Property players see price rise in Penang

A general uptrend in Penang property prices is expected this year as property developers offer better quality products to more discerning buyers.

Penang-based property players interviewed by Business Times have cited construction material prices and inflation as reasons for them to price their units higher this year.

They, however, gave no indication on the quantum of the price increase.

"Despite the risk of price increases in raw materials, the outlook for the property market remains positive this year," SP Setia Bhd general manager S. Rajoo said.

"As the population increases, the demand for properties will increase as well," he added.

Rajoo said available property units in the state have been decreasing tremendously over the past 10 years due to strong demand for selected property types.

"We anticipate demand for landed properties to remain strong, due to the scarcity of land in Penang."

Eastern and Oriental Bhd said the prices of its properties are determined closer to their launch dates and hinge on prevailing market conditions, raw material prices and market sentiment.

E&O owns and develops Seri Tanjung Pinang masterplan township on Penang island that offers a range of properties including landed homes and high-rise residences by the sea.

"Consumers are highly discerning nowadays and they desire a complete package which includes built-in wardrobes and cabinets, quality fittings along with fine finishing and appliances, said its executive direc-tor Eric Chan Kok Leong.

"This in turn affects the eventual pricing of properties," Chan added.

Hunza Properties Bhd group executive chairman Datuk Khor Teng Tong concurred, saying that the rising trend in property prices tend to reflect an upgrading of quality for the said units.

"As buyers demand for better and higher quality, the price of building materials and land contribute to this rising trend," he said, adding that demand for properties in Penang continues to be strong for residential units in the face of a supply shortage.

For Ivory Properties Group Bhd, better finishings and amenities, teamed with larger liveable spaces are expected to result in a higher range of property offerings.

"With impending inflation, increase in prices of construction materials and factors such as all government-driven economic programmes like the Economic Transformation Programme, National Key Economic Area and the economic corridors which are due to drive the economy towards a higher per capita income, we foresee mid- to high-end properties continuing to be in demand," said its deputy chairman Datuk Seri Nazir Ariff Mushir Ariff.

Ivory's ongoing and upcoming projects in the first half of the year, he noted, will comprise commercial, landed residential and high-rise residences in Penang.

IJM Land Bhd, whose flagship "The Light" development is set to keep the company busy for the next 12-15 years, is looking at a slight price increase for its offerings.

IJM Land general manager Toh Chin Leong cited construction materials and inflation as reasons for the revision of prices.

With a gross development value of RM5.5 billion, The Light is a 60.8ha freehold waterfront development which will be built over the next 11 to 15 years.

"We had a good year in 2010 and we foresee the market to be stable and consistent and look forward to another good year ahead," Toh said.

By Business Times

Firm aims for top spot in property management

SUBANG: Andaman Property Management Sdn Bhd (APM), which is currently building and managing 10 ongoing property projects locally, aims to be the country's leading property management and property related services company.

Its executive director (sales and marketing) Datuk Vincent Tiew said from Jan 2011 onwards, the company would be launching and managing at least 10 properties worth RM2bil simultaneously.

Tiew said of 10 projects it currently managed, four belongs to the Andaman group.

“And we anticipate more developers and landowners to request for our services this year,” Tiew told StarBiz, adding that APM's business model was to develop and manage properties while generating high yield and fast turnaround for developers and landowners.

APM was formed in 2009 by some of the management members of the Andaman Group, an established property developer.

“After honing their skills in property development and managing properties of the Andaman Group, they decided to form an independent company, which is how APM was incorporated,” Tiew noted.

On its business model, Tiew said: “We want to be a leader in the industry in the country and build a strong track record of developing, maintaining and adding value to the properties that we manage in terms of yield, occupancy rates and capital gain for our clients, including property buyers.”

He said when APM was given the go-ahead to develop and manage a property project, it would first be looking to fulfill the developers expectation of the property project in terms of commercial reality, yield, bottom line.

“And our work starts from the onset of planning, authority management, construction and building maintenance to units selling, project administration and securing of strata-title. We also provide developers and landowners advice on how to best position the property development in terms of architectural design and other value-added services in line with developers/landowners expectations,” Tiew said.

On pricing he said: “We built shop lots and residential developments with per unit prices ranging from RM2mil to RM10mil and RM350,000 to RM1mil respectively.”

APM targeted its properties at the mass market to ensure that they remain in demand, even during the downturn, Tiew said, adding that for certain properties, buyers were guaranteed with return on investment.

APM's current property projects for the Andaman Group include Kota D'Sara with gross development value (GDV) of RM125mil, and Casa Residenza (GDV: RM180mil), both located in Kota Damansara. APM plans to launch the The Academia@South City Plaza in Seri Kembangan and the RM700mil The Arc@Cyberjaya in Cyberjaya.

By The Star

Bina Puri upbeat on cracking RM1b mark

The company expects 2011 to be one of its better years since its listing in 1995, says Bina Puri's group managing director

BINA Puri Holdings Bhd, which is expanding its business, is bullish that revenue will surpass RM1 billion this year, its chief said.



"This year is all about execution of projects and finishing existing jobs. We expect 2011 to be one of our better years since our listing in 1995," group managing director Tan Sri Tee Hock Seng told Business Times.

In 2010, Bina Puri secured projects worth RM2.5 billion. Among the contracts it won were the Ampang light rail transit line extension, the low-cost carrier terminal in Sepang, the Kuala Lumpur-Kuala Selangor Expressway privatisation project and building ramps and a main line bridge for the Eastern Dispersal Link in Johor.

The company hopes to maintain the rate of new contracts this year by securing RM2.5 billion worth of work.
It has bid for building and infrastructure projects worth over RM2 billion, in Malaysia, Thailand, Brunei and the Middle East.

For the nine months ended September 30 2010, Bina Puri posted a net profit of RM8.13 million on revenue of RM861 million. In 2009, Bina Puri made RM6.4 million on revenue of RM780.1 million.

