mah Sing has a market capitalisation of more than RM2bil, putting it in sixth position. Leong is targeting Mah Sing to have a market capitalisation of RM5bil in the next 3 to 5 years.

“I have worked very hard over the past 18 years as I want to leave behind a legacy. We are building the company to be the next proxy of the property sector, by being the premier lifestyle developer that can be counted upon to deliver the results and the quality that is associated with the Mah Sing brand,” says Leong.

As Malaysia's second biggest listed property developer by sales value, Mah Sing has the credentials for these ambitions.

Up to June 30, 2012, the company has achieved sales of RM1.29bil, which is also 52% of their 2012 RM2.5bil sales target. It has unbilled sales of RM2.69bil and a cashpile of RM555mil.

For the first half, net profit was up 42% to RM120mil on the back of a 25% improvement in revenue to RM913mil.

From 2002 to 2011, Mah Sing has enjoyed a compounded annual growth rate (CAGR) of 47% on net profits. Housebuyers who purchased Mah Sing homes, especially its landed properties, have also seen capital appreciation of more than 50% over a three to four year period.

For instance, Aspen and Clover @ Garden Residence in Cyberjaya has a resort lifestyle concept with lots of lush greenery. Clover@Garden Residence for example, is set upon a hillslope and for home owners, so it is virtually having a mountain beside one's home.

Ferringhi Residence involves condo villas and resort condominiums.

For its upcoming Ferringhi Residence in Penang which also offers the same concept but with an ocean view, registration has currently reached a cumulative 2,787 units, out of total units of 210 units.

Its M Residence in Rawang has seen registration of 2,509 units out of actual units of 779, for its linked units. Its semi-dees have seen registration of 891 units out of actual units of 68.

It is with these statistics that Leong's conviction to achieve his sales target of RM2.5bil for 2012 has been further strengthened.

“If we buy the right land, offer the right product and right concept and launch at the right time, then I am very sure that my developments will sell. Property development is a cashflow game. You have to manage that well. To have a quick turnaround, we must target the right segment,” says Leong.

In 1994, Mah Sing was a fledgling property developer that started off as a plastic manufacturer, foraying into the development of an industrial park. Mah Sing can today boast of a remaining GDV and unbilled sales of RM18bil in Penang, Johor, Kota Kinabalu and the Klang Valley.

Over the past four years, Mah Sing has also bought over RM1bil worth of land with about RM12.6bil in GDV. It is still reasonably geared at 30%, well below management's target of 50%.

The company is known for its small, niche and fast turnaround developments. Previously, the company never owned a single parcel of land bigger than 400 acres. Its strategy was always to roll out what buyers wanted and at the right location.

Township developer

So moving forward, what is Leong's strategy?

For starters, he's expanding Mah Sing's township portfolio. Mah Sing has been developing townships since year 2000 in both Klang Valley and Johor Baru.

Projects like Garden Residence in Cyberjaya, Kinrara Residence in Kinrara, M Residence in Rawang and Sierra Perdana in Johor are mixed townships which have been received good take up rates. So now, Mah Sing is venturing into bigger acquisitions to meet market demand.

This is already evident in the sizes of land it has been buying of late. While its two projects in Rawang is about 400 acres, its Bangi land which will house its Southville City development is over 400 acres with a GDV of RM2.2bil.

Mah Sing will also bid for the Rubber Research Institute Land in Sungai Buloh, where it is hoping to get a bigger portion from the carved out parcels.

When asked for his outlook on the property market, Leong says he is selectively optimistic, especially on the middle income market.

“We have to tailor our property products to the needs of the market. From what I can see, mid to high end developments will still be in demand if they are in good locations. I am still bullish on certain market segments, For example, the market wants landed properties. Buyers don't mind driving 15 minutes to 30 minutes to work, as long as they have a good sized link house, semidee or a bungalow. That is why my Southville City and M Residence in Rawang will cater for this need. Landed properties for the middle income group,” said Leong.

