Hotel sector in for steady growth

Government’s push to promote tourism will help improve tourist arrivals and receipts

PETALING JAYA: The local hospitality sector can look forward to a steady growth this year, given the number of initiatives to promote the tourism industry, property consultants said.

Knight Frank in its Second-Half 2011 Real Estate Highlights report said the local hospitality sector remained optimistic that performance levels would show steady growth.

It said this was despite analysts predicting moderating economic expansion ahead as a result of slowing external demand and continued uncertainties in the Middle East, Europe and the United States.

“Moving forward, the Government will seek to enhance various sector-specific initiatives that focus on high-yield visitors, in particular business and medical tourism. The Budget 2012 announcement will keep the 4-star and 5-star hotel category at the forefront of development opportunities with the provided benefits in the form of tax exemption or allowances.

“With concerted efforts from all parties, Malaysia will remain well positioned to retain its ranking among the global top 10 tourist arrivals and top 15 tourist receipts,” the report added.

Knight Frank said tourism contribution to gross national income was expected to almost triple the 2010 figure of RM34bil to RM94bil by 2020 (ranked the fifth-largest contributor to national economy in 2010).

The growth-centred Budget 2012, announced in October last year, is generally well received by the wider hospitality sector.

In the Budget, the Government has pledged to assist the private sector in developing more international standard accommodation to attract a higher number of tourists through a “pioneer status” income tax exemption of 70% or an investment tax allowance of 60% for five years for new 4-star and 5-star hotels in Peninsular Malaysia.

CB Richard Ellis Research, in its fourth quarter 2011 report on Kuala Lumpur's hospitality sector, said it hoped the various initiatives under the Economic Transformation Programme would be successful in stimulating demand, especially in raising tourist arrivals and average spending.

It also hopes that growing tourist arrivals from China, India and the Middle East would compensate for the likely continued decline from struggling Western economies.

“Tourism Malaysia is maintaining its target of 36 million annual visitors by 2020 with an estimated revenue of RM168bil, up from 24.6 million tourists with revenue totalling RM56.4bil in 2010,” the report added.

It said the hospitality market performed better in the last quarter of 2011 compared with the same period in 2010, led by improvements in overall occupancy rates for 3-star to 5-star hotels.

Although Kuala Lumpur had some of the lowest room rates for luxury hotels in the region, the announced redevelopments in the city centre would add to the growing quality of the city's hospitality market, it added.

The Knight Frank report said industry leaders had now fully recognised the importance of the MICE (meetings, incentive, convention and exhibition) industry as a major contributor to the economy.

The Tourism Ministry, which established MyCEB (Malaysia Convention and Exhibition Bureau), plans to further strengthen the nation's tourism brand and grow the total number of conventions and exhibitions held on home soil.

The number of MICE visitors is expected to reach 1.3 million for 2011 with RM10.8bil in receipts (2010: 1.28 million visitors and RM10.6bil receipts).

It said the Government's concerted efforts to attract more arrivals from the BRIC economies (Brazil, Russia, India and China) through various measures, including a simplified and shortened visa application process, had shown excellent results with recently released figures showing the number of Chinese tourist arrivals increased by 57% between January and July 2011.

As at November 2011, there was a total stock figure of 17,862 hotel rooms in Kuala Lumpur. The supply figure of 4-star and 5-star hotel rooms in the city currently stands at 7,667 and 10,195 respectively.

During the review period, average occupancy rates for 4-star and 5-star hotels in the city registered increases to 72% (first half 2011: 69%) and 71% (first half 2011: 68%) respectively.

Both occupancy and average room rates (ARR) for 4-star and 5-star hotels have shown an improvement over the second half of 2011 review period to November.

The ARR for 4-star hotels was recorded at RM214 (first half 2011: RM209), reflecting a 2.39% increase, while the 5-star category saw a 1.18% increase to RM343 (first half 2011: RM339).

Knight Frank said that during the second half of 2011, Kuala Lumpur's hotel market maintained a reasonable performance with steady improvements in the tourism industry.

“This sub-sector continued to perform well on the back of an increasing number of promotional activities and Kuala Lumpur's growing reputation as a dynamic and competitive shopping hub and host for global sporting events (such as Le Tour de Langkawi, F1 Grand Prix, PGA and LPGA Tours, ATP World Tour, EPL pre-season tours for Arsenal, Chelsea and Liverpool) and business/conference events,” it added.