Tee said the company's order book of RM3.3 billion will help improve its earnings for the next two to three years.

Meanwhile, Tee said Bina Puri is on a drive to expand its property division, which contributes less than 10 per cent to its revenue and net profit.

Bina Puri ventured into property development in the 1980sas a boutique developer.

Some of its prime projects include Bukit Idaman township in Selayang and Jesselton Condominium in Kota Kinabalu, Sabah.

Tee expects contribution from the division this year to be in the region of 15 per cent with RM900 million worth of housing projects in Klang Valley, Johor and Sabah.

"We want to expand the division because of the higher margins that can be made from property development. We don't want to be too dependent on construction, which is harder to take on," Tee said.

By Business Times

GAIM seeks to invest more in Iskandar

Berinda Group chief executive officer and Tanjung Bintang group managing director Frank Goon Swee Kheong (right) briefing Johor Baru mayor Jaafar Awang (centre) and Charlie Taka on the Molek Pine 3 Tower.

The Macau firm has just acquired two condo blocks there for RM200mil

JOHOR BARU: Global Asia Investment (Macau) Ltd (GAIM) is looking to invest in more property projects in Iskandar Malaysia following its initial foray into Johor Baru market.

Chief executive officer Charlie Taka said the prospects in Iskandar Malaysia were good and the company wanted to benefit from long-term growth of Malaysia's first economic growth corridor.

Headquartered in Macau, GAIM is an asset-building consulting company with 10,000 members. It assists its clients, who are mostly Japanese, in investing overseas.

“Iskandar's close proximity to Singapore and its strategic location in the region is the major selling point to attract investors from all over the world,'' Taka told StarBiz at the ground-breaking ceremony of Molek Pine Tower 3 project here recently.

He said like Chinas' Shenzhen, which benefitted from the economic spillover of Hong Kong and Macau, Iskandar would benefit from Singapore's position as an international trade and financial centre.

He expects Iskandar to be fully developed in 10 years although Iskandar Regional Development Authority, under its Comprehensive Development Plan, has set a target for the economic corridor to become an international metropolis in 2025.

Meanwhile, GAIM has purchased the two condominium blocks at Molek Pine Tower 3 from Tanjung Bintang Sdn Bhd for RM200mil. The blocks would be used for its “Malaysia My Second Home” programme for its Japanese clients.

The project comprises a 28-storey tower block with 212 units and a six-storey block with 36 units on a 2.42ha site in Taman Molek.

The units will have built-up areas of 1,300 to 2,300 sq ft. The condo, with selling price from RM500,000, is expected to be completed in two years.

It is being developed by Tanjung Bintang, a unit of the Berinda Group, which in turn is a property development arm of the Kuok Group. Taman Molek was launched in 1990 and now has about 5,000 residential and commercial units.

“With European and the US economies still have a long way to recover and Japan's economy not in a good shape either, we are focusing on China and Asean countries for investments,'' said Taka.

He said GAIM would look at several options when investing in Iskandar including joint ventures with local partners, buying properties en bloc and acquiring stakes in companies.

Taka said apart from Iskandar, the company also had property investments in Kuala Lumpur and Penang.

GAIM, which has a revolving fund of RM500mil, has similar investments in Canada, China, Cambodia, Europe, Hong Kong, Japan, Macau, Thailand, the United States and the Philippines.

By The Star

Abu Dhabi's Tasweek buys Superboom stake

Abu Dhabi-based Tasweek Real Estate Marketing and Development is buying a minority interest in property developer Superboom Projects Sdn Bhd.

Superboom is developing the RM250 million high-end condominium project named The Haven Lakeside Residences in Ipoh, Perak.

The deal was signed last weekend. Superboom chief executive officer Peter Chan declined to specify the stake size nor the amount paid by Tasweek.

"This is a strategic alliance between us and Tasweek to take on more projects in Malaysia. They were very impressed with our development and have decided to invest in Malaysia," said Chan.

He added that the group will provide funds for the project and market the units in the Middle East.

The deal comes just a week after Superboom appointed Best Western International Inc, one of the world's largest hotel chains, to manage, market and lease the units internationally.

Set for completion in 2013, The Haven will see its three 26-storey towers with 165 units each becoming the tallest buildings in Perak.

China's Beijing Construction & Engineering and Bina Puri Holdings Bhd have been given a contract worth RM109 million to construct the buildings.

According to Chan, 85 per cent of Block A and 60 per cent of Block C have been sold to property investors in Malaysia, Singapore, Hong Kong, India, Europe and the Middle East in the last nine months.

Block B was launched last weekend and he expects half of the building to be sold within three to six months.

Buyers are attracted to The Haven as it overlooks a 1.6ha private natural lake with running water, a 14-storey high monolithic limestone rock formation, and the existing 280 million-year-old limestone hills.

The Haven is aimed to be among the first developments to embark on all feasible avenues of harvesting nature's renewable and sustainable resources such as wind, water, bio-gas and pro-active mechanical resources to power and maintain common areas.

By Business Times

Glomac rides on niche projects

Some of the completed units at Suria Residen, a low-density, gated housing developed by Glomac in Cheras.

PETALING JAYA: Glomac Bhd, a medium-sized property outfit, is on an exciting growth path as it undertakes more niche developments with fast turnaround time in Greater Kuala Lumpur.

The company has a broad range of affordable to higher-end projects. Its 13 ongoing projects include townships in Sungai Buloh and Rawang in Selangor and in Kota Tinggi, Johor, as well as some niche residential and commercial projects in Greater Kuala Lumpur.

For the six months ended Oct 31, 2010, its revenue surged 98.5% to RM267.2mil while pre-tax profit rose 87.5% to RM61.5mil. Net profit attributable to shareholders grew 78.4% to RM31.4mil.

