Tropicana Ivory’s RM10bil Penang World City to feature diverse cultural components

Low: ‘We need a huge number of Penangites to call World City their home.’

GEORGE TOWN: Tropicana Ivory Sdn Bhd's (TISB) RM10bil Penang World City (PWC) project in Bayan Mutiara will have affordably priced high-rise units and a world culture' component, featuring different cultural residential enclaves.

TISB is a joint-venture company in which Dijaya Corporation Bhd holds a 55% stake, while Ivory Properties Group Bhd the remaining 45%.

Ivory group chairman and chief executive officer Datuk Low Eng Hock says about 15% of the properties for the 800 to 1,000 high-rise units for the first phase will be priced between RM300,000 and RM500,000, depending on the built-up area which ranged between 600 sq ft and 800 sq ft.

The first phase, to be located on a 10-acre site and scheduled for launch in the third quarter of 2012, will have a gross development value (GDV) of around RM600mil to RM700mil.

Subsequent phases for PWC will also see 15% of the properties priced in the affordable range of between RM300,000 and RM500,000, Low adds. Low said the group might consider using the plot ratio guidelines introduced in 2010 for the island to build medium-priced properties.

Under the revised guidelines of 2010, developers have to allocate 5% of the total units in a development scheme to be priced at RM200,000, 10% to be priced at RM300,000, and another 5% not exceeding RM500,000.

The affordable components were in the planning of the entire master plan as a value-added component from the very early stage, even during the tender exercise, according to Low.

“As we are planning for a world class city within World City, economies of scale is of the essence.

“In order for this to happen, we need a huge number of Penangites to call World City their home.

On the world culture' component in PWC, Low says there will be residential enclaves where the properties will reflect the architectural and cultural themes of a particular country.

“For example, we will create Chinese, Korean, Middle Eastern and European villages in PWC, so that the properties can be marketed in that particular country through an appointed real estate agent.

“We want to create a world culture to attract tourism and foreign investors and to differentiate PWC from the other mega-development projects on the island.

“These parcels will be solely for en-bloc sales to expatriates,” he says.

On the impact of the global slowdown on PWC, Low says at present the group has not felt the impact of the global slowdown yet, at least not in the financial and real estate sectors.

“Our banks are well positioned and the central bank played a very proactive role to mitigate any possible impact or threat to our economy. The scale of foreign direct investments is very encouraging not only for Penang but for Malaysia as a whole,” he says, adding that the group does not foresee any slowdown in the next two to three years. “In fact, property prices in Penang are still very attractive and have yet to reach its peak. Many magazines, including those from Hong Kong, have been mentioning and promoting Penang as the ideal home destination.

“Investors from China, Japan and Korea, for instance, are very much interested in coming to Penang, particularly in the aftermath of the Japan earthquake and tsunami,” he notes.

Meanwhile, on Ivory's plans for 2012, Low says the company is targeting to launch projects worth approximately RM1.4bil in GDV this year, including The Latitude in Mount Erskine, Penang Times Square phase three and phase four, City Mall and City Residence in Tanjung Tokong.

“The company is targeting to rake in sales of some RM800mil this year.

“Last year, we only booked RM121.8mil of sales for completed and on-going projects besides having unbilled sales of RM227mil to be realised over these two years. We are expecting higher sales this year since we have more projects to offer this time and not forgetting the much anticipated PWC project,” he adds.

Last July, Ivory won the right to purchase and develop the site in Bayan Mutiara after edging out four other parties, including SP Setia Bhd, which were bidding for the land. Ivory won the bid after offering the highest price to buy the land for RM240 per sq ft or RM1.072bil for the entire site, securing with it the right to develop on the existing 67.56-acre site and another 35 acres that will be reclaimed over the next three years.

To date, about RM22mil or 2% had been paid as earnest deposit for the land. The remaining downpayment of RM80mil will have to be paid on or before April 10. In the agreement with Dijaya Corporation Bhd, Ivory is the turnkey builder for PWC and will thus be entitled to 48% of the project's gross revenue with the amount due to the company estimated at RM5bil.

By The Star

UOA banks on strategic projects

Khor: ‘It is our strategy to continue with our business model of having smaller parcels of land and building good quality projects at our own pace, instead of rushing through projects which may compromise on quality.’

PURSUING pocket developments in mature neighbourhoods will be the forte of UOA Development Bhd to build up a stronger presence in the Klang Valley property market.

UOA chief operating officer (development) David Khor says the Kuala Lumpur-based developer is also looking for opportunities to tap new growth markets like Penang and Johor.