By The Star

Asian Land helping Aussie developers sell boutique properties

KUALA LUMPUR: Asian Land Realty, which is mulling to float its shares on the local or overseas bourse in five years, is helping several Australian developers to market their boutique developments here.

Asian Land is a local diversified real estate service provider and it helps developers from Australia, the UK and Hong Kong to market and sell their properties here, and vice-versa.

Its business development manager Alvin Lee Jern Fah said the company is introducing several boutique developments in Melbourne, currently the city most appealing to local home buyers and investors.

According to Lee, Melbourne offers good investment properties that have capital appreciation of seven to 10 per cent and rental yield of four to five per cent.

"Whether good or bad times, it is always a good time for Melbourne. The market has softened recently and we expect it to bounce back in the next one to two years.

"Nevertheless, there is still strong interest among Malaysians who continue to buy properties there because of its close proximity to major universities and shopping areas," Lee told Business Times.

At central Melbourne, Asian Land is selling 18 refurbished apartments worth a combined A$7.42 million (RM23 million) at 233 Collins Street@Melbourne Central Business District.

In the east Melbourne, it is selling 20 designer apartment units at 888 Glenhuntly Road@Caulfield South worth A$11.93 million (RM37 million), and on the west it has eight boutique townhouses worth A$4.03 million (RM12 million) at 28 Eleanor Street@ Footscray.

In north Melbourne, the company is selling four boutique townhouses worth A$1.81 million (RM5.5 million) at 1062 Sydney Road @ Fawkner.

Lee said Asian Land has a policy to be transparent at all times and sell properties at developer's prices to capture market share and compete with the big boys.

"We don't jack up the prices so there will not be any shortfall on the buyers' part when obtaining the loan or evaluating the property," Lee said.

By Business Times

Offers of cheap homes

KUALA LUMPUR: Beginning today, about 7,000 public housing tenants in the federal capital will receive offer letters under the People's Housing Programme of the National Economic Action Council and Dewan Bandaraya Kuala Lumpur Public Housing.

Federal Territories and Urban Well-being Minister Datuk Raja Nong Chik Raja Zainal Abidin said the offer letters would be sent by the DBKL Housing Department to their homes.

He said those who received offer letters would be given a month to reply if they took up the offer to buy the houses as the purchasing process would take between three and six months.

“We will not force them to accept the offer letter,” he told reporters after opening the Federal Territory 2011 Excellent Students Awards here yesterday.

The financing scheme was announced by Prime Minister Datuk Seri Najib Tun Razak on Jan 28 to assist the lower-income group currently renting units of People Public Housing and DBKL public housing to obtain loans to buy the units they are already residing in.

According to Raja Nong Chik, the 7,000 involved were the first group of tenants under the first phase of the loan from the Employees Provident Fund totalling RM300mil.

Earlier, he presented the Federal Territory Caring Scheme payment of RM2,500 each to the first 20 recipients.

At the ceremony, he also presented certificates of appreciation and cash to 320 excellent students of Ujian Pencapaian Sekolah Rendah (UPSR), Penilaian Menengah Rendah (PMR), Sijil Pelajaran Malaysia (SPM) and Sijil Tinggi Persekolahan Malaysia (STPM) in Kuala Lumpur.

Meanwhile, Federal Territory Foundation executive director Datuk Mohd Idris Mohd Isa said all the students were selected by the Federal Territory Education Depart-ment, community leaders and schools.

He said for Labuan Federal Territory, 54 excellent students in PMR and SPM would receive similar incentives today.

He said about RM600,000 had been allocated for the programme this year.

By Bernama

Langkawi, Penang get NCIA boost

AN INTEGRATED golf resort in Langkawi, premium shopping outlets on mainland Penang along with the scaling up and strengthening of padi farming in irrigated areas are part of 26 entry point projects (EPPs) which have been identified by the Northern Corridor Implementation Authority (NCIA) for the northern region from 2012 and beyond.

The authority's chief executive Datuk Redza Rafiq told Business Times the EPPs, which are projected to generate some RM17.46 billion in gross national income (GNI), will also include the creation of a central automotive logistics hub in the port area to support automotive players like Naza and Sime Darby and their export markets.

"We want to bring up the tourism and logistics sectors to the same momentum as we have done so far with manufacturing and agriculture," he said in an interview.

