SP Setia plans new revenue churner

By BUSINESS TIMES

SP Setia Bhd, Malaysia's most valuable property developer, says it is keen to establish a real estate investment trust (REIT) in the near future to create another income stream for the company.

No less exciting is the Selangor-based real estate group's planned foray abroad to further diversify its earnings. The company has identified Vietnam as its first stop.

SP Setia's potential REIT, which could materialise within three years, may include the developer's upcoming commercial properties, and a foreign hypermarket within the property group's premises, says SP Setia group managing director cum chief executive Tan Sri Liew Kee Sin.

SP Setia is planning four commercial jobs worth a combined RM5 billion on some 103ha of land in Selangor and Johor over the next five years.

"Tesco has signed one hypermarket with us. Our commercial centre Setia City in Shah Alam can go into the REIT, but Setia City is due for completion in three years.

"Like anybody else, we can revalue our assets and still own part of the REIT, besides earning management fees," Liew told Business Times in an interview in Puchong, Selangor, recently.

SP Setia said in May last year it would build, on its 3.2ha freehold site in Shah Alam, a commercial property with 265,871 sq ft of gross built-up area.

Upon completion, the developer will lease both land and building to UK's Tesco for 30 years.

Liew said SP Setia plans to develop townships within the fringes of Vietnam's Ho Chi Minh City. The property group had, however, set up an office in the Indochinese city nine months ago to study the Vietnamese real estate market.

"Vietnam is a good destination because of its rapid development. We need to look at areas slightly out of Ho Chi Minh City like suburbs to develop townships," said Liew.

He, however, did not specify the timing of SP Setia's potential initiative there, or say how much money the company will earn from its future ventures abroad.

Projects by SP Setia which owns some 1,840ha of untouched land in Malaysia, include the Setia Alam in Selangor, Setia Indah in Johor and Penang-based Setia Pearl Island.

The Bursa Malaysia main board-listed company, which is also into construction and production of wood-based offerings, may also develop properties in Sabah.

Commercial properties, a new growth driver for the developer, may constitute up to a fifth of the group's fiscal 2007 revenue, Liew said last month.

To expand its product range, the developer is also making its maiden entry into upmarket real estate near the Kuala Lumpur City Centre, where the iconic Petronas Twin Towers sit.

SP Setia's first fiscal quarter to January 31 2007 net profit rose by 1 per cent to RM46.7 million, or 7 sen a share. Revenue, however, dipped 9 per cent to RM255.2 million.

"For the first five months of financial year 2007, we have sold about RM500 million woth of properties. Sales mainly came from Penang and Klang Valley," Liew said. It is targeting RM1.2 billion in turnover for the year, 4 per cent above the RM1.15 billion in 2006.

SP Setia shares added 4 per cent or 35 sen to RM8.35 which led to a market capitalisation of RM5.62 billion last Friday.

The stock has gained 64 per cent so far this year, outperforming the Kuala Lumpur Composite Index's 20 per cent rise.

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Setiahills Ampang offers buyers holiday resort experience

By THE STAR

SETIAHILLS Ampang, the country's first spa villas, is out to woo those in search of luxury living amid the embrace of nature with its limited edition of 45 lavish residences.

Located on the last 15 acres in SP Setia Bhd's 255-acre Bukit Indah Ampang, the premium bungalows perched atop the highest point of Bukit Indah adjacent to the Ampang Forest Reserve provide residents a panoramic view of the Kuala Lumpur skyline.

SP Setia divisional general manager of investment and business development Wong Tuck Wai said Setiahills’s tropical spa villas have redefined luxury living.

“It is our interpretation of resort style living where you can relax and be pampered, truly your own holiday-destination home.

“We believe buyers will like the spa villa concept with the resort lifestyle elements and carefully thought out layout with spacious areas,” he added.

It is an exclusive project that seeks to recreate the nostalgia of traditional homes with thoughtful architectural features.

According to Wong, homeowners will find Setiahills a private haven as it is nestled against the forest reserve while located in the established Ampang area that is so convenient and accessible.

At Setiahills, residents get to enjoy a perpetual holiday resort and bask in a host of luxurious features such as a private swimming pool, relaxing outdoor spa and massage deck.

The master bedrooms are designed like villas - spacious and fitted with roof garden and outdoor shower.

Fitted with smart home alarm features, owners also get to enjoy a four-acre green lung within the low-density guarded development of only 45 spas villas, or about 3 units per acre on a 15-acre land. There are 13 designs of 2 and 2½-storey and 3 and 3½-storey villas.

With built up ranging from 7,600 sq ft to 11,000 sq ft and land areas from 6,000 sq ft to 30,000 sq ft, the spa villas are priced from RM2.3mil to RM3.6mil a unit.