In a recent note, ECM Libra Research said Glomac was on the brink of higher earnings and land bank.

An analyst with a local brokerage concurred, saying the company could look forward to strong double-digit growth of at least 30% over the next three years.

As at end-October 2010, Glomac has unbilled sales of RM572mil, which will be one of its key earnings growth drivers, going forward.

For the financial year ending April 30, 2011, Glomac has set a sales target of about RM500mil.

Going forward, the company can look forward to growing contribution from some of its key ongoing projects like Glomac Tower, Glomac Damansara, Glomac Cyberjaya and Bandar Saujana Utama.

Glomac Damansara Residences, a 2-tower serviced apartment project with an estimated GDV of RM240mil, is set for soft launch in the middle of next month.

Other projects earmarked for launch over the next 12 months will have a combined GDV in excess of RM1bil.

These include a boutique mall in Glomac Damansara with an estimated GDV of RM145mil, Glomac Al Batha Mutiara serviced apartments (RM250mil) and Glomac Utama, a mixed development within the vicinity of Bandar Utama (RM400mil).

One of Glomac's core strategies is to acquire land bank that offers potential for prime and sizeable greenfield developments in Greater KL.

Its recent acquisitions include a 200-acre parcel in Puchong and seven acres in Cyberjaya.

The Puchong land, purchased at RM8.84 per sq ft, has a potential GDV of RM800mil. Glomac will start developing it in about 12 months and the project will comprise terrace and semi-detached houses as well as villa apartments.

The seven acres of commercial land in Cyberjaya were purchased at RM90 per sq ft.

The mixed commercial project planned for this year will have an estimated GDV of RM250mil. It will be an extension of the ongoing Glomac Cyberjaya project launched about two years ago.

Glomac was founded in 1988 by two entrepreneurs, Tan Sri FD Mansor and Datuk Richard Fong.

The company was listed on Bursa Malaysia main board on June 13, 2000. In 2003, it received ISO 9001:2000 certification.

Glomac has completed about 15,000 residential and commercial units with sales totalling RM4bil. It has also completed 5.4 million sq ft of commercial space.

The completed high-end residential developments include gated-and-guarded communities of Aman Suria Damansara in Petaling Jaya, Lakeside Residences in Puchong and Suria Residen, Cheras.


Suria Stonor being developed by Glomac in Kuala Lumpur.

Suria Stonor, a luxury condominium in the vicinity of Kuala Lumpur City Centre, is Glomac's jewel in the crown.

In late 2007, Glomac acquired a 1.3-acre site opposite Petronas Twin Towers and developed it into Glomac Tower, the company's first commercial high-rise project in Kuala Lumpur.


Artist’s impressions of Glomac Tower.

Glomac Tower, a grade A commercial building, has been sold en-bloc at a record price of RM1,120 per sq ft. The project will be completed in the middle of this year.

In 2006, Glomac made two overseas investments. They comprised an office building with car parking lots in Melbourne and a “built-to-suit” warehouse in Bangkok. Both are contributing steady rental yields to the group.

Glomac is now helmed by Datuk FD Iskandar, who is group managing director-cum-chief excutive officer.

The group comprises about 40 subsidiaries involved in every facet of real estate business including property development, property investment, construction, property management and car park management.

By The Star

All eyes and ears on second MRT

KUALA LUMPUR: The second mass rapid transit (MRT) line, which circles the Kuala Lumpur city centre (KLCC) orbital and known as the “circle line”, is already in the final planning stage.

The details are expected to be announced in March.

“Its alignment must depict the current and future business districts in Kuala Lumpur,” said Minister in the Prime Minister's Department and chief executive officer of Pemandu Datuk Seri Idris Jala during an Economic Transformation Programme (ETP) update to analysts and fund managers recently.

In the longer term, a third line to Port Klang was being comtemplated, he said. The circle line is expected to cover the hotspots surrounding the KLCC, Jalan Bukit Bintang, the new Kuala Lumpur International Financial District in Dataran Perdana, KL Ecocity, Pusat Bandar Damansara and Sentul, among others.

Meanwhile, the “blue line” the first line which is a 50km alignment that covers Sungai Buloh to Kajang, via Pusat Bandar Damansara and Bukit Bintang is slated for completion in 2016. The network of all the three MRT lines will be fully operational by 2020.

“Greater KL now has a population of 6 million people. By 2020, we will have 10 million people. If we don't have the MRT, the city will be choked. Right now, nearly everybody drives. This is not sustainable,” said Idris.

He added that currently 13% of people commuted using urban transportation. Under the ETP, Idris said this should increase to 50%, adding that the funding structure for the MRT would be disclosed by end-February.

“Apart from reducing travelling time, the MRT will also cause property prices to appreciate because of better accessibility. If your house is near the MRT station, prices will go up because of the commercialisation created around the area,” said Idris.

Some analysts are wary of the ambitious plans laid out by Pemandu.

“As usual, it's a case of execution. Will the Government be able to actually implement the project? We'll need to see it being done to believe it. More importantly, how is the Government going to fund this project?” asked a construction analyst.

Another analyst said the Government was likely to reduce cost by getting developers to co-fund some of the MRT stations.

On implementation, he said that Pemandu would have learnt from past lessons of the LRT, monorail and commuter train.

Some brokers have notably been able to analyse the impact of the proposed MRT comprehensively.

In a Malaysia Market Strategy Report titled “Property boom-boom” released on Jan 26, global investment bank UBS' head of research Chris Oh said Malaysia was set to enjoy improved connectivity in the coming years with the proposed infrastructure rollout of the MRT system and possible high-speed rail linkage between Kuala Lumpur and Singapore.

He said the MRT captured the imagination of the people, developers and investors. He expects property value around a radius of 20km of the city centre to rise significantly.

The preference would be on developers who have vast landbank with high-density mixed development around MRT stations.