In developing premium shopping outlets on mainland Penang and introducing unique retail concepts, Redza noted that that it will involve RM736 million in private sector funding and see the creation of 5,418 jobs.

"In developing a northern cluster 'Straits Riviera'," he added, "enablers to facilitate greater cruise arrivals into Langkawi and Penang will be developed.

"This will involve the revitalisation of a 2km radius of the areas of the respective ports."

While the federal government will provide RM15 million in funding for this initiative, private funding will see RM169 million ploughed into it, and this expected to see some 3,671 jobs created.

Also on the drawing board in giving tourism development a boost are dedicated entertainment zones in conducive areas in Penang and Langkawi, where the private sector will invest RM371 million.

"The government will also plough in an estimated RM52 million for the development of two new convention centres, events development and the establishment of a meetings, incentives, conventions and exhibitions bureau in Penang," Redza said, adding that shell sites will also be established for incentive events.

In uplifting the northern region's logistics sector, Redza said the proposed "One Auto Hub" will involve RM770 milluion in private funding.

"Our aim is to attract the small- and medium-sized players who have been squeezed out from Thailand's Rayong Province which serves as centres for the auto and chemical industries," he added.

Out of the 26 EPPs, about RM6.6 billion investments will involve 13 city initiatives to improve public transport, provide affordable quality housing, maintain green spaces and waste management.

A total of 70,565 new jobs are also expected to be created from the 26 EPPs.

By Business Times

Businessmen shying away from pre-war shophouses in Kuala Lumpur

THERE is no denying that the mention of Kuala Lumpur old city, which covers Medan Pasar, Chinatown and Little India, conjures images of old, empty and decaying shophouses despite the area’s hustle and bustle, as well as the heritage value.

Unlike the situation in Penang and Malacca, businessmen and investors are still shying away from the pre-war shophouses in Kuala Lumpur in spite of a heightened awareness on heritage preservation.

The business rows here are interspersed with dust-collecting lots that are not taken for years, their unique architecture and frontage carvings eroding away by the day.

What’s more heartbreaking, is the emergence of foreign workers’ ghetto in these areas, enveloping the heritage area with appalling filth and noise.

Eyesore: This row of pre-war shophouses along Jalan Tuanku Abdul Rahman seem to have taken in new occupants, creepers and trees. — By YAP CHEE HONG / THE STAR

The intersection of Jalan Tun Tan Cheng Lock and Jalan Tun H.S. Lee reveal a sorry sight, major banks and retail labels were there years ago but never came back. Many lots at one end of Jalan Tuanku Abdul Rahman face the same fate.

Along Jalan Tun H.S. Lee, empty lots are splashed with real estate agents’ contact numbers to “shout” for attention but somberness stays on year after year.

“The rents have gone too high,” said a businessman in Jalan Tuanku Abdul Rahman.

“It’s RM10,000 a month for an old, shaky unit. The owner does not want to do repairs, and not many tenants can afford to fix these old problems, much less coming out with the money to do the so-called conservation.”

He said most of his neighbours used the buildings for stock storage because this quiet part of the road hardly attracted passers-by.

Rotting away: This pre-war lot sitting near the intersection of Jalan Tun Tan Cheng Lock and Jalan Tun H.S. Lee was at one time occupied by a major hypermarket chain but is now left to rot.

The historical value of these pre-war buildings is no doubt immeasurable but the reality is, the costs involved in maintaining or restoring its past glory would also be immense.

Malaysian Institute of Architects (PAM) president Saifuddin Ahmad gave a comparison: it can be cheaper to demolish the whole building and build a new one, than to carry out proper conservation.

We trust that DBKL know what’s best for the building but we will still advocate if it’s not done properly. If given the opportunity, we would like to continue managing the building as we’ve helped to keep it to what it is today. —SAIFUDDIN AHMAD

Building conservation is a specialised area in architecture. Malaysia may have produced internationally known conservation architects such as Lawrence Loh and Mike Boon, but not all architects are capable of doing conservation in the real sense, he said.

Furthermore, not many contractors are equipped with the know-how even though the National Heritage Department does offer a course on the subject, he said.

“As you can see, many ‘conservations’ do not do justice to the building,” he added.

He said aside from specific methods, conservation also required special building materials which meant additional costs. “You may even need to custom-make the bricks because the sizes are different,” he said.