On this note, he will continue to focus on linked houses in a gated and guarded concept priced below RM1mil.

Leong is extremely excited over the launch of Southville City, as this sizeable land will provide housing which is within the reach of many middle income earners in the Southern part of KL. Southville City has prime frontage of 2km along both sides of the North South Highway, providing value enhancing branding opportunities for project.

Mah Sing is planning to seek approval from the government for a new interchange on the North South Highway just 2.5km from the existing Bangi interchange to allow direct access to Southville City. Currently, registration for Southville City has reached close to 2,500 registrants.

Leong sees Southville City changing Bangi. He feels that presently, despite the rising trend of urbanisation, locals are largely underserved.

It is on this note that the township of Southville will comprise of landed residential units, and some 30% of the landbank will be allocated for commercial properties. Leong is targeting the upgraders and new buyers from Bangi and surrounding townships of Kajang, Semenyih, Putrajaya, Cyberjaya, Nilai and Seremban. Leong adds that for serviced apartments, there is demand for units between 500 and 700 sq ft. This was especially popular among new household formations and singles.

“Nowadays people buy properties to match their lifestyle. Property is acknowledged as the best hedge against inflation, and people buy properties as a form of wealth preservation and not speculation,” said Leong.

By The Star

Buying your first home is a big step and can be exciting

Let’s say one morning you wake up and realise that, yes, buying your first home is the right thing to do for yourself.

You’re tired of throwing away money on rent and figure that it’s time to get into a home of your own.

In most cases, first-time home buyers would opt for apartments due to convenience and the abundance of choices in accordance to one’s budget.

Apartments enjoy a reputation synonymous with city living, stylish open-plan space and great views.

But choosing and buying an apartment can be an arduous task (or maybe it was just me), and there are plenty of things you need to think about at each and every stage of the investment process.

This guide is what I put together to help highlight those key points you need to be thinking of at each and every stage of your quest for the perfect apartment. It was what I used to consider my purchase.

Spend some time thinking about the kind of apartment you’re looking for. This will help you narrow down your options and enable you to determine some ‘must haves’ in your apartment choices.

* Location, location, location! - Narrow down the areas that you are most interested in living in, and make a list of these locations. Similarly, make a note of all the areas you definitely don’t want to live. This way, property agents will know immediately which properties to offer and which to discard. This process narrows down your search and save you time when viewing.

* Money matters - Consider your finances carefully and decide on a maximum budget – narrowing down your search field in this way will ensure that you only view properties you can afford. Don’t forget to bear in mind your income and outgoings – factoring in not just the monthly payments, but the apartment’s montly service charges as well.

* Space - How much space will you need in your apartment? How many bedrooms? How big a kitchen? Do you need an office?

* Style - Studio apartments merge all your living space into one area, while open-plan design means that your kitchen, dining area and living room will be contained in one open space. Do you want separate rooms within the apartment? Would studio living be too cramped? For me, I had to give up on the idea of an open-concept kitchen mainly because I placed top priority on my apartment’s location and the apartment that suited my budget did not have an open-concept kitchen.

* Specifics - Are there certain criteria on which you are unwilling to compromise? Do you want wooden floors? High ceilings? An open-plan design? Designated parking spaces? In my case, besides the location being a priority, I wanted to have the smallest room in the apartment to be right next to the master bedroom. That way, I would be able to hack the wall to create an opening for my walk-in wardrobe.

It would be pointless for me to look at layouts where the smallest room would be at one end of the apartment, and the master bedroom be at the other end of the apartment.

The middle room would be too big to house my wardrobe and the smallest room would have been too small for my guest room and office.

Things to look out for

1. Noise - If you’re seriously thinking of investing in a particular apartment, take the time to research those living above and below as well as next-door to your property.

A week into your new apartment-life is not the time to discover a neighbour’s penchant for heavy metal or playing the drums!