“Interest in Malaysian property will be fuelled by foreigners looking out for higher returns (via undervalued currency and low entry costs) than their home countries (Singapore and Hong Kong) and the absence of significant restrictions on property ownership by foreigners,” said Oh.

Singapore-based DBS Research was the first to issue a property sector report titled “Entering a Golden Era” on Jan 14, analysing the impact of MRT on the property sector.

The analyst, Yee Mei Hui, said: “The MRT system is expected to be a structural catalyst for the rise in value of the real estate surrounding MRT stations.”

In the report, the firm was projecting boldly that land values in MRT hot spots could jump by up to six-fold over the next five years.

She said the MRT would have a strong structural impact on the Kuala Lumpur real estate, given that the KL city had been under-invested since the last wave of mega-projects in the late 1990s.

The new MRT will create new opportunities for high-density mixed developments, urban renewal and new suburban townships.

In turn, this has boosted the potential for land prices to reach new peaks with higher plot ratios and more commercial developments. Other than existing prime areas, she identified KL Ecocity, Pusat Bandar Damansara and Sentul as new locations for high-density developments to watch out for.

By The Star

Property loans growth may taper off

ECM Libra Investment Research expects the loans growth to taper off in anticipation that property sales growth may slow down in late 2011.

Residential and non-residential property loans which accounted for 44 per cent of loans growth in 2010 are already showing signs of growth moderation, it said in a research note today.

Residential loan approval has contracted 3.8 per cent year-on-year in December while non-residential loan approval slowed to 30.2 per cent from 47.3 per cent in November.

"Loans growth will also be dampened by an impending statutory reserve requirement (SRR) hike and imposition of macroprudential lending measures as guided by Bank Negara Malaysia in its latest monetary policy statement on Jan 27," said ECM Libra.

In the near term, it said, loans growth is expected to remain intact as lending indicators continue to be in positive territory with loans application and approvals in December 2010, increasing by 36.5 per cent and 17.4 per cent year-on-year, respectively.

"That said, loans disbursement contracted by 2.8 per cent year-on-year in December," it added.

Loans grew by 12.8 per cent to RM883.6 billion in 2010.

Both household and business loans growth moderated in December at 13.4 per cent and 12.1 per cent, respectively.

The loan-deposit ratio remains high at 81.4 per cent from Nov 10 at 81.3 per cent, which is close to the seven year high of 81.7 per cent reached in Oct 10.

"This was due to deposits growing at 7.3 per cent as compared to the loans growth of 12.8 per cent. We believe the lagging deposit growth may curb loans growth momentum going forward," ECM Libra said.

ECM Libra said it has maintained the neutral call on the banking sector as loans growth is tapering while net interest margins is under pressure going forward.

Meanwhile, OSK Research Sdn Bhd has maintained its view of loans growth for 2011 as remaining robust, with the rise in interest rates from record lows unlikely to dampen pent-up credit demand spurred by a recovering economy.

"The banking system's capitalisation remains sufficient, with the risk weighted capital and core capital ratio, standing at 14.6 per cent and 12.8 per cent, respectively," it added.

By Bernama

SP Setia remains a 'sell', says ECM

SP Setia Bhd remains in the 'sell' zone despite the positive acquisition of a 106.2 hectare (262.5 acres) land in Tebrau, Johor, last Friday, ECM Libra Investment Research said today.

It target price was at RM6.00 per share. "We are not imputing any earnings from this new project into our model yet, until there is more clarity on the development timeline," the research house said in a note.

The land, to be developed as a mixed township, is expected to
generate a gross development value (GDV) of at least RM700 million, ECM Libra added.

It also expects the project to be launched in FY12 with the contribution commencing from FY13 onward.

With the new acquisition, SP Setia will have six projects in Johor.

By Bernama

Bringing condo living to Perak

Artist’s impression of The Haven Lakeside Residences in Tambun, Perak.

It takes a foreigner to help us appreciate what is available in our backyard. It also takes the can-do spirit of Australian Peter Chan to do the unthinkable.

The limestone rocks and hills around Ipoh have so enchanted the co-principal of Superboom Projects Sdn Bhd that he is building three blocks of luxurious condominiums The Haven Lakeside Residences in Tambun, 15 minutes' drive out of Ipoh.


Peter Chan ... ‘This is a little Guilin.’

“This is a little Guilin,” says the CEO of Superboom Projects, referring to China's famed holiday destination Guilin. “Limestone hills and formation are unique. They do not happen just anywhere and The Haven is surrounded by them.”

The area that Chan has set his sight on forms part of the Malaysian Main Range, which stretches from southern Thailand to Johor. Limestones have today become synonymous with Ipoh, just as the Melawati Range is synonymous with Taman Melawati, Kuala Lumpur which also is part of the Main Range.

Leveraging on the green factor and old money looking for new lifestyles, Chan will be building what will be Ipoh's most luxurious condominium priced from RM330,000 to RM2mil a unit. It will also be the tallest building in and around Ipoh. The tallest building is Tower Regency, a 20-storey hotel in Ipoh. The project is expected to set a new benchmark for the Perak property market.

“Property prices move up quite a bit in the Klang Valley and Penang but there is this perception that it should be low here (Ipoh). It is just that there is little population growth here. The young people keep leaving home to seek work in Kuala Lumpur and Penang. So, when there is no population growth, there is no demand. But environmentally, Ipoh is an ideal place to retire in. The cost of living is not as high as in Kuala Lumpur or Penang,” he says, adding that there are several hospitals and a supermarket chain within a short drive of the project.

For years, developers in Perak have concentrated on building double-storey terraced and semi-detached houses. Because of the abundance of land, the idea of building luxurious high-rise condominiums did not figure.

Chan looks at the market demand with new lenses. There are many empty nesters in and around Ipoh, with a population of about 800,000. Increasingly, security has become an issue. There is no room today for a five- or six-room house, unless two or more generations stay together, he says.

