Nusajaya progressing well despite economic glut

By THE STAR

NUSAJAYA: UEM Land Holdings Bhd is confident Nusajaya will have enough to attract investors and residents by end-2011 when major projects such as the RM1bil Kota Iskandar are completed.

By then, the RM1.4bil Coastal Highway linking Danga Bay to Nusajaya and the RM715mil Legoland Theme Park would also be ready, said managing director and chief executive officer Wan Abdullah Wan Ibrahim.

“Nusajaya is progressing well and has attracted interest from both local and foreign investors despite the current economic slowdown,’’ he said yesterday.

He said this at a briefing attended by Housing and Local Government Minister Datuk Seri Kong Cho Ha and his deputy Datuk Seri Lajim Ukin during their working visit to Iskandar Malaysia.

UEM Land is the master developer of the 9,308ha Nusajaya, which is the key driver of Iskandar Malaysia.

Nusajaya comprises seven signature developments – Kota Iskandar (Johor State New Administrative Centre), Southern Industrial and Logistics Clusters, Puteri Harbour Waterfront Development, EduCity, Medical City, International Destination Resort and Residential Developments.

Wan Abdullah said its high-end residential projects, East Ledang and Horizon Hills, a joint venture between UEM Land and Gamuda Bhd, had attracted a large number of foreign buyers.

“Foreigners made up of 65% and 45% of the buyers at East Ledang and Horizon Hills respectively and the projects have recorded a good take-up rate,’’ he said.

He said UEM Land would sign a contract with the Federal Government this year to build a housing project for the latter’s staff based in Kota Iskandar.

Wan Abdullah said it would also submit a proposal to the Federal Government to build the Customs, Immigration and Quarantine complex (CIQ) at Puteri Harbour.

He said the CIQ Puteri would facilitate visitors coming to Johor Baru from Singapore using water taxis and ferries from nearby islands in the Riau Archipelago such as Bintan and Batam.

Wan Abdullah said the CIQ Puteri would also provide similar facilities for boaters and yachters from all over the world to moor their vessels.

Meanwhile, Iskandar Regional Development Authority chief executive officer Harun Johari said investment in Iskandar Malaysia would be largely driven by the private sector.

Of the RM47bil investment expected in Iskandar Malaysia by next year, 60% would come from the private sector while public spending and government-linked companies would make up the balance, he said.

Launched on Nov 4, 2006, the 2,217-sq-km Iskandar Malaysia is divided into five flagship development zones – JB City Centre, Nusajaya, Eastern Gate Development, Western Gate Development and Senai-Skudai.

Mavtrac keen on construction, property

By THE STAR

This follows its appointment as Sime Darby Property’s preferred vendor

KUALA LUMPUR: Mavtrac Sdn Bhd wants to get more involved in construction and property projects in the country after being chosen as a preferred vendor to Sime Darby Property Bhd.

Chief executive officer Mohd Azman Sulaiman said the two parties last week signed a memorandum of agreement for Mavtrac to supply construction materials to Sime Darby Property’s selected projects in Malaysia and to facilitate Sime Darby Property’s spend management and strategic procurement.

“Since our establishment in 2007, Mavtrac has been consistently delivering quality materials at prices competitive to the market. To date, Mavtrac has supported contractors delivering projects to an estimated development value of more than RM250mil,” he said at a media briefing yesterday.

Owned by the Finance Ministry, Mavtrac acts as a supply chain integrator to help contractors and project developers with procurement and supply of strategic construction materials.

“Mavtrac works closely with project owners to forward bundle demand, for which price economies of scale are secured and supplied to the projects utilising the existing distributor network and suppliers.

“This way, Mavtrac is not displacing existing supply chain members, but integrates the supply chain for overall value (price, quality and security supply),” Azman said.

Currently, most of the projects that the company were involved in were linked to the Government such as those by the Works Ministry and government-linked companies like UEM World Bhd for its Nusajaya project.

“However, our plan is to expand our business involvement to other property players as we believe we can’t just rely on government-led initiatives only,” he said.

He added that Mavtrac’s role was to help industry players, especially the small contractors, to access materials at fair price and to facilitate the procurement process for efficiency.

“We have already developed strategic partnerships with a number of distributors, wholesalers and manufacturer, and this would make it much easier for contractors and project developers to plan for their business,” he said.

Azman also said Mavtrac would continue to offer value-added services to the construction community, aided by its trading portal, www.mavtrac.com.my.

Tipping point for Nusajaya growth in 2011: UEM Land

By BUSINESS TIMES

UEM Land Holdings Bhd expects growth for its Nusajaya township to start gathering momentum from 2011 as more infrastructure and other projects near completion.

Managing director Wan Abdullah Wan Ibrahim said the year would mark the starting point for many large-scale projects in Nusajaya.

At the same time, work on other major projects would also be done by then.

Among the projects that would be completed by 2011 are the coastal highway linking Johor Baru, quarters for state government staff and the federal government agency complexes.

The Legoland theme park would also be in its finishing stage.

"The tipping point for growth to spurt in Nusajaya would be in 2011. That is when a new pace of development begins and the environment in Nusajaya and Iskandar Malaysia would pick up pace," said Wan Abdullah during a question-and-answer session after a briefing on projects under Iskandar Malaysia.

Housing and Local Government Minister Datuk Kong Ho Cha, who was on his first visit to Nusajaya with his deputy Datuk Lajim Ukin were among those at the briefing in Nusajaya, near Gelang Patah, Johor.

Also present were Iskandar Regional Development Authority chief executive officer Harun Johari and Iskandar Investment Bhd managing director Arlida Ariff.