“We believe Setiahills offers good value for money as the built up pricing is only from RM300 per sq ft,” Wong said.

Being the only up-market project on an exclusive hillock in Ampang, the development has become a big hit among affluent Ampang locals who want to reside in the area but upgrade to a more luxurious environment.

Ampang is a matured neighbourhood with middle to upper class neighbourhoods and there is a lack of luxurious high-end projects within a secured area like Setiahills.

Since its launch in January, the project with a total gross development value of RM120mil has recorded 60% sales.

Bukit Indah Ampang in the heart of Ampang comprises some 3,000 residential and commercial units. Launched in December 1990, the sold out project neighbours other premier developments in the Ampang-Ulu Kelang area and is only 20 minutes from Kuala Lumpur.

Among the signature features of the township is an exclusive range of condominiums such as Emerald Hill Condominiums, Crystal Towers and Sri Baiduri that are nestled on high vantage points with good views of the city.

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More high-end Duta series from SP Setia

By THE STAR

SP Setia Bhd is keen to launch more high-end Duta range of residential projects to tap the growing demand for such residences in the Klang Valley.

According to divisional general manager of investment and business development Wong Tuck Wai, the company is making efforts to further develop the Duta brand of residences into “trophy” houses.

Wong, who heads SP Setia's Duta range of projects, said since the company ventured into the high-end residential sector through its Duta Nusantara and Duta Tropika projects, it has topped the scale in the luxurious home market.

“Ultra-lavish projects such as the tropical enclaves of Duta Nusantara - the winner of Fiabci Malaysia 2006 best low-rise development award, and the recently handed over Duta Tropika has upped the bar in the super luxurious market.

“They provide home-owners with the ultimate luxury and pampering with resort-styled abodes decked in beautiful and high-quality fittings to fulfil the every heart’s desire,” he said.

Among the general expectations for high-end products are a unique concept, lifestyle living, security, high returns potential and proximity to amenities.

Wong said in the high-end property sector, the buyers are savvy and know exactly what they want.

“Purchasing property can be a very personal choice and different people will have their own preference. From our experience, buyers of Duta Nusantara and Duta Tropika liked the project’s proximity to downtown Kuala Lumpur, educational facilities and a host of modern amenities.

“As for Setia Eco Park, the buyers are taken in by the rich biodiversity of flora and fauna in the project’s lush landscape,” he added.

Wong Tuck Wai with a model of the Setiahills project in Ampang

Wong is confident that the Government's latest initiatives to scrap the real property gains tax and the encouragement of foreign purchasers to invest in the country's property sector would go a long way to promote sales of high-end residences.

“In tandem with the strong demand outlook for high-end homes, we are keen to develop more niche up-market boutique projects in strategic locations.”

Based on the just released National Property Information Centre (Napic) figures, properties priced above RM500,000 accounted for less than 10% of total residential property transaction last year.

The high-end market yields higher margins, enjoys shorter project turnaround and is seeing burgeoning demand due to the rising income level of prospective purchasers.

A closer view of a model of the project

Wong said the confidence in the high-end market prompted SP Setia to embark on the country’s biggest up-scale project - Setia Eco Park in 2005 to tap the opportunities in the growing market.

Over the years, the company has evolved from targeting at the mass market through the Setia brand to the nature-themed Eco and high-end Duta brand.

For the financial year ended Oct 31, 2006, the Duta series of residences made up 15% of the company's sales of RM1.4bil while 30% was from the Eco range and the balance from the Setia series.

With the latest Duta project, Setiahills Ampang that was launched in January and the upcoming launch of the company's maiden luxury condominium project next year, contribution from the Duta products to total sales is expected to rise to 20% in the next two years.

SP Setia plans to acquire two parcels of prime land measuring 5.96 acres in the heart of KL city.

It will pave the way for its foray into the luxury condominium market.

The development named Setia Residences will have an expected gross development value of RM500mil.

“The move to introduce a high-end luxury condominium brand is synergistic with our business strategy to tap into the robust demand for such products in the city centre. It is a good opportunity for SP Setia to venture into a quick turnaround project,” Wong said.

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i-City sets new standard in malls

By THE STAR

I-Bhd has finalised plans to build a 2.5 million square feet regional shopping centre in its proposed RM1.5 bil i-City in Shah Alam.

Chief executive officer Eu Hong Chew in disclosing this to StarBiz said the centre would comprise a conventional shopping mall and the open-air Citywalk street mall with a 1.3 mil sq ft net lettable area.

The three-level shopping mall, slated to be the biggest in Shah Alam and Klang, and one of the biggest in the country, would boast of many unique features including an acre-sized pond in the central atrium and broadband connectivity.

