Thinkproperty Blog

PETALING JAYA: I-Bhd has inked an agreement with Everbright International China to co-develop the remaining 30 acres of land in i-City, Shah Alam. Everbright will hold a 70% stake in the deal, while I-Bhd will hold the remaining 30%.

Under the agreement, Everbright will finance the entire construction and lead a consortium of China-based companies to set up operations in i-City, while I-Bhd would be responsible for providing the land, as well as ensuring that the subsequent development would continue to be certified as an MSC Malaysia Cybercentre and a tourism destination. The consortium will also be responsible for marketing the commercial hub in China.

According to I-Bhd group chief executive officer Datuk Eu Hong Chew, the value of the JV is not only in having Everbright as a co-developer, but Everbright will also be spearheading a consortium of other Chinese investors to work with i-City. "We are honoured to be able to work with a Chinese company, following investments by Australia's Servcorp Ltd and Al Rajhi Bank in i-City.

" I-Bhd executive chairman Tan Sri Lim Kim Hong said that the strategic alliance with Everbright was in-line with the Selangor state government's vision of transforming Shah Alam into an international metropolitan city. Everbright chairman and chief executive officer Zhang Huaipu said Everbright was seeking more investment opportunities in Malaysia.

SEREMBAN: More large developers are expected to work with the government to build afforable homes under the Projek Perumahan Rakyat 1Malaysia (PR1MA) housing scheme. Prime Minister Datuk Seri Najib Razak — who launched PR1MA's collaboration with Sime Darby Bhd to build 2,200 houses in Labu, Seremban on Tuesday — told reporters, "They are coming on board one by one. Sime Darby is the first because they have land and are prepared to launch.

 So we gave them the honour." The prime minister said PR1MA is scouting for land to undertake affordable housing projects. The chairman of PR1MA is former minister and current ambassador to the US Datuk Seri Jamaluddin Jarjis and the chief executive is Datuk Abdul Mutalib Alias. The first PR1MA housing project was launched in Putrajaya two months ago.

 But the project launched on Tuesday is the first development to be undertaken jointly by PR1MA and a private entity. The project will have 2,200 houses on 62ha. The units are priced at RM200,000 to RM250,000 and the studio apartments will cost around RM140,000. Phase one will comprise 420 homes. "This will fulfil the needs of those who earn RM2,000 to RM6,000 who are in need of housing but cannot afford houses at the high prices on the open market.

 "With the cooperation between the government and private sector through a public private partnership, this programme will be able to provide quality and affordable homes for this group," said the prime minister. Najib said the partnership is a social business model where the developer does not make any profit or loss.

PETALING JAYA: Ekovest-MRCB JV Sdn Bhd, a 60:40-joint venture between Ekovest Bhd and Malaysian Resources Corp Bhd (MRCB), has finally been appointed the project delivery partner (PDP) of the RM2.2 billion Klang river rehabilitation and beautification project, known as the River of Life project. The JV first obtained the letter of intent from the government for the job back in February. According to the announcements made by both Ekovest and MRCB on Tuesday, the JV as the PDP will receive 1% of the estimated value of the project of RM2.2 billion, or RM22 million, as compensation for managing or coordinating the river rehabilitation and beautification projects over a three-year time period.

 "The PDP will also enjoy monetary incentives with respect to the river rehabilitation and beautification works," said Ekovest-MRCB JV in a press statement, without elaborating. Notwithstanding the "monetary incentives", the 1% fee or RM22 million may seem low compared with the usual contract margin in the construction industry that is at least 5% or more. Nonetheless, according to a source familiar with the River of Life project, Ekovest-MRCB JV could still actually bid for the cleaning, rehabilitating and beautifying works for the project through a Swiss challenge exercise, which was what applied to the MMC-Gamuda JV in the MRT project.