His target audience is the retirees' market in and around Ipoh, Kuala Lumpur and Singapore. The other market segments are those in search of a holiday home.

“Ipoh is a quiet and serene place to retire and to holiday in. Penang and Malacca are oversold but little is known about Ipoh. I would like to change that,” he says.

He is offering 11 layouts with built-ups ranging from 1,000-3,000 sq ft. Although there are about 500 condominium units, Chan is offering about 300 covered car parks in a three-storey parking podium with lifts. There will be two separate covered parking facilities with additional bays on ground level.

Chan does not expect full occupancy all year around. Hence, he is working with Best Western Hotels group, one of the world's largest hotel chain to manage, market and lease out some of the properties. Maintenance charges for the first 1,000 sq ft is 22 sen, the second and third 1,000 sq ft at 16 sen and 12 sen per sq ft.

On the issue of the terrain housing the three 26-storey blocks, Chan said the site has been tested by three independent engineering companies working on structure and foundation. Prof Bernard Pierson, the Shell chair for Geosciences at Universiti Teknologi Petronas was reported to have vouched for the safety of the residences.

This will be Chan's third project. His previous two projects are double-storey terraced housing at Subang Galaxy in Subang 2, Selangor and Permai Lake View Apartments, located adjacent to the 14-acre Haven site. Chan completed the apartments in 2006. Fronting the Permai Lake View apartments later on will be about 30 shops. The concept to build the condominiums came in 2008.

The three blocks will be sited around a 4-acre lake on the foothills of the Main Range, where a 14-storey limestone rock stands. Chan's 14-acre site, inclusive of the lake, is adjacent to Sunway's plot of land which includes a hill. On the other side of the hill is Perak's famed spa resort, The Banjaran.

“Things are moving in Perak. It is just that this place has long been overlooked, with Penang and Malacca oversold as a retiree's home and a retreat,” he says.

The project, with a gross development value of RM250mil, is being constructed by Bina Puri Holdings Bhd and Beijing Construction Engineering (M) Sdn Bhd, two top contractors in Malaysia and China respectively. The leasehold project is expected to be completed in 2013.

By The Star

Higher income status will help grow real estate sector

We are in very interesting times when changes are happening in almost every sphere of our lives and in every part of the world. We are certainly experiencing first hand the age old saying that “the only constant thing is change”.

With change comes challenges and opportunities. To avoid being left behind, all alike from the common folks to governments and organisations should be proactive and take the necessary steps to be part of the big wheel of change.

One of the big changes underway for the country is the need to take the big step forward to become a high income nation. This is indeed a welcoming change that will allow all working Malaysians to progress up the income ladder and to look forward to bigger pay checks and maintain a higher standard and quality of living.

Widening the pool of high income earners is certainly good for the country to take a leapfrog forward across all the economic sectors. This is because it will promote higher domestic consumption and more sustainable growth for the country.

In the real estate sector, one of the keys to ensure sustainability in the local market is to increase the people's per capita income at least to the level of the other developed countries in Asia.

Unless we grow our per capita income, we will not be able to move up the value chain and see a phenomenal growth in our real estate sector.

The vast difference in per capita income compared with the high income countries of Singapore, Hong Kong, South Korea and Taiwan could be the reason for the big property price gap here compared with that in those countries. Likewise in the other sectors, there are also many growth opportunities to be tapped by moving up the value chain.

It does not help that the country is still dependent on so many foreign workers which is causing substantial outflow of foreign exchange to the other countries. Instead of relying on these supposedly lower wage foreign labour, it is time to revert back to our own Malaysian workforce which will have substantial spillover benefits to the local economy.

Although the pay structure will have to be revamped upwards, employing our own workers will ensure that they will be duly employed and prevent them from getting involved in other undesirable activities if they remain unemployed.

Like many high-income countries such as Singapore, Hong Kong and Taiwan, foreigners should only be allowed to work as domestic maids and high skilled and critical professional jobs that are in short supply locally.

This way, the people's wages will have a chance to move upwards and not kept artificially low like what is happening now. There will also be less outflow of funds from the country.

In the real estate sector, one of the most obvious changes is the rapid appreciation of property valuation and the sudden windfall for many property investors.

The sharp rise in property prices in some parts of the country has caused both anxiety and excitement depending on which side of the scale one is at.

Developers certainly have a big role to play in the way property prices move. The pace and size of their project launches will determine the supply coming into the market.

When there is still a strong pent-up demand for more affordably to higher priced houses like what is happening now, it will help if developers speed up on their launches and help to ease the supply flow.

The price of a property when it was first launched is an important factor, but beyond that, the rate of how much a property will appreciate or depreciate is dependent on a number of factors including demand and supply. While location is a major factor that determines a property's value, other important considerations include infastructure network, accessibility, security, and the amenities and facilities provided.

I have observed that while there are townships and neighbourhoods that continue to be relevant and look refreshing and happening, there are also many that are dreary without much going for them. Of course, the value of properties will also differ accordingly.

Developers should continue to establish strong rapport with their buyers even after the projects are handed over to buyers.

We should give the thumbs up to developers who consider the handing over of completed projects as the beginning of their relationship with their customers.

They continue to listen to their buyers, help to form active and engaging community activities and add value to the townships they build.

It is important not to undermine good after-sales service as they can work wonders for a developer's reputation and promote loyalty and repeat purchase from customers.

Deputy news editor Angie Ng hopes to see developers sprucing up parks in their townships instead of cannibalising them and deprive residents of a healthy form of recreation.

By The Star (by Angie Ng)

Supply of office space in the city to considerably exceed demand

PETALING JAYA: The supply of new office space in Kuala Lumpur will be overwhelming this year making the market soft and competitive as tenants will get to pick and choose the best deals.