Although the company's cash pile of some RM300mil and borrowing of only RM10mil would mean it has leeway to resort to bank borrowings should it decide to make sizeable land acquisitions, UOA is not in a hurry to ramp up its gearing because it prefers to acquire strategic parcels.

Khor says the 40 acres of undeveloped land in Bangsar South and another 60 acres in other parts of the Klang Valley will keep the company busy for the next seven years.

“It is our strategy to continue with our business model of having smaller parcels of land and building good quality projects at our own pace, instead of rushing through projects which may compromise on quality,” Khor shares with StarBizWeek.

Smaller plots of land will mean a shorter turnaround time of between two and three years (for high-rise developments); and being located in mature locations also ensures a better premium and margin for its properties.

UOA projects yield net margins of about 30%.

He says the other option is for the company to form joint ventures with landowners, and preliminary negotiation is underway for two potential sites in the Klang Valley.

The UOA group also has a large presence in commercial development.

It has completed quite a number of office buildings of which six have been injected into the UOA real estate investment trust (REIT) which currently has an asset value in excess of RM1bil.

UOA Ltd, which is listed on the Australian Stock Exchange, owns 68% of UOA Development and 47% of UOA REIT.

Completed office buildings in Bangsar South – UOA’s flagship project.

Khor says UOA has about 100 acres of undeveloped landbank in the Klang Valley, with 40 acres in Bangsar South, and the balance in Kepong, Taman Desa, Segambut, OUG and Glenmarie.

Last year, it bought three parcels of land six acres in Sri Petaling, and 10 acres each in Segambut and Kepong.

Meeting market needs

The company recorded RM850mil in sales in 2011 and is expecting double digit growth in 2012.

On new project plans, it has lined up four to five projects worth a total gross development value (GDV) of RM1.5bil to be launched in the next12 months.

Khor concurs with industry observers that the high-end condominium market is moving into a glut situation, with a high number of projects scheduled for completion these one to two years.

“The over-supply situation is particularly acute in condominiums with a large built-up of more than 2,000 sq ft, when actually demand is greater for average sized units of between 1,000 sq ft and 1,200 sq ft,” Khor observes.

He points out that the issue of affordability could be one of the reasons for this situation, following Bank Negara's directive to banks to decide on the quantum of loan approved based on a borrower's net income instead of the previous method of using gross income.

“The imposition of a maximum loan to value ratio of 70% for third time borrowers has also impacted on the affordability level of property buyers.

“In such a situation, there is a need for developers to plan for more average sized houses that are more affordably priced at around RM400,000,” Khor notes.

Flagship project

Going forward, he says UOA would be focusing on that market range and designing its projects with more average sized residences to fit the affordability level of buyers.

Khor notes that UOA is among a handful of local developers that have undertaken projects under the build-then-sell (BTS) system.

Its two residential projects Villa Yarl and Halimahton were completed before they were launched for sale in 2007.

It has also completed a few boutique residential projects including Villa Mont'Kiara in Mont'Kiara and One Desa Residence in Taman Desa.

Khor says the company's flagship project is the 60-acre Bangsar South, an integrated mixed use development located on the former Kerinchi squatter colony, which is off the Federal Highway.

The land was acquired at RM35 per sq ft back in 2005, and today, the market price has reached RM300 per sq ft.

Khor says Bangsar South will comprise 29 office blocks, a retail block, and seven residential blocks with an estimated gross development value in excess of RM8bil.

So far the company has sold RM620mil worth of boutique office towers of 10 to 11 storeys to corporate buyers who will have the naming rights for the property.

The selling price for the office space is around RM800 per sq ft while the asking rental rate is RM5.50 per sq ft.

The residential properties were opened for sale since 2007 and so far RM476mil have been sold.

Khor says UOA will be improving the infrastructure access between the residential and commercial precincts by widening the roads, and has upgraded the Universiti LRT station.

Walking pavements and sheltered pavilions have also been built.

According to him, the Bangsar South project will continue to be the main growth driver for the company over the medium to long term.

“Going forward, the development in Bangsar South will remain the company's focus as it will contribute positively to the company's bottomline over the next seven years,” he adds.

By The Star

State to maintain low-cost apartments to improve quality of life

Improving facilities: Low-cost flats need to be spruced up to make it more liveable.

The state government has given priority to improving the quality of life of residents at low-cost apartments through its Caring Government for Residents’ Improvement Aid (Ceria) scheme.