“Construction work will start end of this year and is expected to be completed in 2010,” said Eu, adding that the mall would be for lease only.

“The rental will provide a long-term income stream for the group,” he added.

An artist’s impression of the shopping mall in i-City

Eu said the proposed shopping centre would be different in that it would be completely “wireless”.

“When you enter the mall, you can read from your hand phone or PDA the mall's directory or receive information about events at the mall via short messaging service,” he said.

The shopping centre, shop offices and innovation centre would be developed between three and five years under Phase 1.

I-Bhd, which is expected to make an announcement about the mall at its AGM tomorrow, has entered into strategic partnerships with Intel, Telekom Malaysia, Universiti Industri Selangor (UniSel) and recently with Cisco to develop the digital capabilities of the 72-acre freehold development in Section 7, Shah Alam.

The ICT master plan for i-City will include an ICT/digital products retail centre; setting up an incubation programme, establishing a technology showcase, implementing digital technology based township services such as remote surveillance, smart car parking, information kiosks and sensory-activated light and sound multimedia displays along City Walk. The shopping centre's retail consultant, Allan Soo is confident of its success given its prime and strategic location being just off the Federal Highway with easy accessibility to various highways.

“It is also strategically located between Klang and Shah Alam where the catchments are about 600,000 people within a 15-minute drive,” he said.

Eu Hong Chiew

He said Shah Alam and Klang have a population of over one million.

Soo who is managing director of Regroup Associates Sdn Bhd, a property consultancy and real estate firm, said its other strong points include its unique concept that offers a new shopping experience.

He said the total net lettable area of the mall is 840,000 sq ft with half level basement car park. When the City Walk is included the total leasable area would be 1.3 million sq ft.

Soo said although there were many shopping centres in the Klang Valley not many of them were “quality malls”.

“In order to be successful we have to differentiate in terms of trade mix, tenant mix, concept and even size. In our case the mall in i-City will be the biggest in Shah Alam and Klang and this differentiates us from the other malls.”

Concept-wise, it would also be unique in that there will be an open-air central atrium with a one-acre pond in the centre. People at the lower ground floor and basement level would be able to see a cascading waterfall while those at ground and upper ground levels would enjoy the spectacle of a big fountain and the pond. There will be four entrances.

“There will be alfresco F&B outlets around it,” he said, adding that the proposed mall would be a “mid-mid market” mall unlike the Mid Valley Megamall that is positioned as a “mass mid market” shopping centre.

Soo said talks were in progress with several famous international parties to look into the feasibility of jointly developing the mall. “Having a renowned international party would give a strong branding to the entire development. Over the long-term we may put it (shopping centre) into a REIT,” he added.

The mall will boasts of state-of-the-art security features such as IP surveillance with integration to the Intruder Alert Systems.

Selangor State Executive Councillor Datuk Ch'ng Toh Eng, who is chairman of the state Multimedia, Environment & Village Development Portfolio said the state government hoped that Rapid KL could provide feeder service between i-City and the KTM station at Kampung Padang Jawa and for the LRT to be extended from Kelana Jaya to i-City as well. “We have held talks with the parties concerned on the matter,” said Ch'ng who is also chairman of the steering committee for i-City.

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Local shopping centres need to be innovative

By THE STAR

Are our shopping centres keeping abreast with the times?

This question may sound odd when we think we have mega malls that are second to none in the region.

After all we have the “mother of all malls” the Berjaya Times Square with its huge theme park and the popular Mid Valley Megamall and Suria KLCC with its park and Petronas Twin Towers.

Most of our shopping centres are part of an integrated development as compared to many departmental-style shopping centres in countries like Japan and Australia.

Although our top shopping centres are modern with plenty to offer, there is something amiss.

We still lack style, innovation and a wide customer loyalty base.

Let's look at style.

Those of you who have travelled abroad may agree that we seem to be years behind some foreign countries especially in terms of retail outlet layout and product packaging.

The open air central atrium with an acre-sized pond surrounded by alfresco dining in the proposed shopping mall in i-City

The retail scene in Tokyo for example gets better all the time.

Just visit a food centre at a department store be it Mitsukoshi, Tobu, Isetan, Takashimaya, Parco or Matsuzakaya. They offer a wide range of foodstuff ranging from gift boxes, take-away to food that is hot from the oven and they are stylishly packaged that add value and attraction to the product.

As for innovation, several shopping centres in Tokyo are re-inventing themselves. During a recent vacation to Tokyo, I was astonished to find that Takashimaya Times Square is undergoing a major facelift. So has Isetan.

The latest attraction is the art, cultural and entertainment hub of Roppongi Hills that boasts of Tokyo's largest cinema complex where people can enjoy all night movies on weekends and there are three floors of posh restaurants.