DTZ Nawawi Tie Leung executive director Brian Koh said an additional 2.3 million sq ft in new office space this year will put more pressure on the market.

He estimated that the average rental rate for office space in the city would ease by 5% to RM5.90 per sq ft compared with last year's figure.

“Demand will not grow as fast as supply and this will result in a vacancy rate of 12.5% this year. With the increase in new office space, the rate of unoccupied space is expected to go up to 15% by next year,” he told StarBiz.

Koh said an estimated 13.2 million sq ft of new office space was in the pipeline in the city between this year and 2013.

He said the target to have 100 multinational companies based in Malaysia and the proposed growth of the services sector would augur well for office space demand.

In its latest market report, DTZ Research said the overall occupancy rate of office buildings in Kuala Lumpur decreased from 87.1% in the third quarter of 2010 to 86.4% in the fourth quarter due to weak demand.

Total office space in the city stood at 63.1 million sq ft of net lettable area. It added that office rentals continued to be under pressure in thefourth quarter of 2010 due to competition with average prime office rent going at RM5.97 per sq ft per month in the fourth quarter of 2010.

Knight Frank executive director Sarkunan Subramaniam said office rates were expected to come under pressure and rentals would trend downwards as “completion coming onstream from new and refurbished buildings is expected to overshadow tenants' demand.”

Last year, 2.495 million sq ft were added to the market.

The new buildings included Menara PJD (414,00 sq ft), HSBC new headquarters (175,000 sq ft), Cap Square Tower (600,00 sq ft) CCM headquarters (281,000 sq ft), MIDA Building (283,000 sq ft) and BRDB Tower (221,000 sq ft).

He said the buildings, coupled with those completed in 2009 which were still being leased out, gave existing buildings stiff competition.

Sarkunan said the average rental and occupancy as of the fourth quarter of 2010 have dipped slightly to RM5.09 per sq ft and 92% respectively. Prime office rentals in the city were between RM6.50 to RM10.00 per sq ft.

“The tenant-favoured market environment will continue to prevail. There could be more incentives other than rent-free periods for negotiations,” Sarkunan said.

It would be tough to retain tenants and attract new ones, he said. “Tenant rapport is key. It is important to understand the geographical location and service type concentration in the area and target such tenants,” Sarkunan said.

He said good grade office buildings in good locations, supported by amenities and public transportation would continue to be favoured by tenants.

Offices within integrated developments that offer complementary support components such as retail and hotel facilities as well as MSC-status are expected to perform well.

CB Richard Ellis executive chairman Christopher Boyd was optimistic that the market would be balanced this year with very little hangover from last year.

“Since the end of last year we have been hearing of more multinational companies, financial institutions and oil and gas companies looking to expand their operations here.”

Boyd said rentals in most prime buildings in city's golden triangle were from RM6.50 to RM7.50 per sq ft and from RM5 to RM5.50 for secondary buildings.

“However, from the middle of next year supply will considerably exceed demand while rentals and occupancy rates are expected to weaken.”

He said a total of 4.21 million sq ft in new office office space will be completed in Kuala Lumpur this year and 5.46 million sq ft more will come onstream in 2012.

By The Star

Mah Sing eyes 30pc revenue from overseas

PROPERTY group Mah Sing Group Bhd said it hopes overseas ventures will be able to bring in 30 per cent of its total revenue within five years.

Mah Sing is aiming to launch its first project in China this year and is also working towards participating in property development activities in Vietnam, Singapore and Australia.

"China and Vietnam have a high population demand, while for Singapore and Australia, we can offer the type of products they need based on our experience over the years," senior manager corporate communication Lyanna Tew said in Kuala Lumpur.

She said the group is expected to do well overseas, given its large network of consultants and architects.
Yesterday, Mah Sing held a signing ceremony with 20 of its future tenants at its first retail development project, Southgate Sungai Besi, which will be officially opened in June this year.

Southgate is an integrated commercial hub comprising three retail office blocks and corporate blocks with a total new lettable area of 600,000 sq ft. In 2009, it sold a seven-storey Apex Tower in Southgate to Taiwanese Chen Ho-Yuan for RM63.1 million.

Among tenants who took part in the signing ceremony include food and beverage outlet Subway, Aunty Anne's and Pappa Roti and fashion house Nichii, which took up 32,000 sq ft of retail shop lot.

This year, the property group is projecting between RM2 billion and RM2.5 billion in sales, boosted by project launch, with a gross development value (GDV) of between RM2.5 billion and RM3 billion.

Two highly anticipated projects are the MCity in Jalan Ampang and Icon City located in Petaling Jaya.

Currently, Mah Sing has 33 ongoing projects with a GDV of RM9.4 billion, which should last it over the next seven years.

By Business Times

Mah Sing targets 30% sales from overseas ops

KUALA LUMPUR: Property developer Mah Sing Group Bhd is targeting to get 30% of its revenue from overseas projects in five years.

“In five years we hope that 30% from our sales will come from the overseas projects,” its senior manager for corporate communications, Lyanna Tew told reporters after the signing of agreement with the tenants of its Southgate commercial centre project here, yesterday.

Tew said the remaining 70% revenue contribution would come from the company’s property projects in the Klang Valley, Penang and Johor.

As for the company’s overseas expansion plan, she said it was looking at China, Vietnam, Indonesia, Singapore and Australia.

According to Tew, China and Vietnam are good markets due their population and there is simply such a big demand for properties over there.

“In other places like Singapore and Australia, we believe that we will be able to provide the type of products that will do well even though their market is pretty mature,” she said.

She added that the company also expected to do well overseas because of its network of consultants and partners.

By Bernama

At RM77mil for 200 acres leasehold land in Puchong, analysts say it’s a steal

PETALING JAYA: Glomac Bhd's proposed acquisition of leasehold land in Puchong from Score Option Sdn Bhd (SOSB) will be advantageous to the property developer for its attractive price and strategic location, analysts said.