Wan Abdullah said Nusajaya already has the volume in terms of residents as 11,000 houses in the township were already occupied.

Foreigners also make up almost two thirds of high-end homes such as the East Ledang project.

When asked about a public housing project which would cater to people working in the area, Wan Abdullah said the efforts would be made to ensure only qualified tenants would get the houses.

UEM Land Holdings is the developer of Nusajaya's main features such as the state administration complexes of Kota Iskandar, Puteri Harbour, Southern Industrial and Logistics Clusters and Alfiat Healthpark and residences.

REIT firms targeting northern investors

By THE STAR

Over RM354bil in fixed deposits, savings poised to be tapped

GEORGE TOWN: Real estate investment trust (REIT) companies are now targeting investors in the northern region, particularly the high net-worth individuals and “men on the street.”

»They hope to channel some of these funds into REIT « GAN KIM KHOON

OSK Investment Bank Bhd (equity capital markets) director Gan Kim Khoon said there were over RM354bil in fixed deposits and savings of individuals in the country waiting for REIT companies to tap.

“They hope to channel some of these funds into REITs, which are high yielding and low risk in nature,” he told StarBiz after a one-day roadshow on REITs-Investors Outreach Programme recently.

The REIT companies from Kuala Lumpur that took part in the event included Axis REIT Managers Bhd, AmFirst ARA REIT Managers and AmanahRaya-JMF Asset Management.

“Outside Kuala Lumpur, REITs have little exposure from large companies, and participation by individual investors is also small,” Gan said.

Investment in REITs presently offered the best yield, ranging from 8.5% to 12% yearly, based on current earnings, he said, adding: “In such a challenging climate, there are not that many stocks that can give you such yields. It is better than putting funds in fixed deposits.”

Stewart Labrooy ... ‘After upgrading, the valuation increased to over RM140mil’

Meanwhile, Axis REIT Managers chief executive officer Stewart Labrooy said the company regularly implemented asset-enhancement exercises to increase the value of its assets.

“Last year we injected about RM3.5mil to upgrade one of our office buildings, Wisma Kemajuan, in Petaling Jaya. After upgrading, the valuation for the property increased to RM52mil, compared with the original valuation of RM29mil in 2005,” he said.

He said Axis REIT recently spent RM8mil on two of its commercial properties which were originally valued at RM106mil.

“After upgrading, the valuation increased to over RM140mil.

“Through such asset-enhancement exercises, we create more value-added space, which in turn attracts more tenants, and increases our income from rentals,” he said.

Owner plans hotel near Kota Kinabalu

By BUSINESS TIMES

ANTHONY Wong, owner and managing director of the Frangipani Resort and Spa Langkawi, plans to open a four-star hotel in Sabah in the near future and a third venue in Phuket, Thailand, in the long term.

He is now scouting for suitable land near Kota Kinabalu to open an environmentally-friendly hotel there.

As he plans to execute most of the plans by himself as well as source his own material, Wong expects that the planned 150-room hotel may cost up to RM40 million.

"We are looking for a piece of land, not more than one-and-a-half hours from the Kota Kinabalu airport to build our hotel," Wong told Business Times.

"I have already looked at 40 sites... but we are not happy (with the sites we saw). We do not want to make a mistake when we purchase it," he added.

He is looking for land measuring 4.5ha to 6ha, a third of which will be for an organic garden.

"We want to grow part of the food on site and treat waste water on our own so that it does not go out into the sea and pollute it," he said.

Since the hotel will be built from scratch, it will also incorporate many energy-efficient features.

"We want to be able to use the heat from the air conditioners to be able to run other things. Basically, we want to be energy efficient as energy usually makes up 20 per cent to 25 per cent of operating costs," Wong said.

Malaysia Pacific in talks on office tower venture

By BUSINESS TIMES

MALAYSIA Pacific Corp Bhd (MPC) has denied that it is in talks with the Qatar Investment Authority for the redevelopment of Wisma MPL in Kuala Lumpur.

In a statement to Bursa Malaysia yesterday, it said that it is in negotiation with a foreign development fund comprising local and Middle Eastern parties on a 51-49 per cent joint venture, to build a proposed new 50-storey office tower on its existing plot of land at Jalan Raja Chulan, Kuala Lumpur.

MPC expects the joint venture to bring immediate and long-term benefits if the deal is concluded.

Concrete Engineering to buy shop office in KL

By BUSINESS TIMES

CONCRETE Engineering Products Bhd is looking to acquire a double-storey shop office in Bangsar, Kuala Lumpur, for RM4.5 million.

It is buying the property from Deal Trekker (M) Sdn Bhd to boost income from renting out the asset.

The total net lettable area on both the ground and first floors is 3,576 square feet.

The ground floor can fetch up to RM18,000 a month whilst the first floor rental is around RM5,500 per month.

Construction industry building itself up again

By THE STAR

PETALING JAYA: More than a year after the local construction industry was hit by deferred projects coupled with high material costs, its prospects appear to be on the mend, say industry players.

“We can definitely look forward to better times, especially with cheaper material prices now,” Malaysian Resources Corp Bhd (MRCB) group managing director Shahril Ridza Ridzuan told StarBiz.

Construction workers working on an apartment complex in Kuala Lumpur. CIMB Research says execution is now the order of the day for the construction industry.

Shahril said he believed the Government would be “efficient” in rolling out projects under the 9th Malaysia Plan (9MP) and stimulus packages which were key to the survival of the sector.

MRCB’s ongoing projects were “going well”, he said, adding that the company, largely involved in construction and property, had several projects under tender of which “one or two” fell under the RM67bil stimulus packages. Its current construction order book stands at close to RM3bil.