2. Accessibility - Take a minute to think of those who will be visiting you at home – are there people for whom access could be a problem? Is there a functional lift for older visitors or family?

3. Outside Space - One of the sacrifices of apartment living can be the loss of outdoor space. I’m not so much of an outdoors person, but I made sure the apartment I purchased had a reasonably-sized balcony.

4. Pets - If you have pets, consider them in your property search.

This can be a major consideration for those wishing to move into an apartment, as you must be fair to both your pets and your neighbours.

Is your dog’s barking likely to irritate neighbours? Will you be able to give the pet adequate fresh air and exercise?

When you’ve found an apartment you’re really keen on, you may want to ask around people who live there or nearby to ensure there are no hidden problems which may affect your interest.

These efforts in research goes a long way in giving you peace of mind, should you finally decide to put in an offer, and can help you to avoid making an unsound investment.

I was passively looking at properties and being indecisive for three years before making a choice and sticking to it.

> Dawn Jeremiah is looking for faux mantelpieces and fireplaces for her living room. Armed with a passion for television and journalism, she handles regional marketing at a regional lifestyle channel. She also tweets at www.twitter.com/dawnjeremiah

By The Star

Points to consider when buying a house to avoid future complications

Can you afford a house now?

Assuming you can afford a house, how much can you afford to pay? These are important questions that many people do not research. This oversight can lead many people to bad debt and even bankruptcy.

Your monthly expenditures will be more than just the housing loan. There will also be insurance, electricity, water, telephone bills, contributions to maintenance fund, medical bills, groceries, unexpected household/auto repairs, lunch money and many other obligations.

They must all be accounted for in your budget spreadsheet. For many of us the purchase of a house or property is the largest financial commitment we will ever make. This makes arranging the most suitable housing loan just as important.

Make sure you know the costs of entering into the loan for the purchase of the property. They include conveyancing, application fees, valuation and legal fees, mortgage insurance (if necessary) and sometimes, extra life insurance premiums.

Some lenders will tell you the advantages of whatever housing loans they are trying to squeeze you into, but rarely will they tell you the disadvantages.

According to an article in a business magazine, the banking system is flush with RM180bil liquidity. This explains the increasingly aggressive sales promotions undertaken by financial institutions for the housing industry.

Always look at the total deal, not some dangling carrots in front of you. Compare the entire housing loan cost of different lenders to determine which is best for you.

I would like to discuss some of the lenders' offers that may not be as attractive as they appear. I will start with the special low interest offered for the first year. Such an offer is usually given during a sale campaign and it usually carries a fixed calendar period with a run-out date. Thus, even if a house buyer commenced his application process immediately upon the launch of the campaign, by the time the loan is approved and disbursement commences, the period remaining to enjoy this special low interest rate will certainly be less than one year.

If he were to start the application process a few months after the campaign, it is likely that he will enjoy the special low rate for only a very short period.

Due to our unique system of progressive payments to the developers, the mean average of the amount disbursed by the banks during the “first year low interest offer,” is really lower than the loan amount. Thus, any saving on interests is really much less than it seems. And these have all been figured out already by those marketing experts in the banks.

A more sincere approach would be to offer the special low interest rate to apply during the progressive payment period and to continue to run for one year after the date when the loan is fully disbursed. Only then can such offers bear some element of sincerity. I believe that anything short of that makes the offer a sales marketing gimmick.

There are other clauses that put house buyers in a disadvantaged situation. Some lenders include clauses in the loan agreements that give them the absolute rights to alter both the Base Lending Rates and/or the margin of interests.

Doesn't this in effect nullify their typical attractive offer of “BLR plus X% for following years?”

One cannot make a special low interest offer in the sales campaign and then contractually (through the loan agreement) creates a clause to allow that special offer interest rate to be invalidated. Make sure you know all the costs of early discharge of the loan.

One other clause to look out for is the redemption of the loan. A house buyer may wish to sell the house and wished to fully-settle the loan.

This is where the conditions for full-settlement differ from one financial institution to another. Think long term.