In disrepair: Some of the abandoned pre-war buildings near Masjid Jamek LRT station.

Private ownership of the heritage buildings is in most cases a major hindrance to conservation efforts, too.

“PAM published a book on shophouses in 2007 in view of the string of old buildings demolished in the name of development.

“However, PAM can only advise and advocate but at the end of the day, it’s the still the owner’s call,” he said, citing the case of Bok House in Jalan Ampang.

In other words, if the owner decides to leave their time-honoured building to rot away, there is nothing much the others can do.

Likewise, Saifuddin said the institute was concerned about what would happen to the Loke Mansion, where PAM had called home for the past 41 years, after Kuala Lumpur City Hall (DBKL) has taken over.

“We trust that DBKL know what’s best for the building but we will still advocate if it’s not done properly.

“If given the opportunity, we would like to continue managing the building as we’ve helped to keep it to what it is today,” he said.

Real Estate and Housing Developers’ Association (Rehda) vice-president Datuk Soam Heng Choon said heritage buildings in Kuala Lumpur might not attract the interest of developers as they came with a lot of restrictions on development.

“The architecture has to be preserved and therefore the density is very low.

“Moreover, these buildings are usually located in prime areas, the high real estate prices add to development costs.

“You need someone with not only deep passion, but also financially sound to take over heritage buildings and keep them in good shape, this is why most people are shying away from them,” he added.

Saifuddin proposed involving public and private bodies to set up a fund for heritage conservation to help owners who cannot afford the high costs.

If that cannot be done, he said the government could acquire the buildings to carry out conservation in view of the deterrents mentioned above.

Alternatively, he said, the government should provide some form of incentives for companies to take up heritage conservation projects.

“If you look at some matured cities, the new and old can co-exist while the city progresses,” he said, stressing that many places in Kuala Lumpur, especially Sungai Besi Old Town, should be carefully conserved to offer locals and tourists a glimpse into the past.

“You do not need to look far, Malacca, Penang and Singapore have done wondrous projects on this,” he highlighted.

On the other hand, Soam felt that the models in Penang, Malacca and Singapore where heritage buildings had their exterior preserved and polished, and interior enlivened with various usages ranging from eateries to guesthouses, would not work in Kuala Lumpur without a push from the government.

Home for the homeless: A vagrant is seen sleeping on the walkway of an unused pre-war shophouse located near the intersection of Jalan Tun Perak and Jalan Tuanku Abdul Rahman.

“There must be a theme for these areas, then only it will work. Otherwise, developers will not be interested as the development will not evolve fast enough for them to generate the desired returns.

“On top of that, there bound to be owners who refuse to sell their properties,” he added.

Nonetheless, DBKL has several initiatives in place to upkeep areas with historical value.

Corporate planning manager Dr Ismail Stapa said DBKL had been carrying out periodical inspections, by serving painting and cleaning notices to the building owners to ensure that they maintain and retain their premises with heritage value.

He also highlighted City Hall’s upgrading and beautification programmes along the KL Heritage Trail and Medan Pasar which involved repainting building façades, rearranging signage on the buildings’ facades, enhancing lighting impact on the buildings’ façade as well as assembling “mock-up façade” for selected buildings.

“The buildings in Medan Pasar, Leboh Ampang and Jalan Tun Perak are sited within Secondary Heritage Zone under the Kuala Lumpur City Plan 2020. Some of the buildings have been demarcated as Category 3 Heritage Buildings, which means the original façade has to be conserved.

“Meanwhile, for non-heritage buildings within the Secondary Heritage Zone, the architectural elements and character should be retained,” he added.

By The Star

IGB proposes REIT, comprising The Gardens Mall, Mid Valley

KUALA LUMPUR: IGB Corp Bhd has proposed to set up and list a real estate investment trust (REIT) on the Main Market, comprising of two malls in Kuala Lumpur.

It said on Monday the initial properties would comprise of The Gardens Mall -- which is eight-storey retail mall -- and Mid Valley Megamall, which is a five-storey retail mall with one mezzanine floor.

These properties are currently owned by IGB's subsidiary, KrisAssets Bhd.

“In conjunction with the proposed REIT establishment and listing, IGB has today acquired a newly established subsidiary, IGB REIT Management Sdn Bhd, to act as the proposed management company for IGB REIT,” it said.

By The Star