Last year was a difficult one for the construction industry with the change in government in certain states which subsequently thwarted certain infrastructure plans.

Coupled with the surge in prices of materials like steel, which peaked at RM4,000 per tonne and crude oil which hit a record of US$147 per barrel, many construction companies were struggling to keep margins afloat.

Steel prices have since softened to around RM2,000 per tonne last month while crude oil is about US$60 per barrel now, translating possibly into healthier margins for the players.

Shahril Ridza Ridzuan ... ‘We can definitely look forward to better times’

A clearer political direction is also apparent under the administration of new Prime Minister Datuk Seri Najib Tun Razak.

“Execution is now the order of the day,” CIMB Research told clients in a recent construction sector update.

“We believe things are getting better but we urge the Government to be ‘quicker’ in the implementation of more of the announced projects,” Prinsiptek Corp Bhd managing director Datuk Foo Chu Jong said.

The smallish construction company which has an order book of about RM400mil to RM500mil was “in discussions” with the relevant parties on several infrastructure projects and hoped to secure “some soon”, he said without elaborating.

In its update, CIMB Research identified 12 mega construction projects worth up to RM80bil, of which RM30bil to RM35bil was for the Klang Valley light trail transit extension and upgrade project, also known as the “highlight” project of the government’s pump-priming over the remaining 9MP period.

It identified MRCB, IJM Corp Bhd, Gamuda Bhd, UEM Builders Bhd and WCT Bhd as potential winners of this huge project, citing their cost efficient measures and track record.

The Bakun power transmission project is another mega project to look out for with CIMB saying that the project may take off “sooner than later” as cost had come off from RM14bil to RM9bil on lower steel prices.

Datuk Foo Chu Jong ... urged the Government to be quicker in implementing projects

MRCB was at the forefront for this project given its experience in undertaking major power transmission in the country, it said.

Najib said early this month that as at June 19, RM9bil worth of projects had been awarded under the Government’s RM67bil stimulus packages to stimulate economic growth. Of this, RM3bil had been disbursed.

Hotel dealmaker of the region

By THE STAR

Awards spur Previn’s agency to aim for higher achievements

KUALA LUMPUR: A passion for putting together hotel transactions around the region has proven to be a boon for Zerin Properties chief executive officer Previndran Singhe.

Having brokered a number of prominent hotel deals, Previn, as he is fondly known to industry peers, and his agency are regarded as the “hotel dealmakers of the region.”

Since opting to specialise in the hotel sector in 2004, his real estate agency has brokered seven deals with total market value of close to RM1bil.

The disposal of part of the Sheraton hotel chain in 2005 for RM138mil set the pace.

In 2005, the sale of Grand Centrepoint Hotel to Tune Hotel group for RM12.5mil paved the way for the first Tune Hotel in the country.

Describing the Tune Hotel deal as his most exciting so far, Previn said the excitement was in doing a deal for a new Malaysian brand and having to convince the buyer that the property was at an ideal location.

Located at the corner of Jalan Sultan Ismail and Jalan Tuanku Abdul Rahman in Kuala Lumpur, the hotel has been refurbished and turned into the flagship property of Tune Hotels.com.

According to Previn, his most memorable and rewarding deal to date is the sale of Four Seasons Langkawi Resort and Spa to Kingdom Hotel Investments for RM435mil in 2007.

Kingdom Hotel is a company affiliated to Prince Alwaleed Bin Talal Bin AbdulAziz AlSaud of Saudi Arabia.

The deal won his agency Best Real Estate Investment Award Asia Pacific 2008 by Real Estate Facilities and Projects (RFP) magazine of Hong Kong.

This was followed by the 2008 sale of Intercontinental Hotel Hanoi to Berjaya Group for RM253mil, which clinched the Best Real Estate Transaction Award Asia Pacific 2009 from RFP.

Despite having won numerous awards over the years, Previn said that being voted the Real Estate Agent at the recent inaugural MIEA National Real Estate Awards was “the most humbling so far” because he was nominated against industry peers who were equally good.

“The award will spur us to aim for even higher achievements. Within the next two to three years, Zerin Properties will be opening offices in Indonesia, Thailand, Cambodia and Laos, to market Malaysian properties,” he said.

What are the secrets to his success?

Previn attributes a generous dose of good luck, tremendous hard work and strong team spirit.

“We have stayed focused on what we aim to achieve and relentlessly seek to achieve those targets. I have been very lucky, my degree is in real estate and I’ve always enjoyed all facets of the real estate business,” he told StarBiz.

Previn began his career at Jones Lang Wootton, a leading international property consultancy firm in Kuala Lumpur, in the early 1990s.

There he was exposed to all aspects of the property industry, having started out in the research and consultancy department.

He then ventured into the valuation department and finally his passion for sales and marketing led him to the agency department.

He was then headhunted by another leading property consultancy to head the residential agency.

After a short stint with Tenggara Capital Bhd as commercial manager and head of marketing and sales (property), he left in 1998 to start a new hospitality management company, Signforce Sdn Bhd.

“My last position in Signforce was chief marketing officer overlooking the sales and marketing of some of the finest hotels and resorts in the region. This helped ignite my passion for the hospitality industry,” Previn said.

In 2002, he opened his own real estate agency.

“This was motivated by the need to spend more time with my family and a chance to build something meaningful,” he added.

From a one-man show, his agency has grown to 17 employees in Malaysia today.

In 2004, he initiated overseas expansion plans and opened offices in Singapore, Sydney and New Delhi.