Under the scheme, the state will repair lifts, roofing and water tanks at the flats as well as other issues.

Housing, Building Structure Administration and Squatters committee chairman Iskandar Abdul Samad said the state had agreed to share 80% of the cost and the buyers 20% for repairs at the low-cost apartments.

“This way, the apartment buyers will have a sense of belonging to the facilities in their buildings.

“This also enables the buyers to know the cost of maintenance and how much the Government is paying for it,” he said.

Iskandar added that the Ceria scheme started in June last year and the state had spent RM9.1mil so far.

“Last year, the state contributed RM5.1mil while the buyers paid RM1.8mil.

“The problems in the low-cost apartments are leaking roofs, lift breakdown, rusting water tanks, broken fencing, clogged drains, potholed roads, rundown playgrounds and sewage.

“In the state executive council meeting on Oct 27 in 2010, it was decided there will be a 20% increase in parking bays at low-cost housing projects to address the shortage at such schemes,” said Iskandar when answering a question from Haniza Mohamed Talha (PR-Taman Medan) on the state’s plan for housing for former squatters and the strategy to solve issues like of parking bay shortage.

By The Star

Pembinaan BLT sees strong sukuk demand

MEDIUM-TERM NOTES: Firm announces third series of a 25-year programme to raise up to RM10 billion

PEMBINAAN BLT Sdn Bhd, a property developer owned by the Ministry of Finance, expects the issuance of its third series of Islamic bonds to be well received by the investment community.

"We expect great demand for our sukuk. We expect the rates to be even better than the second series. It (the rates) has been showing downward trend, which is good.

"I think we are also hitting the market at the right time. The market has a lot of interest in high-grade papers this time around, but there are not many (such papers) at the moment," managing director and chief executive officer Mohammed Redza Mohd Yusof told newsmen after announcing the third series of Islamic Medium Term Notes (IMTN) yesterday.

The fund-raising exercise was part of Pembinaan BLT's 25-year IMTN programme of up to RM10 billion, to be raised by its wholly-owned unit, Aman Sukuk Bhd.

The first series of the sukuk issue, which involved RM1.1 billion, was priced between 3.73 per cent (three years) and 5.05 per cent (15 years).

The second series, which involved RM1.16 billion, was priced between 3.6 per cent (three years) and 4.45 per cent (15 years).

The company has 74 projects in hand worth RM7.6 billion. It expects to complete all the projects by 2015.

"So far, we have completed 47 projects worth RM4.28 billion and another 27 projects ongoing," he said.

Pembinaan BLT was formed in 2000 to build quarters and facilities for the Royal Malaysia Police.

Under its business model, it is responsible to build and secure its own financing.

The government will pay Pembinaan BLT in stages only upon completion of the quarters and facilities.

The company hopes to secure more jobs over the near term.

"We remain very optimistic. We have already received in black and white and are currently ironing out some details. There are many more police facilities to be developed all over the country.

"We are looking at RM600 million to RM700 million of jobs, comprising 10 to 15 projects," Mohammed Redza said.

By Business Times

Glomac posts RM21.9m net profit in Q3

HEALTHY GROWTH MOMENTUM: Firm well on track to achieve target sales of RM500m for full year

GLOMAC Bhd registered a net profit of RM21.9 million in its third quarter ended January 31 2012, up 32.7 per cent compared to RM16.5 million in the previous corresponding quarter.

In a statement, the property group said its net profit attributable to shareholders for the first nine months of its financial year rose 32.2 per cent to RM63.5 million from RM48 million achieved in the previous corresponding nine-month period.

This surpassed the company's full-year net profit attributable to owners of the company of RM63 million in its previous financial year ended April 30 2011.

Consequently, Glomac's earnings per share for the nine-month period jumped 34 per cent to 11 sen from 8.2 sen previously, it added.

Glomac has proposed an interim dividend of 2.75 sen per share less 25 per cent tax for the current financial year ending April 30 2012, higher than the 2.25 sen interim dividend paid in the previous financial year.

"We are riding on a healthy growth momentum. Not only have our results continued to excel, we chalked up property sales of RM343 million in this nine-month period, well on track to achieve our target sales of RM500 million for the whole financial year," said Glomac Group executive chairman Tan Sri F.D. Mansor said.

He added that the group's townships are thriving with launches in both Bandar Saujana Utama and Saujana Rawang enjoying good take-up rates.

F.D. Mansor also said that the company's current projects, namely Glomac Cyberjaya 2 and Glomac Centro have also been well received.