I was impressed with the Arena with its giant TV screen and the lovely Mohri Garden beside the modern TV Asahi building.

Visitors going up a high escalator are greeted by a giant spider-like sculpture in front of the Roppongi Hills Mori Tower.

There are also many new retail outlets selling all kinds of innovative things in Tokyo.

There is a shop at Sunshine City selling do-it-yourself teddy bears where shoppers can buy clothes, shoes, bags and what not to stuff and dress up their teddies. The Build-A-Bear Workshop is very popular with young Japanese women.

There is also a florist shop called the Odakyu Florist next to My Lord in Shinjuku that sells mini bouquets in chic boxes packaged with expensive chocolates, fruits and even a bottle of wine as a gift for occasions like weddings and birthdays.

During a trip to Chengdu, China two months ago, I saw a pretty model dressed in ancient court costume sitting at the display window of a wedding shop.

She drew quite a large crowd of curious onlookers.

At a small restaurant in Ikebukuro, a sub centre in Tokyo, diners eat, chat and watch movies on LED monitors placed on each table.

While some of our shopping centres like Sunway Pyramid, 1 Utama and Mid Valley Megamall are expanding or have increased in size, what is needed is more unique retail mix and exciting concept to give shoppers that “oomph” in shopping experience.

There are too many repeat retailers with nothing new to show.

The upcoming Pavilion shopping centre at Jalan Bukit Bintang is expected to introduce some new brand names.

We should nurture more local brands and get more foreign brands but are we ready for a sophisticated product and prepared to pay for it?

The proposed “wireless” shopping mall in i-City would be a welcome change especially to the Klang and Shah Alam retail scene as it promises an exciting concept.

I-City has been master-planned by Jon A Jerde, the renowned US architect behind such successful retail projects as the Mall of America and Universal Citywalk.

In Jerde’s master plan for i-City, the shopping centre would be the heart of i-City with pedestrian linkages to all the other components.

As Richard Chan, director of consultancy firm RCMC Sdn Bhd said the challenge was managing shopping centres.

He said a recent trend is the changing street mall concept. “After The Curve, there are many street malls in the pipeline. A concept must be well planned to meet the customers' needs and the environment,” said Chan who is the Malaysian Association for Shopping and High-Rise Complex Management (PPK) advisor.

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Hektar-REIT to pay 2.5 sen dividend for Q

By THE STAR

PETALING JAYA: Hektar-REIT will declare a 2.5 sen a share dividend for its fiscal first quarter ended March 31.

Hektar Asset Management Sdn Bhd chairman and chief executive officer Datuk Jaafar Abdul Hamid said the company had a quarterly dividend distribution policy in line with international best practices for real estate investment trusts (REITs).

Hektar Asset Management is the manager of Hektar-REIT, a retail mall property trust.

Jaafar said the quarterly dividend distribution policy was aimed at encouraging greater foreign and local investor participation in Hektar-REIT.

“We want to reward investors for their support and patience,” he told StarBiz yesterday.

In Hektar-REIT’s prospectus, the company pledged to offer total dividends of 9.6 sen a share or 90% of the actual net income for the year ending Dec 31, 2007 whichever was higher.

Jaafar said Hektar-REIT was honouring its pledge. “We are confident of delivering on the dividend payout because of our strong management and execution,” he said.

For the first quarter, Hektar-REIT achieved revenue of RM23.6mil, or 2.8% above expectation.

“The improved revenue was attributed to an increase in exhibition income, casual leasing and carpark fees. We also managed to reduce operating expenses by RM8.7mil through more efficient property maintenance and marketing,” Jaafar said.

He also said the first-quarter net profit was RM11.2mil higher than forecast owing to an increase in net property income and reduction in interest expenses.

The company secured a variable rate finance of 4.7%, which was lower than the 5.8% interest expected on its RM184mil borrowings.

Jaafar said due to the company’s prudent management of finances, Hektar-REIT’s earnings per unit now stood at 3.5 sen with RM1.04 net asset value after the provision of RM7.6mil dividend payout.

Going forward, he said, the management company was studying 10 shopping centres, three of which were in the due diligence phase.

“We plan to inject another property into the REIT by year's end,” Jaafar said, adding that it was on the lookout for old, “tired” shopping centres, ranging from neighbourhood to regional malls that could be revitalised through capital injection and good management.

Hektar-REIT has about 80 million sq ft of net lettable area (NLA) of retail space.

“Our portfolio is worth RM500mil, which is about 1% market share of the NLA shopping space,” Jaffar said, adding that there were about 200 shopping centres in Malaysia built over 20 years ago with huge potential for a turnaround.

Currently, the trust owns two assets – Subang Parade in Selangor and Makhota Parade in Malacca - worth a combined RM523mil.

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