Currently, the corporate mergers and acquisitions (M&A) portfolio contribute about 50% of the agency’s total fees, followed by residential property and office leasing which comprise 25% each.

According to Previn, the agency has always been focused on corporate and residental sectors.

“We now have a strong private wealth division that caters to mostly friends and families for their private investments. The M&A department is divided into office leasing, development and investments,” he said.

Going forward, Previn sees the agency growing into a boutique real estate investment house catering to corporate real estate M&A and private wealth real estate.

Glomac hopes to sell half of properties in present campaign

By THE STAR

KELANA JAYA: Glomac Bhd hopes to sell at least half of the RM400mil worth of properties offered under its current property campaign that ends this month, amid signs of a pick-up in demand for medium-price houses, said group managing director/chief executive officer Datuk FD Iskandar Mohamed Mansor.

“Since April, we have been seeing some pickup in the property market particularly for houses priced RM300,000 and below,” he said. “At the same time, banks are still providing loans and offering low interest rates.”

Glomac was offering “everything” from 11 property developments, from medium-price houses to high-end condominiums and commercial properties in its 21st Anniversary Property Campaign, he said.

“We are turning 21 this year, so we want to celebrate our achievement by giving 21 great rewards to our customers,” Iskandar told StarBiz during an interview recently, referring to freebies such as free kitchen appliances.

“Some of the properties have just been launched such as Seri Bangi and Glomac Damansara,” he said.

He added that given the current market conditions, the company needed to be realistic on sales targets and property launches.

“We have six new property projects to launch this year apart from 13 or 14 ongoing projects. Another three new commercial projects are being planned and will be launched when the market improves,” he said.

The company’s gross development value for its ongoing projects was RM2.8bil, which could last the company for a further five to six years, Iskandar said.

He noted that Glomac’s gearing ratio was also low at 0.1, and the company would try to contain it below 0.5.

Naza TTDI aims for the next level

By BUSINESS TIMES

Plans to float Naza TTDI Sdn Bhd remains in its keep-in-view file, but may well resurface as the developer makes strides towards a top spot in Malaysia's as well as region's property market.

Naza TTDI and I&P Group Sdn Bhd (formerly Island & Peninsular Bhd) are two of the big Malaysian property companies under private ownership.

It made a grand entry into the big league last week when Prime Minister Datuk Seri Najib Razak performed the groundbreaking ceremony for the Naza group's 50-storey corporate headquarters located in the high-value Kuala Lumpur City Centre area.

The Naza Tower makes up one of the buildings in the group's RM4.1 billion integrated upmarket commercial and residential property project known as Platinum Park.

Naza TTDI is the property arm of the Naza group. Founded by the late Tan Sri Nasimuddin SM Amin, the group was better known as a motoring company before it bought over TTDI from Danaharta in 2004.

Traditionally a developer within the Klang Valley, Naza TTDI group managing director SM Faliq SM Nasimuddin said it was looking for more land to widen its offerings.

In an interview with Business Times last week, he said the company was studying options outside of Kuala Lumpur and had been quite impressed with prospects in Iskandar Malaysia in Johor.

"Taking the company to the next level is my goal and I think, with the brand, we can do that," Faliq said.

The 24-year old, who was thrusted into the boss' seat after the demise of Nasimuddin last year, has settled in comfortably and now speaks like a seasoned property man.

He did not discount the possibility of plans to float Naza TTDI, once mooted by Nasimuddin, being revisited.

"Eventually we want to become a big player in the property sector," he said.

Like clients of the Naza motor vehicle division, Naza TTDI has built a big following over its three decades of existence, Faliq said.

He attributed the strong support to the quality of products and services Naza TTDI delivers. Helmed by experienced managers, it has delivered ahead of schedule several times.

The company has the tradition of hiring reputable planners and architects for its projects, adding much value to the properties either in terms of comfort or capital appreciation.

Its Platinum Park looks to be a sure winner. With one tower sold to Felda, another 50 storeys designated as the group headquarters and a 30-storey building sold to a government-linked company (GLC) that Faliq did not name, the project is already funding itself.

The buyers of Platinum Park units are expected to enjoy good capital appreciation. The entire project is scheduled for completion in 2018.

Naza TTDI is also a lowly-geared company, with total debt of just about RM100 million. It borrows on a project-to-project basis.

Faliq wants to keep it that way and, with properties being snapped up before the projects are even officially launched, he foresees little problem.

Current total gross development value of Naza TTDI's projects in the Klang Valley is about RM8 billion.

The company has not been afffected much by the weak economic environment and sees no reason to halt new ventures.

It has been fortunate in that the Platinum Park tower sale to Felda was effected just before the crisis. Then it managed to sell a tower to its parent company and a building to a GLC.

"We have unbooked sales of about RM1.4 billion so we are sitting quite comfortably to take us through the next three to four years," Faliq said.

Naza TTDI's Laman Seri Business Park in Shah Alam was sold out about a week ago. Another high-value residential project, The Valley, in Ampang will be launched soon.

Faliq said the company was interested in exploring opportunities in other states in the country in addition to identifying projects in Vietnam and China.

"It's new to us, but, eventually, if we want to be a regional developer, we will have to venture outside of Malaysia," he added.

CMP to start Lido Beach mega project this year

By THE STAR

JOHOR BARU: Central Malaysia Properties Sdn Bhd (CMP) will start developing Lido Boulevard, its multi-billion ringgit integrated waterfront development project, this year.

Managing director Datuk Chan Tien Ghee said land reclamation work along Lido Beach would start soon and would take 24 months to complete.

“The project has a gross development cost of RM2.7bil and a gross development value estimated at RM4bil,’’ he told StarBizWeek.