When one takes a loan, one spends a much longer period servicing the loan beyond the first year or even the second and the third year. So do not be taken in by the very attractive offers during the honeymoon year/s of the tenure of your loan. Remember, the remaining of the 25 years is more important. Do not go for short-term gains only to lose out heavily on the long remaining years.

I would advise house buyers to look beyond the first year of so-called low interest when shopping for housing loans. With the stiff competition among the various lenders today, one should seriously shop around and scrutinise each and every offer before commencing the application process. Talk to your bankers, lawyer friends or seek advice from the National House Buyers Association.

One really has to scrutinise the fine print before making a decision as to which financial institution to go to for a loan. It is about time to standardisde the terms and conditions in the loan agreement so that there will be orderliness in the banking industry.

No more “embedded” clauses within the voluminous stakes of papers one has to initial giving the impression that one has truly read and understood them. It is obviously impossible to read and understand those 40 over pages of legal language that comes with appendixes.

Chang Kim Loong is the honorary secretary-general of The National House Buyers Association, a non-profit, non-governmental, non-political organisation manned by volunteers. For more information, check www.hba.org.my or e-mail info@hba.org.my

By The Star

Finding the right property mix

Making housing affordable, avoiding a property bubble and ensuring there is no over or under development are some key issues.

FOR the vast majority of people property means getting a respectable roof over their heads with proper amenities in a decent neighbourhood, and getting it affordably.

For others, it is about getting a second or third property or more for the sake of investment – a good return eventually for the price they paid and as a hedge against inflation because property prices mostly continue to rise in the long term much faster than inflation.

The most sophisticated of them don’t just restrict their investments to the residential market but dabble as well in commercial and industrial space such as shops, offices and factories, wherever they may be located.

Socially, there has to be regulation of property development not only to ensure that it is done up to certain standards but to ensure a proper mix between the various kinds of development such as residential, commercial and industrial and the various segments within these broad sectors.

It would be a mistake to micromanage however and within broad guidelines, it is often best to leave it to the market place to adjust things. But it does take a long time for things to adjust in property because of the gestation period before a property can be brought to market.

Ideally, property development should take place under the aegis of a broad master plan which has been formulated after intense study and research, taking into account projected population growth and other demographics. It should be dynamic to take into account changes.

Unfortunately we don’t stick to a plan in terms of development and even when there is a master plan it is often overruled by those in authority for other reasons which are often not compelling from an economic viewpoint.

In residential development, the greatest challenge is, of course, providing decent housing at affordable cost to the vast majority of the population. Unfortunately that is also a function of income – if people are poor, they won’t be able to afford nice houses no matter what.

But we are a middle-income country and we can do some things to keep prices of properties within reasonable levels. The best gauge of that is in relation to our own income level instead of making comparisons with countries with much higher incomes (eg Singapore) or those where special situations make property expensive (eg Mumbai).

Prices are always a function of demand and supply. Some moves simply increase demand, often without a fundamental increase in demand for actual occupation. Opening up property purchases to foreigners often result in a spurt in demand at the time of sale but properties may not get occupied. Look at some high-end properties in Mont’Kiara and around the twin towers area in Kuala Lumpur for illustration.

Also, making a leveraged property purchase easy encourages property speculation. If you pay 5% down and if your next payment is two years later and if the property appreciates just 10%, you have made 100% (before transaction costs) in two years or 50% a year roughly. That is powerful incentive for speculation, creating an artificial demand that can collapse two years out.

To curb such kinds of speculation which lead to temporary surges in house prices and a potential bursting of the bubble in future, it will be necessary to curb foreign property purchases and easy financing schemes.

Meantime, the state and federal governments and their agencies must be more circumspect about handing out their landed assets to developers at very low cost to develop. Developers naturally want to maximise their returns and high-end, high-density properties offer the best returns.