At RM77mil for 200 acres, the effective cost of the land worked out to be RM8.84 per sq ft, which was significantly lower than the range of transacted or asking prices of RM32 to RM48 psf in Puchong.

“The purchase price is deemed cheap,” TA Research said in its report.

Located near the established commercial hub of the town with the IOI Mall and Tesco Store in the vicinity, it is basically an extension to Glomac's present development, called the Lakeside Residences in Puchong.

“Glomac can now strategise any land enhancement activities to improve the value of its enlarged landbank,” TA Research said.

The Lakeside Residences is a joint-venture development between Glomac and SOSB on a 90-acre land to be acquired.

The project, comprising 537 units of double-storey terraced houses and 100 units of semi-detached houses, was launched in 2005 with a total gross development value (GDV) of RM250mil.

“What's positive is that property prices have increased significantly since the launch of the first phase of Lakeside Residence,” ECM Libra said in its report, comparing the initial launch price of about RM300,000 per unit in 2005 for terraced houses versus the current asking price of about RM440,000.

Puchong is one of the property hot spots in the Klang Valley, as the area is easily accessible via Lebuhraya Damansara-Puchong, the Shah Alam Expressway as well as the Bukit Jalil highway.

With the land acquisition, Glomac's future earnings capability would be enhanced, as the property developer could now extend its presence in Puchong and gain from the fast-growing property market there, analysts said.

“The acquisition would be accretive to the company's net asset value (NAV) and earnings,” AmResearch said in a recent report.

On average, some analysts were looking at a potential increase of 25% for the company's NAV and more than 20% in the company's earnings in the financial year ending April 30, 2013.

However, Glomac had yet to reveal details such as the GDV and timeline for its “enlarged” Puchong project. Following the proposed land acquisition, Glomac's existing masterplan for the area would likely undergo significant amendment, according to some analysts.

Analysts in general viewed Glomac favourably for its strong earnings visibility with unbilled sales of almost RM600mil.

They also expect further news flow on land acquisition by the company as part of its aggressive expansion plan.

Glomac reported a net profit increase of 71% year-on-year (yoy) to RM15.88mil for the second quarter ended Oct 31, 2010 on revenue of RM140.89mil, which represented an increase of 86% yoy.

Over the next 12 months, the company would be launching projects valued in excess of RM1bil. These include a RM250mil apartment project in Mutiara Damansara, a RM145mil retail mall in Glomac Damansara and the RM400mil Glomac Utama mixed development in Petaling Jaya.

By The Star

Increase in property and rental prices after facelift in Brickfields

Many business operators in Little India and other parts of Brickfields are likely to be edged out or forced to take a cut in their profits with an imminent increase in rental and property prices.

According to property consultants, realtors and valuers, the market was adjusting to the improved outlook Brickfields is now enjoying.

All along the price of property and rental were stagnant because Brickfields, though close to the city centre, was perceived as congested, dirty and predominantly Indian enclave with perennial traffic problems.

Property consultant agency PPC International Sdn Bhd executive director Thiruselvam Arumugam said with improved traffic flow, better infrastructure, cleaner environment and better-looking buildings the market was adjusting and this was reflected in rising property prices and rental.

He said the rental and property prices had been low for quite sometime and now the market was adjusting to reflect its true value.

“In other words the market is only making up for its lost time,” he said.

Citing the Palm Courts condominium as an example, he pointed out that before KL Sentral was built the price of a unit was between RM240,000 and RM250,000.

“But recently it has shot up to RM300,000 and it will likely go up to RM500,000,” he said.

Property valuer T. Nagalingam of Azmi & Co Shah Alam Sdn Bhd noted that foreign money had also helped boost property prices in Brickfields.

“Investors now see Brickfields in a positive light and forecast a better return on the investments,” he said.

Nagalingam said the present business operators, who are renting in Little India and other parts of Brickfields, would probably have to go somewhere else.

Since Little India took shape, many traders have complained that while their profits were dwindling due to lack of parking space fronting their shops, property owners were increasing the rental.

Little India Action Committee chairman S. Baktha, also a registered property agent, said many business operators had complained that their landlords had threatened to increase the rental once their tenancy agreement expired.

“Their businesses have been further affected by lack of parking space in front of their shops,” he said.

Sampoorna Curry House owner S Thilagavathy, 30, noted that the lack of parking was likely to keep away many customers and cut into her profits by at least 30%.

Another restaurant owner, M Prema, 40, who owns Seetharam Curry House, pointed out to lack of parking space as the main factor in the drop in her revenue.

Her business registered almost a 50% drop since parking bays were done away in the area.

Saradha Silks (M) Sdn Bhd owner P Loganathan, 45, attributed the rise in rental as the main concern of the business community in the area.

“There is talk that building owners may hike up rentals after Deepavali,” said Loganathan, who is also a tenant.

He claimed that he had learnt that building owners were planning to increase rental to RM30,000 for the ground floor, from the current RM10,000 once the tenancy agreements expired.

“I’m not sure how I’m going to deal with the increase,” said Loganathan, who claimed the move was attributed to the RM35mil facelift to the area to attract more tourists.

By The Star

Elegant and fashionable

Posh: The semi-detached houses by BSG Property in Tanjung Bungah.

BOON Siew Group Property’s (BSG) NineTen project comprising 40 semi-detached houses located in Tanjung Bungah will be completed by July.

The project, which is part of the upcoming 48.5ha Permai Village township, will have the Tunku Abdul Rahman College (TARC) and Tenby International School (scheduled for completion in August) as “neighbours”.

BSG property business development manager Koay Wei Loong said the units, aimed at the middle and upper middle class, have been bought by locals and foreigners mainly from Europe, Hong Kong and Singapore.

“We made sure that everything is of the highest quality, because these buyers are usually very choosy. Most of our buyers are also repeat customers.