Located on 49.37ha, the project will be developed in phases stretching 2.4km along the Tebrau Straits from the now the defunct Lot I shopping complex to the Harbour Master’s office.

The flagship project by CMP, a company linked to business tycoon Tan Sri Vincent Tan Chee Yioun, is a joint-venture between CMP and Johor State Secretary Inc as the land owner.

“The project will be fully funded by CMP,’’ said Chan.

He said four dredging companies had bid for the reclamation work and the winning tender would be announced by end of the month.

They are Dredging International and Jan De Nul from Belgium, and the Netherlands-based Boskalis and Van Oord.

The notable projects undertaken by them include the Penny’s Bay for the Hong Kong Disney World Park, Dubai Palm Jumeirah, Singapore’s Jurong Island, Pulau Indah Marina and Watervillage in Klang and Palm Cove Canal in the United Arab Emirates.

About 6.8 million cu m of sand sourced from Teluk Rumania on the east coast of Johor is required for reclamation works.

The sand will be transported by a dredger anchored at Stulang Laut near the Causeway; then pumped to the site via a 2-km floating and sunken pipeline.

To facilitate this, two culverts under the Causeway were cleaned; one will be used to transport the sand and the other to ensure continuous flow of water.

“This was the first cleaning exercise conducted on the Johor side since the road section of the Causeway was completed in 1923,’’ said Chan.

He said the continuous flow of water from Stulang Laut to Lido Beach and vice versa would improve the water quality at Lido Beach.

“The project is expected to take shape by 2016 and it will completely rehabilitate Lido Beach and give Johor Baru a facelift,’’ said Chan.

The project comprises four main components – luxury condominiums, waterfront office suites, a hotel and a shopping mall.

Eight condominium blocks of between 18 and 26 floors each will offer 914 units on a 10.60-ha site.

Eight office blocks between six and eight floors each, a 296-room hotel-cum-serviced residences and a three-storey dual-frontage retail complex are also in the plan.

Incorporated in the mall will be an international-sized ice skating rink and 32-lane bowling alley and one of the main attractions will be the 4,645.15 sq m Indoor Snow Park with activities like ice sliders and tobogganing.

Chan said RM150mil would be spent to upgrade Jalan Abu Bakar, including widening it and building pedestrian bridges. CMP would also allocate RM46mil for landscaping to include water features like wading and splash pools as well as pocket parks along the 10m wide boardwalk.

What’s in store for property firms involved in large mergers

By THE STAR

MALAYSIAN property companies will continue to grow both organically and through mergers and acquisitions (M&As). The question is which method of growth is better for the industry.

While most Malaysian property players are moderately sized in terms of assets and market capitalisation (if they are listed) compared with their overseas peers, there will be more larger players coming onstream with talk of more potential M&As underway, especially those involving government linked companies.

The mega Sime Darby merger in 2007 that involved Sime Darby Bhd, Kumpulan Guthrie Bhd and Golden Hope Plantations Bhd has created the country’s largest property group in terms of land assets and sales.

The next merger in the pipeline is touted to be the amalgamation of Permodalan Nasional Bhd’s three property companies – Island & Peninsular Bhd, Petaling Garden Bhd and Pelangi Bhd. Together, they will have more than 10,000 acres of land bank.

The Sime Darby merger resulted in the new merged entity with a sprawling plantation land of close to 500,000 acres, of which 37,000 acres are under Sime Darby Property Bhd, the group’s property arm.

Among the critical issues to be addressed for a successful merger include leadership and staff morale after the amalgamation exercise.

These large property groups with their large landbank will do well if strategic plans are in place to unlock the value of these land through quality and innovative product offerings. In fact, they should take the opportunity to spearhead good sustainable and environment-friendly projects to promote a greater appreciation and care for our planet.

Ultimately, the property business is about holding power as it involves huge capital outlay and holding cost.

The larger the landbank, the heavier the holding cost and the onus is on developers to unleash their ingenuity and creativity to turn these land into well sought after addresses.

Expanding through organic growth certainly has its merits as the companies have built up their reputation, brand name and product specialties over the years, and they have rightfully earned the respect and trust of property buyers. More importantly, those who have developed their own successful business models have become industry leaders and trendsetters in their own right.

Companies such as SP Setia Bhd is well regarded for adding substantial value to greenfield township development in new growth areas.

It is one of the top industry performers in terms of sustainable earnings and sales and is well known for its innovative marketing expertise and product offerings.

Its capability in product innovation and designing has won the company many industry awards, both on the local and international stage.

Another industry innovator, Mah Sing Group Bhd is well known for its ability to develop small pockets of land within a short time frame. The fast project turnaround model has contributed to the company’s consistent good earnings and strong compounded annual growth in its top and bottom lines.

At the end of the day, it is important for a broad spectrum of property developers, whether big or small, to co-exist and continue making a mark in their respective market and product forte so that the industry will grow in depth and buyers will have a wider selection of property products to choose from.

What is important is for these developers to add value to the property landscape and contribute towards lifting the living environment, whether the projects are in the local or overseas markets.

While the company’s size and financial capability matter, especially if it involves huge greenfield developments with substantial holding cost, it is important to maintain one’s market niche and product specialties.

The degree of success of property companies speak a lot about their management skills and expertise, product design and innovation, branding quality and price premium.

It is important to have a competent and trustworthy management team in place. They are the faces behind a company’s name that property buyers and the investing public relate to.

The faces behind companies and organisations will have a bearing on the level of trust and confidence that customers and the investing public have in these companies.