Instead governments and their agencies should develop a master plan for the land they have and allocate the areas meant for low-cost, medium and high-end residential as well as commercial and industrial. Then they can invite the developers to bid for the parcels they will develop.

All that would take a lot of work, yes, but nothing worthwhile comes without proper effort. Examples to emulate for low-cost to medium-cost housing might be the Singapore Housing Development Board which has strict criteria for purchase of property, resale and standards.

Examples not to emulate would be Singapore again which has adopted a free and unfettered stance as far as sale of property to foreigners is concerned which has priced high-end property beyond the vast majority of Singaporeans to become the domain of multi-millionaires.

Incidentally, this is one of the major complaints of Singaporeans who otherwise have little to complain about in terms of economic development and living standards given their tiny space and resources. That has been reflected in voting trends too, leading the government to descend from its mighty perch of “I know it all” to re-examine its policies.

In commercial development, the trend in Malaysia has been to cramp it all in as little space as possible to maximise development profits. Abetment comes from authorities who give approvals with little or no thought of proper planning considerations such as availability of parking, public transport and whether it will cause congestion.

Many developers are willing to take the plunge into commercial development because of high profits. The danger of over-development is the greatest here, especially with plans to set up a new financial district called the Tun Razak Exchange, which will result in plenty of commercial space coming on stream in Kuala Lumpur city. Developers in this area have been granted tax exemption which will cause market distortions by giving them an advantage over others.

Under the circumstances, authorities have to be extra-vigilant to ensure that there are no untoward pressures on the property market, both in terms of a boom or a bust.

Speculation and ill-considered development can cause a volatile, mercurial mix which if it explodes can cause years of agony. Better a sensible, more stable brew that stands the test of time and ages gracefully.

P Gunasegaram (t.p.guna@gmail.com) is an independent consultant and writer. He believes strongly in the old adage that prevention is better than cure.

By The Star

KSL jumps on the Kesas bandwagon

It is developing the Canary Garden township along corridor of the busy highway

AS one drives along the Kesas Highway heading towards Klang, new townships are being developed closer to Klang town nowadays, leveraging on the popularity of other townships that have emerged over the years.

The development of Kota Kemuning by Hicom-Gamuda Development Sdn Bhd, which is the nearest to Subang Jaya, started about 20 years.

Bandar Puteri Klang by the IOI group and Bandar Botanic, also by Gamuda group, were other townships that were launched subsequently.

Much of the growth along the Kesas corridor came about because of access. Today, as one drives further, one will see a lot of signboards promoting upcoming projects.

Home owner Kalai, who lives in Bandar Puteri, says: “Today, the Kesas Highway has a lot of traffic, much like Lebuhraya Damansara-Puchong. The amount of traffic using this highway is an indication that the population along Kesas is growing.”

After the turn off at Banting, there is the newly-developed Bandar Parklands by the WCT group.

The Island and Peninsular group and other developers are also there. Johor-based developer KSL Holdings Bhd has also set its sight in the vicinity.

Patrick Khoo Keng Ghiap, the project director for Canary Garden, says: “We would like to build our base here and establish our name in the Klang Valley and eventually work our way up to Rawang and Semenyih. The margins here are much higher compared with Johor projects.”

Khoo is the son of managing director Michael Khoo whose brothers are also holding positions in the company.

Canary Garden is a 446-acre development near WCT's Bandar Parklands and fronts Jalan Langat which provide direct access to the Kesas highway. There is a 2km river or stream cutting across it, dividing the land in half.

Under state laws, all rivers, streams and drains are state land, which means there is a buffer on both sides of river that cannot be developed. The 446 acres exclude this 50 acres which the developer will landscape.

KSL head of marketing Chris Fong says the company will landscape an additional 50 acres on the 446 acres in order to add value to the properties in that development.

The plan is to use the river as a natural border which separates the landed units totalling about 1,300 from the commercial area of about 90 acres. Cluster homes were launched at just below RM1mil a few months ago while semi-detached units, with and without lifts, are priced from RM1.3mil.