“Besides buying for occupancy or as a holiday home, the customers will sometimes buy it for investment,” he said after holding a private preview for selected guests recently.

BSG property executive director Alfred Chew said that the units priced from RM2.4mil to RM5.8 mil are almost completed.


Luxurious: Houses in NineTen project come complete with swimming pool.

“We have sold 60% of the NineTen project. Landed property in Penang is in demand because of land scarcity on the island. These days, we see that buildings in Penang are moving upwards,” Chew said.

By The Star

GUH seeks more land for property projects

WHILE GUH Holdings Bhd continues to look at its printed circuit board (PCB) division as the primary driver of growth this year and in years to come, the firm continues to expand its landbank for other activities.

Managing director Datuk Kenneth H'ng Bak Tee said for its PCB business, the company will move into niche, better pricing and future trend products such as light emitting diode (LED)-based special tuners and power supply.

"In further restructuring our clientele base," he noted, "we are moving away from Taiwanese and Chinese clients who are generally known for their low pricing and being bad paymasters."

While South Korean clients are basically associated with average pricing and are good paymasters, H'ng said the focus would be more on Japanese, the US and European clients who are known for not only good pricing, but also for being good paymasters.
On the property development side, GUH is looking at acquiring land in the Klang Valley, Penang island and upcoming spots in Seberang Prai.

He said GUH's Taman Bukit Kepayang development in Seremban, has so far seen development of 120 hectares and there was a balance of about 108 ha left to be developed over the next six to seven years.

"We want to maintain our current build-and-sell strategy for residential and commercial development," he added.

On GUH's plantation activities, H'ng said the 154 ha of plantation land in Kedah, acquired as a testing ground, had proven to be very successful and boasted industry-standard yields.

"We are now looking to increase the estate size to between 1,200 ha and 2,000 ha in order to achieve meaningful economics of scale," he added.

By Business Times

Demand for new houses to surge, says Knight Frank MD

There will be a surge in demand for new houses in Malaysia as Asian property investors look for properties, and expatriates come here for projects under the Economic Transformation Programme (ETP).

"The expatriates will be here for the duration of the projects such as the Mass Rapid Transit (MRT), among others. They would need a place to stay," said Eric YH Ooi, managing director of Knight Frank.

Ooi said, Asian investors are returning as Malaysia still offers the best value for properties, as compared to Singapore and Hong Kong where the property price is about five times more expensive.

Malaysia is the prime investment location in Asia because of its stable property market and relative affordability.

Many investors are coming to the market, rich with cash, and with an appetite for luxury properties in Kuala Lumpur, Ooi said on the sidelines of a property market outlook summit in Kuala Lumpur recently.

The investors from Singapore, Hong Kong, Indonesia, Taiwan, South Korea and Japan are buying condominiums, apartments and bungalows in the KLCC, Bangsar, Mont' Kiara and Kenny Hills areas.

Ooi said Malaysia's positive economic outlook and improvement in the rental market is driving them here.

During 2008/2009, rental of the properties fell by 20 per cent to 40 per cent in some locations in Kuala Lumpur, because of the financial meltdown and more supply in the market.

"It has improved and rentals are hovering between RM3.50 per sq ft and RM7.00 psf now," Ooi said.

Ooi expects more than 15 per cent of the sale of luxury properties this year to come from foreigners.

But this is low compared to 2008, where some 40 per cent of the sales were contributed by foreigners.

"We expect it to return to levels of 30 per cent," he said.

By Business Times

Property transactions may hit RM100bil

KUALA LUMPUR: A total of 342,179 property transactions worth RM96.77bil were recorded between January and November last year, which means the full year's transactions could reach the RM100bil mark, said Knight Frank Malaysia managing director Eric Ooi.

Ooi was commenting on figures provided by the Valuation & Property Services Department director general Datuk Abdullah Thalith Md Thani at the Property Market Outlook for 2011 yesterday.

“This is the first time transactions value has reached this figure,” said Ooi at the event organised by the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia.


Eric Ooi ... ‘This is the first time transactions value has reached this figure

In light of this, and considering Malaysians penchant for property investments, Ooi said it was unlikely that property values would fall. It may not rise as much as it did last year, but the uptrend is there.

Ooi, together with Henry Butcher chief operating officer Tang Chee Meng, said property value rose between 30% and 40% last year.

“This is the first time property went up so much,” Tang said, adding that he had never seen such record growth for the property market in 30 years.

“The condominium market saw a price rise of between 60% and 100% between 2003 and 2008. This pales in comparison to the rise in value of landed units which rose as high as 40% in just one year. If one were to average out the rise in condominium prices, it is about 20% a year,” Tang said.

Earlier, in his overview of the Malaysian economy and the Malaysian property market, director general of Valuation & Property Services Department Abdullah Thalith said it was very significant that the transaction volume between the 11-month period increased 12.2% year-on-year, but the value of transactions increased at a higher rate of 35% from RM71.67bil to RM96.77bil.

“The recovery of the Malaysian economy has reinvigorated the overall property market,” he said.

In terms of lending in the broad property sector, the purchase of residential property took up the lion share of bank loan, at 58.8% compared with the purchase of non-residential property, at 22.1%. Construction took up 9.6%.

“Credit expansion for the broad property sector in the banking system increased from RM342.09bil as at the end of September 2009 to RM391.25bil as at end-September 2010,” he said.

“This means the residential property sub-sector remained the main mover of the property market,” he said. In this residential market, transactions in Kuala Lumpur recorded a growth of 8.2%, Selangor 7.2%, Johor 3.6% and Penang (island) 9.7%.

Terraced houses continued to dominate the market, especially in Selangor with 27,165 transactions, Johor with 12,555 transactions and Penang 4,358 transactions.

The city of Kuala Lumpur recorded more condominiums changing hands, 10,333 units versus terraced housing at 3,756 units.

By The Star