Meanwhile, with the emergence of large multinational property groups vying for a share of the international property market, especially the insatiable China and India markets, our own home-grown property groups should also harness their skills and export their expertise to these high growth countries.

Property players with well-established brand names and financial capability should further benchmark against other international players and take the opportunity to shore up their image as international players.

Spreading their wings overseas will offer the opportunity for greater earnings growth for developers with an eye to expand offshore and give them an opportunity to break out of their comfort zone.

Making British property attractive

By THE STAR

THERE is something about London which tugs at the heart’s strings. The place evokes a sense of nostalgia, especially among those who studied and lived there. Australian cities do not have the same effect, says a property consultant and valuer from Henry Butcher.

The company has, of late, exhibited four projects in Malaysia since the last quarter of 2008 after the devaluation of the British pound. There are expected to be more such weekend property exhibitions in Kuala Lumpur, Singapore and Hong Kong in the second half of this year.

Grouped together as the Far East, British developers have been marketing their projects sometimes 10% to 20% off their published British prices.

Says an agent: “Unlike Malaysia, where prices are fixed, it is possible to bring the price down a little or to ask for better terms. Two years ago, there was no room for negotiation. It’s different today.”

He managed to get a two-year rental yield of 6% for a buyer, and an 18-month rental yield for another at the same rate. A furniture package was also thrown in, complete with cutlery, tables and chairs, when these were not included in the selling price.

“If the owner were to provide this for the tenant, it can add up to quite a bit. So there is room for negotiation,” he says.

Despite London being one of the most expensive cities, Malaysians have shown keen interest, but they are price sensitive, preferring those in the £200,000 price range. In ringgit, that’s about RM1.2mil already. (An average cost of a house in mainstream market in Britain and Wales is £160,000. London prices is not representative of those in overall mainstream British market.)

Henry Butcher brought in several projects of late ranging from £120,000 to £925,000 for one to three bedroom units from zone 1, which is prime central London, to zone 5. The most popular was CityWalk, with a SE23, London address close to Forest Hill Station and about 10 minutes to London Bridge. The one-bedroom unit (of about 480 sq ft) begins from £169,950 and the two-bedroom (700 sq ft) units £250,000. This project was sold out when in Singapore, Kuala Lumpur and Hong Kong.

Some buyers have so much confidence in the London property market that they bought without checking out the place. Others prefer to fly over to check out the place.

Two agents from different consultancies say they will not bring in the top end housing in the prime Central London in Chelsea, Knightsbridge or Hyde Park which may go into several million pounds.

“Not that Malaysians could not afford it, but they will not go into this segment,” he says.

If what he says is true, Rahim & Co will have a challenge on their hands. Managing director Robert Ang says it has put together a deal between a Malaysian developer and a British company to enter into a £6mil land deal several weeks ago.

The 50:50 joint venture is expected to develop a five-storey office and residential building located in the heart of Chelsea, one of most affluent prime residential areas in Central London. It is within walking distance of both Kings Road and Chelsea Embankment and the Thames. They are seeking planning permission for 10 units priced between £1,200 and £1,300 per sq ft. How much the unit will sell for is not known yet.

“This will be a quality development,” says Ang. For some buyers, location is paramount. A source related the story of a Malaysian who bought a £600,000 property in the early weeks of the crisis and today is looking for another in prime central London.

During a recent outing to Kuala Lumpur, Battersea Reach in the township Battersea and Aquarius House, on St George Wharf in Vauxhall SW8, had few takers. Singaporeans showed more interest. St George, the developer for both, is a subsidiary of Berkeley Homes group, one of Britain’s largest developers.

Both are riverside projects in the south but in terms of connectivity, Aquarius in Vauxhall SW8 offers more transport options than Battersea. The price for Battersea begins from £830,000 and goes up to £2mil (RM5.80 to £1). There were two buyers for Aquarius House who paid £420,000 and £540,000 respectively for their smaller units.

The development on Battersea Reach started seven years ago and is expected to complete in 2014, while the project on St George Wharf, started 12 years ago. Battersea is located on 13 acres of ex-brewery land. It is next to Wandsworth Bridge SW18, with Chelsea SW3 and Fulham SW6 on the other side. Battersea will have 1,084 units, with 1, 2 and 3-bedroom units.

Everything in the Battersea building have been specked up with modern finishes and comes with fully fitted kitchen with electrical appliances. Both Battersea and Aquarius House have gone to India, Singapore, Hong Kong, Malaysia and United Arab Emirates.

A more affordable project by Berkeley group is Beauford Park in Colindale in the north, zone 4. Located on former aerodrome land, this 25-acre site across a police training grounds, will have 3,000 units of which 650 have been built. The project comes with 1, 2 and 3-bedroom units with price starting from £170,000 and goes up to £1mil for penthouses.

Says St George Central London Ltd managing director Ross Faragher, who is undertaking the project: “The market has been relatively difficult the past year and Beauford Park has been selling better than the rest of the group, at a rate of about five units a month.”

Faragher says the market picked up the last three months. Buyers comprise young professionals and first time buyers.

Consultant: Weigh risks when buying

By THE STAR

A Malaysian property consultant says Malaysians must consider the risks and challenges when buying British properties.

Hall Chadwick Asia chairman Kumar Tharmalingam says unless one have children studying abroad, Britain can be an expensive place to maintain a property, more so London.

Kumar Tharmalingam ... Britain can be an expensive place to maintain a property.

“If you buy a landed property, you have to have somebody to occupy it. Otherwise you may get squatters moving in and you cannot move them out without a court order. The only advantage of buying London property is its capital appreciation and one may be looking at between seven and 10 years before you get real appreciation in value to cover the cost of maintenance,” says Kumar.