The commercial area will occupy up to 90 acres and will have a gross development value of about RM3bil, Fong says.

The plan is to have a three-storey linear mall with internal and external retail space and al fresco dining along the riverside with a total gross area of over eight million sq ft with a plot ratio of 1:4.

KSL developed the KSL City Mall in Johor Baru opposite Holiday Plaza which comprised a hotel and serviced apartments.

The same template will be used here. This time, seven blocks of serviced apartments of 28-storey will sit on top of the mall. There will also be a hotel, a few schools and a tertiary education block. He says the idea is to make the place self-contained.

In addition to the proposed 1,960 serviced apartment units, condominiums and other commercial blocks encircle the entire project.

Fong says Canary Garden is not a strata development, but there will be a perimeter fencing around it and the units will be individually titled, which means there is room for renovation.

There will also be a monthly security charge of RM250 per household which the developer will bear in the first 24 months. The owners have the option to employ their own security from the third year onwards. Monthly charges may vary.

The local authorities will upkeep the place. The maintenance charge of the serviced apartment has not yet been determined.

The plan, he says, is to have several thousand housing units comprising mostly high-rise projects on that 446 acres.

Fong says the company is not building a gated and guarded landed community because residents will have to form a joint management body. An agent from Reapfield says landed units are currently more popular than high-rise projects, because there is an abundance of land in Klang.

“Landed units, by comparison, will be cheaper because there is a cost to having a high-rise development. So far, high-rise developments have not been popular in Klang.”

While Canary Garden is easily assessible from the Kesas Highway, in time to come, more townships will be developed fronting Jalan Langat and congestion may be an issue, the agent says.

By The Star

Mah Sing on track for full-year RM2.5bil sales target, says MD

PETALING JAYA: Mah Sing Group Bhd is on track to hit its full-year sales target, recording RM1.29bil sales in six months, representing 52% of its target of RM2.5bil.

Unbilled sales were about RM2.69bil or two times the revenue recognised from the property division in 2011.

In a statement, Mah Sing group managing director-cum-group chief executive Tan Sri Leong Hoy Kum said the company had been enjoying a consistent sales trend by rolling out what the market wanted, allowing it to deliver commendable double-digit growth in both revenue and profits.

The group delivered vacant possessions for 780 properties to property owners in the first half of 2012, and looks forward to delivering vacant possessions for another 1,290 units in the second half.

For 2012, deliveries of vacant possessions are estimated to bring in an additional RM315mil.

The group recorded revenue of RM913mil and net profit of RM120mil for the first half ended June 30. This represents an improvement of 25% and 42% respectively over the previous corresponding period.

The current-quarter revenue and net profit of RM455.2mil and RM60.1mil represents 9% and 39% improvement respectively over the previous corresponding quarter.

Revenue from the property segment soared by 29% to RM808mil on the back of strong sales of RM1.29bil as at June 30.

“For the first half of 2012, we have seen very strong sales from Kinrara Residence,” Leong said.

By The Star

PJI to buy land from Noble Star services

KUALA LUMPUR: PJI Construction Sdn Bhd, a wholly-owned subsidiary of PJI Holdings Bhd, has signed a conditional sale and purchase agreement with Noble Star Services Sdn Bhd for a proposed acquisition of a piece of land for RM13.2mil cash.

The company said the land, identified in Damansara, measures 5,257 sq m, together with all buildings erected or to be built on the land.

The buildings would include a single-storey warehouse, a three-storey office building, two guardhouses, a rubbish disposal site and a power sub-station,” it said in a filing with Bursa Malaysia.

By The Star

House price hike likely

Penang properties said to increase 5%-10% due to more costly cement

GEORGE TOWN: The selling price of properties in Penang will soon surge by 5%-10% following the recent move by Lafarge Malayan Cement to raise cement prices by about 6%, according to housing developers here.

Following Lafarge's announcement, a 50kg bag of cement is now priced at RM17.50, compared to RM16.50 before the hike.