Glomac Cyberjaya 2, which has total gross development value (GDV) of RM130 million, was launched in November last year.

Glomac Centro, meanwhile, which will be launched later this month, will have a GDV of RM370 million.

"We are also looking forward to the upcoming launch of our 39-storey Reflection Residences, a freehold serviced apartments project with a GDV of RM270 million in Mutiara Damansara," he said.

F.D. Mansor said Glomac has built up a substantial "war chest", which will allow it to acquire new landbank.

Glomac's balance sheet, as at January 31 2012 stood at RM353.5 million in cash and cash equivalents.

The company recently required two parcels of leasehold land totalling 80ha for RM44 million, adjacent to Bandar Saujana Utama. This would raise its total estimated GDV of current and future projects to RM6 billion.

Meanwhile Bernama reports that Glomac Bhd's sales are expected to pick up in the fourth quarter of the 2012 financial year, with RM640 million worth of new launches by end-March, said Maybank Investment Bank.

In a research note yesterday, it mentioned the launches of Reflection Residences and Glomac Centro shop offices and serviced apartments, both in the Klang Valley.

"We believe projects in good locations such as Reflection Residences will continue to attract buying interest," it said.

Maybank Investment said Glomac has locked in RM343 million worth of property sales in the nine months of financial year 2012 (FY12), meeting only 69 per cent of its FY12 target.

It said Glomac's 2012-14 earnings would be driven by RM418 million in property sales achieved in FY11 and new launches worth RM1.4 billion this financial year.

Maybank Investment has maintained its 'buy' call on Glomac with a target price of 96 sen.

By Business Times

Glomac posts higher profit on property sales

PETALING JAYA: Glomac Bhd posted a higher net profit of RM21.9mil for its third quarter ended Jan 31, 2012, up 32.7% from RM16.5mil recorded in the previous corresponding quarter.

Revenue decreased to RM145.2mil from RM176.5mil previously.

For its nine-months ended Jan 31, 2012, the company achieved a net profit of RM63.5mil, a 32.2% increase, compared with RM48mil previously. Revenue dropped to RM407.9mil from RM443.7mil.

In a statement, Tan Sri Datuk FD Mansor said the company was riding on a healthy growth momentum. Not only have our results continued to excel, we chalked up property sales of RM343mil in this nine-month period.

“We're well on track to achieve our target sales of RM500mil for the whole financial year,” he said.

The group is also preparing for the upcoming launch of its 39-storey Reflection Residences, a freehold serviced apartments project with a gross development value of RM270mil in Mutiara Damansara.

“We have also built up a substantial war chest,' allowing us to seek out opportunities for new landbank acquisition to maintain the growth strategy in our development business.” he said.

The company recently acquired two parcels of leasehold land totaling 80.94ha for RM44mil, which is adjacent to Bandar Saujana Utama.

By The Star

GuocoLand expects 18% yield from PJ City, PJ Corp acquisitions

KUALA LUMPUR: GuocoLand Malaysia Bhd expects a firm yield of 18% from the recent related party transaction to purchase PJ City Development Sdn Bhd and PJ Corporate Park Sdn Bhd from Guoline Asset Sdn Bhd and MPI Holdings Sdn Bhd respectively.

GuocoLand’s shareholders yesterday approved the resolution at an extraordinary general meeting held at Wisma Hong Leong because of the good prospects of these developments given their locations, its senior public relations manager, Leslie Lim, said.

“The company (GuocoLand) expects per annum returns of 18% from these developments and of course this will be dependent on the economic situation as well,” Lim told StarBiz, citing some research documents.

After the approvals, GuocoLand will proceed and buy PJ City for RM29.79mil from Guoline Asset; and will then purchase PJ Corp from MPI Holdings for RM258,000.

These companies house developments which are mainly parked under PJ City, including commercial land of 3 acres which already has existing buildings on them as well as an industrial land of 7.75 acres fronting Jalan 225, PJ.

GuocoLand said it would develop the industrial land for factories after tenancy agreements for the open air carpark and the cement batching plant expires on March 31, 2012.

The purchases of PJ City and PJ Corp would be funded entirely from borrowings which would increase its gearing ratio basing on its shareholders’ funds from 1.13 to 1.20, the shareholder statement said.

The purchase of PJ City also took into consideration the unaudited net tangible assets (UNTA) of PJ City of RM8.77mil as at Oct 31, 2011 and after adjusting for the total market value of the land at RM72.5mil, it said.