He related a friend who had a condominium in Victoria that come with concierge and security. His monthly service charge was £460. He sold it after 4 years as he could not get more than £900 a month rental and half of that goes towards payment of service charges. It is a cost that the landlord has to bear, among other things.

Although Kumar’s friend makes a small profit, the service charge increases by 10% annually, but not the rental. So management is an issue. An agent will charge 10% of the amount to manage the asset and one month rental every time you have a new tenant. The returns on investment is rather unattractive but the capital gain is attractive.

“What buyers are aspiring today is for London prices to go back to pre-2007 value and our exchange rate going back to RM7 a pound.

“But you will be caught unless you pay cash or take up a very small loan over a short tenure because you will be paying in pounds. In addition, Britain has a captial gain tax of 30%.

“If you take all this into consideration, I prefer to buy in Sydney or in Singapore where you are able to monitor your investments more easily. It is also cheaper to maintain. There is also the same value upside but without the currency risk,” says Kumar.

He says the British economy has taken such a deep hit that it may never regain the financial status of pre-2008.

He says prices in Manchester, Liverpool and Birmingham have almost halved. Rates and taxes will be lower, but the resale value will also be lower.

Kumar suggests interested parties check out a website address rightmove.co.uk, one of the country’s most popular property website. It captures every sale, in any district in Britain.

“If somebody offers you a property, you can check the website to see the transacted prices of other properties along the same street by typing the address or street name. You will be able to see the most recent property sold in that street, the type of property, the price paid and whether it is leasehold or freehold. You can even check how far the prices have gone up over the years. That way, you can check if anyone is trying to slap you with a 2007/2008 price.

Agents don’t like websites because you can check yourself. You also need to know what people have paid for in that locality. The price cannot be very far from the other.”

Aspiring buyers must ask three questions: Is that a holiday home? Is it for the children’s education? Is it for investment?

“It can be all three. If it is a holiday home, then somebody must manage it so that it does not get broken into when you are not there. If it is for the children’s education, you can rent it after your children graduate. North of the Thames is always better than south,” says Kumar.

“Another thing to consider is culture. Malaysians are spoilt when it comes to apartment living. We want carpets, high ceiling and en suite bathrooms. These are only found in new properties so forget about the Georgian variety, which may only have a bathroom for an entire three-room house. Look for newer apartments which are better suited for Malaysians. There is no cultural shock.”

Mahabuilders to revive Pandan City Business Centre project

By THE STAR

JOHOR BARU: Property developer Mahabuilders Sdn Bhd plans to revive the abandoned Pandan City Business Centre here into a thriving commercial and educational centre.

Managing director Mustapha Hassan said it was currently talking with several educational-related institutions to set up branch campuses, colleges or learning centres.

He said Universiti Malaysia Perlis would be opening its southern region matriculation centre in January with the initial intake of 120 students.

“We also want to attract private medical service providers and banks here,’’ Mustaphatold a press briefing on Thursday.

He said the project by Kretam Holdings Bhd was left abandoned for almost seven years before Mahabuilders took over in 2007 after paying RM20mil to the bank.

The business centre is located along the Tebrau Highway and easily accessible from the city centre and via Jalan Tampoi and Pasir Gudang Highway.

Mustapha said there were 338 shop-offices in four blocks of four-storey commercial buildings with lifts and 1,000 basement parking lots available for tenants.

He said the company was open to any business proposal including turning Pandan City into a one-stop textile and garments wholesale centre like the one in Jalan Kenanga, Kuala Lumpur.

“Accessibility to the centre will also improve when the flyover from the Tebrau Highway and the exit point from the North-South Expressway (NSE) are completed in a year or two,” said Mustapha.

He said the company also wanted to attract domestic and foreign visitors driving to Singapore via the NSE to stay at its Pandan City Hotel, located just a few kilometres from the Sultan Iskandar Customs, Immigration and Quarantine Complex.

130 abandoned projects yet to be revived

By THE STAR

A TOTAL of 130 out of 151 abandoned housing projects identified by the Selangor Task Force for Abandoned Projects have yet to be revived.

Selangor housing, building management and squatters committee chairman Iskandar Abdul Samad said only eight of them involving 2,710 units of various types were revived and completed.

“But it does not mean the remaining projects cannot be revived. We are studying the matter and looking at the best way to solve the problem,” he said.

The task force was chaired by Hulu Klang state assemblyman Saari Sungip with five consultant firms. The five consultant firms were Rimbun Capital Sdn Bhd, RSS-PMC Sdn Bhd, SSF Corporation Sdn Bhd, Crimson Landscape Sdn Bhd and SMY Capital Sdn Bhd.

The recovered projects include the mixed-development project in Taman Prima Selayang in Gombak involving a total of 110 commercial units, 600 apartments in Bandar Pinggiran Subang and 700 houses in Taman Puncak Jalil.

Iskandar added that one of the reasons some of the projects could not be revived was because no developer or contractors could be found to salvage the abandoned projects.

Some of them found the abandoned projects not viable.

“These are deficit projects, which have suffered lost.

“Most of these projects have been abandoned between 10 and 15 years and the original estimated cost of the project cannot cover the current construction cost,” he said.

Iskandar also added that some of the projects did not get the planning or development approval from the local authority or have broken some of the rules.

“There are also projects that were constructed on agricultural land and the developer did not change the land status for the development.

“Changing the land status will involve additional cost for the new developer,” he said.

He said the task force was in the process of tabulating the real cost involved for each project before taking the next step of reviving them.