Lim: ‘The price of sand is now RM40- RM43 per cu yard.’

Penang Master Builders & Building Materials Dealers Association president Lim Kai Seng said 60% to 80% of the materials used for a building comprised cement and cement-related materials.

“This is why an increase in cement price will have a significant impact on property prices.

“The other cement manufacturers in the country have sent signals that they will raise prices very soon,” Lim said.

There are six cement producers in Malaysia, namely YTL Cement Bhd, Tasek Corp Bhd, Cement Industries of Malaysia Bhd, Lafarge, CMS Cement Sdn Bhd, and Holcim (M) Sdn Bhd.

Only Sarawak-based CMS Cement has confirmed it would keep prices at the current level.

Lim said the price of other essential building materials such as sand and aggregate had also increased.

“The price of sand is now between RM40 and RM43 per cu yard, depending on the grade, compared to RM38-RM40 earlier this year.

“The price of aggregates is now at RM21 per tonne, compared to RM20 per tonne earlier this year,” he said.

House prices on the island are expected to rise by 10%, while in Seberang Prai, housing prices are expected rise by 5%, following the hike in cement price.

Kuala Lumpur-based developers such as Mah Sing Group Bhd and SP Setia Bhd with projects in Penang will continue to absorb the cost of the cement price increase.

Ooi: ‘There will be a 10% hike in the selling price of properties in Penang.’

Ideal Property Development Sdn Bhd managing director Datuk Alex Ooi said the company was now revising the selling prices of its new projects upwards, due to the hike in cement price.

“There will be at least a 10% hike in the selling price of properties on the island.

“A hike in cement price means the price of all cement-related products such as concrete and bricks will rise. Construction cost will go up by between 15% and 20%.

“We expect the rest of the cement manufacturers in the country to adjust the price of cement upwards in the next one to two months,” he said.

In addition to the rise in cement prices, the cost of labour and transportation charges have also increased this year.

Tambun Indah Land Bhd managing director K.S. Teh said the cost of labour had increased to RM45 per day this year, compared to RM35 a year ago.

Transportation charges for sand have increased to RM450 per truck load this year from RM400 a year ago.

“There is also a labour shortage, as many Indonesian workers have gone back to Indonesia, which is booming currently.

“The selling price of properties will be impacted by the hike in raw materials and labour costs.

“However, Tambun Indah will absorb the increase in the price of raw materials until year-end.

“We will revise our pricing next year,” he added.

Teh said the selling price of properties on the island would increase more because of the additional transportation charges to ferry the raw materials to the island.

“This is why the increase in property prices on the island will be around 10%, compared to about 5% in Seberang Prai,” he said.

Tambun Indah will be launching next month the Straits Garden@Jelutong on the island, the Pearl Residence@Pearl City and Pearl Indah@Pearl City projects in Simpang Ampat.

The Straits Garden is a high-rise project comprising 183 condominiums priced from RM688,000 onwards, while the Pearl Residence@Pearl City and Pearl Indah@Pearl City schemes comprise landed properties priced between RM353,000 and RM508,000.

Mah Sing managing director and chief executive Tan Sri Leong Hoy Kum said the cement price hike would have less than a 1% impact on construction cost.

“Most of our projects have been tendered out and the construction costs are already locked in,” he added.

SP Setia property (north) general manager Khoo Teck Chong said the group would absorb this impact for now to be competitive.

”If other raw material prices such as bricks, rebar and tiles were to increase drastically, we may then have to review and adjust our property selling price accordingly,” Khoo added.

Meanwhile, the Malaysian Competition Commission (MyCC) chief executive officer Shila Dorai Raj had said the price hike by cement manufacturers did not at this juncture warrant a formal investigation.

“Price increases are by themselves not anti-competitive in nature. However, if there is evidence of collusion among the competitors to increase prices, this would be of concern to MyCC and may merit an investigation,” she said.

By The Star