“Guoline Asset is a wholly-owned subsidiary of Hong Leong (Co) Malaysia Bhd (HLC) and its original cost of investment in PJ City was RM5mil,” it added.

The purchase of PJ Corp also took into consideration of the UNTA at RM258,375 as at Oct 31, 2011 while there was no valuation had been undertaken on the two units of low-cost houses owned by PJ Corp.

MPI’s original cost of investment in PJ Corp was RM265,000 which was made on May 4, 2011.

By The Star

Perak Corp unit enters joint venture

PETALING JAYA: Perak Corp Bhd subsidiary PCB Development Sdn Bhd has entered into a heads of agreement with Sanderson Project Development (Malaysia) Sdn Bhd (SPDM) for a joint venture to develop and operate an international standard animation theme park, resort hotel and serviced apartments in Ipoh. The project has a gross development value of RM506.7mil.

Perak Corp told Bursa Malaysia yesterday that the intended equity participation in the joint venture shall be 20% to be held by PCB Development and the balance 80% by SPDM.

“SPDM will negotiate with third parties in relation to raising funds for the JV to develop the project,” it said.

PCB Development is the land owner and developer of BioD City at Bandar Meru Raya, Ipoh. BioD City is a master-planned development comprising residential, commercial, retail and leisure precincts.

SPDM is a special-purpose vehicle set up particularly for the project by Sanderson Group Pty Ltd group of companies, which is engaged in the design, construction and operation of international tourist and leisure destinations around the world.

“The rationale of the project is to fulfil the BioD initiative development as well as to complement the developments of BioD City and BioD Eco-Tourism undertaken by the PCB Group to facilitate the national strategic policies providing various conducive environments for optimal economic growth,” Perak Corp said.

The heads of agreement will enable the contracting parties to negotiate on an exclusive basis the formation of the joint venture for the purpose of developing and operating the project.

The joint venture will enter into a turnkey construction contract with SPDM, or a company under the Sanderson Group, to provide turnkey construction services to develop the project which will include the design, fabrication, construction, project management and operations establishment of the project.

By The Star

PCB, Sanderson to cooperate on RM507m project

IPOH: Perak Corp Bhd (PCB) says its unit, PCB Development Sdn Bhd, has teamed up with Sanderson Project Development (Malaysia) Sdn Bhd to develop an animation theme park, resort hotel and serviced apartment here with a gross development value of RM506.7 million.

In a filing to Bursa Malaysia, PCB said a joint venture would be formed between the two partners, with PCBholding a 20 per cent stake and Sanderson Project the balance.

PCB is the developer of BioD city at Bandar Meru Raya here, a key development comprising residential, commercial, retail and leisure precincts. Sanderson Project is a special purpose vehicle set up particularly for the Perak venture by Sanderson Group Pty Ltd.

By Business Times

PNB projected to get more than 5.5% yield from latest London office

PETALING JAYA: Permodalan Nasional Bhd's (PNB) latest and fourth purchase of a London office building is expected to have a yield exceeding 5.5%, a source familiar with the deal said.

PNB is expected to seal the purchase of Woolgate Exchange at 25, Basinghall Street in London by the end of this month, bringing its total investment in UK properties to more than £1bil in a span of four months.

On Thursday, group president and chief executive officer Hamad Kama Piah Che Othman told Bernama that “PNB has changed”.

“In the past, it was shares but now we are looking at real estate which would bring in stable returns,” he said.

Inclusive of its purchase of Santos' Place, in Brisbane, Australia, PNB has spent RM4.9bil on both continents. PNB bought Santos' Place for A$290mil in August 2010. Since then, it seems to have shifted its focus to the prime London.

According to several websites, the principal tenant in Woolgate Exchange is German bank West LB. The lease is until 2020. The next rent review is in three years, in 2015.

According to two London-based websites, the selling price for Woolgate Exchange was set at £290mil (RM1.4bil). The 350,000-sq-ft office building was constructed in 2000 and has an annual rent of more than £7mil.

In 2006, the same property was purchased by Irish property investment group D2 Private for £325mil when British property prices were on an uptrend.

The nine-storey building, which comes with a basement floor, is located within 150 metres of the Bank of England, a salient feature of the property considering that London is famed for its financial centre status.

PNB has attracted the interest of the British property fraternity when it bought a 12-storey office space in Milton & Shire House on 1 Silk Street for £350mil in December.

Earlier this month, it acquired two other properties, 90 High Holborn and One Exchange Square, from German fund manager KanAm for £500mil.

By The Star