“We have blacklisted 115 developers who were involved in the abandoned projects and the list is in our website and the public can find out who they are.

“We are also planning to include the names of the affected company directors in the list for possible legal action against them,” he said.

Meanwhile, in the Bukit Botak issue, Iskandar said the special committee set up to handle the case had started their investigation and was expected to be completed by Aug 18.

“The investigation was to make sure that the rightful person will have fair share of the land ownership.

“Those who are eligible need not worry about it,” he said.

New police station to serve i-City

By THE STAR

TENANTS and visitors to Malaysia’s premier digital city in Section 7, Shah Alam, will be conducting their business with an added sense of security.

The Shah Alam police is planning a new police station at the western boundary of i-City, which will enable them to respond to calls within a minute and offer 24-hour patrol.

Other safety services, such as ambulance and fire brigade, will respond within 15 minutes of any call from i-City.

In the interim, the security measures planned by the police include linking the current CCTV surveillance in i-City to the Shah Alam police station.

Strategic alliance: Selangor Police Chief Deputy Commissioner of Police Datuk Khalid Abu Bakar (front row, third from left) and IBerhad deputy executive chairman Datuk Lim Kim Hong (in suit).

Apart from having patrols from i-City, the police also plans to train i-City in-house security staff.

In today’s competitive environ-ment, a safe and secure zone is an additional competitive edge for i-City, and the strategic alliance with the Polis DiRaja Malaysia (PDRM) is an important feature in ensuring i-City can compete to attract international investors to Malaysia.

The digital city is designed to be managed as one large complex with a controlled tenant mix.

There is CCTV surveillance as well as patrolling guards.

The Concierge in i-City serves both as a meeting point and a one-stop centre.

From a master planning perspective, i-City is bordered on three sides by either a river or housing.

Only the western border is open, but there is a 30.5m-wide (100ft-wide) buffer between this boundary and the main MBSA road.

The site is accessed by a main boulevard with only two entry points, so although it is not a gated community, the development easy security controls.

The project caters for two communities — the knowledge workers and the tourists.

In line with this, there are two major components in the development, i.e. the managed offices and the tourism components.

The office component comprises the MSC cybercentre offices, office towers, data centres and the related infrastructure, while the tourism component comprises the shopping mall, citywalk and media hub.

However, both the knowledge workers and tourists will have many similar requirements.

First, there is a need for i-City to operate round the clock seven days a week as many of the operations have international linkages.

Furthermore, as a tourism destination, i-City has to operate all year round and till late into the night.

Secondly, both the offices and tourism components cater for the international community, for which cosmopolitan outlets and other entertainment facilities like cinemas are integral to their lifestyle.

Then, there is the atmosphere of the place.

Thus within i-City, both the workforce and visitors would want a safe and comfortable environment, both in terms of personal safety and the security of their assets.

And, even more importantly, for i-City Data Centre Park, the operations not only require restricted access but have also to be secured against info-security risks.

The development’s infrastructure is based on the Cisco Connected Real Estate solutions. Cisco is the leading network services in the world from both the technology and data security perspectives.

Ho Hup withdraws one of two land disposal proposals

By THE STAR

PETALING JAYA: Ho Hup Construction Co Bhd yesterday withdrew one of two land disposal proposals tabled for approval at the company EGM, worried that the involvement of an interested party in that exercise could raise shareholders’ objection.

“We are still looking for options to sell the land, maybe via a joint venture with other partners but I think it will not be difficult. However, we need time to solve this matter,” group managing director Lim Ching Choy said yesterday after the meeting.

Lim said shareholders did not support the second land disposal plan due to conflict of interest issues.

The company had proposed to sell two plots of land in Kuala Lumpur to Santari Sdn Bhd and Permata Juang (M) Sdn Bhd (PJSB) for a total cash payment of about RM29.24 mil.

PJSB is a subsidiary of Magna Prima Bhd whose director Datuk Lye Ek Seang also sits on the board of Ho Hup.

Lim was also an executive director at Magna Prima before joining Ho Hup as group managing director.

On Ho Hup’s operations in Madagascar, Lim said the company had obtained back all the machinery confiscated by the Madagascar government following a settlement and now planned to lease them in that country for some income.

“By leasing, at least we can see some positive income to the company even though not that substantial,” he said.

Ho Hup had been involved in a legal tussle with the Madagascar government over a terminated 400km road project.

Lim said for the next six months, the company would continue to generate value from its property projects in Bukit Jalil and launch a mixed development project next year, also in Bukit Jalil.

Property owners urged to settle outstanding assessment fees

By THE STAR

TEMERLOH: All houses and business premises owners here are reminded to settle their outstanding assessment fees to avoid court action and the sealing of properties.

Temerloh Municipal Council president Datuk Zulkifli Yaakob said up to early this year, debts owed to the council stood at RM7mil.

He said during the Ops Sita conducted last month, its enforcement division managed to collect RM2mil in outstanding debts.

“We hope to recover another RM2mil in outstanding taxes before the end of this year,” he said here recently.

Zulkifli said taxpayers’ money would be used by the council to carry out various projects to upgrade infrastructures and public facilities in the district.

He said records showed that Mentakab had the highest number of outstanding debts due to the many business premises and housing estates.

“In the latest operation, we succeeded in collecting outstanding debts amounting to RM300,000 from 97 business premises and houses in Taman Temerloh Jaya.

“The move was provided for under Section 148 of the Local Government Act 1976,” he said, adding that the council would continue to initiate such operations from time to time, targeting those who were still adamant and reluctant to pay up.

Zulkifli said defaulters were being unfair to others who paid on time but utilised the same facilities managed by the council.