This means the Ekovest-MRCB JV could still bid for the tenders and the authorities would call for other companies to submit a matching or better proposal to get the best quality at the lowest possible cost. "The government has actually mentioned that if the JV can do the work at a cheaper rate than the other bidders, it would get the job. It doesn't matter if it (the JV) was appointed the PDP, as the project does not belong to it. "The River of Life project is led by a multi-agency task force under the purview of the Ministry of Federal Territories and Urban Wellbeing, hence the authorities will call for the tenders," the source said.

KUALA LUMPUR: Malaysian developers that enthusiastically expanded across the Causeway could hit a bump in their plans, following the latest move by Singapore to further cool its property market by making buyers, particularly foreigners, pay more in taxes. Singapore’s government had on Wednesday announced that foreigners buying private homes will have to fork out an additional stamp duty amounting to 10% of the property’s value.

Singapore permanent residents meanwhile will be subject to an additional stamp duty of 3% for second and subsequent properties while citizens purchasing their third and subsequent homes will similarly have to pay an extra 3% on the property’s value. Foreign buyers accounted for 19% of all private residential purchases in 2HFY11, up from 7% in 1HFY09. Explaining its rationale, the government said in a press release that demand for private residential properties in Singapore remained firm and prices have continued to rise, albeit more slowly in the last two quarters.

It can’t help that the new measures, which came into effect yesterday, raised concerns that property developers will be hit in the immediate term. Malaysian property players that have expanded to Singapore include S P Setia Bhd, Selangor Dredging Bhd, IOI Corp Bhd, YTL Land and Development Bhd and sovereign wealth fund Khazanah Nasional Bhd. “The effect is expected to be most felt by developers with projects in the pipeline as well as those that sell substantially to non-Singaporean customers,” said a local property analyst.

PUTRAJAYA: International hotel operator Accor announced its plans to establish 10 new hotels in Malaysia as part of its robust expansion plan in the country.

According to Accor Malaysia, Indonesia & Singapore vice president Gerard Guillouet, the ten new hotels will add significantly to Accor's presence in Malaysia, as the success of its four existing hotels provides the confidence to aggressively expand its network of hotels in Malaysia.

"The success of these ventures is due to Accor's business model, whereby Accor brings its international expertise in the fields of hotel construction, product concept, design and branding, as well as its global sales, marketing and distribution network, and co-operates with partners having local expertise and investment knowledge. This has encouraged and given us the confidence to aggressively expand our network with 10 more new hotels that are to be opened next year and 2014," he said.

The 10 hotels announced together with their forecasted date of completion are: Pullman Kuala Lumpur, 513 rooms (2012); Pullman Port Dickson, 318 rooms (2014); Novotel Melaka, 320 rooms (2013); Novotel Klang Valley 1Gateway, 187 rooms (2013); Ibis Styles Fraser Business Park Kuala Lumpur, 500 rooms (2012); Ibis Styles Cheras, 156 rooms (2012); Ibis Styles Johor Bahru, 179 rooms (2013); Ibis Styles Kota Kinabalu Inanam, 165 rooms (2013); Ibis Styles Lahad Datu, 108 rooms (2013); and Ibis Styles Ipoh, 118 rooms (2013).

KUALA LUMPUR: The mega projects to build more skyscrapers in Kuala Lumpur city centre that are in the pipeline will result in an oversupply of office space in the Klang Valley by 2014, said CB Richard Ellis (M) Sdn Bhd executive chairman Christopher Boyd.

“We are looking at a picture where supply [of office space] is going to likely outstrip demand,” he said at a luncheon talk hosted by MIDF Amanah Investment Bank Bhd last October 31.

“This year alone, new supply was over four million sq ft which is already in excess of demand even in a good year,” said Boyd, pointing out that demand for new office space averaged two million to three million sq ft net in the Klang Valley.

“Next year we are looking at six million sq ft [in new office space]. It [supply] will fall in 2013 but in 2014 we’re looking at 10 million sq ft,” he said.

KUALA LUMPUR: With about two months to go till 2012, Zerin Properties Sdn Bhd CEO Previndran Singhe is expecting real estate transactions to slow down before picking up again in the middle of next year.

Previndran said the market in 2012 will be stable. “I am of the opinion that 2012 will be a stable year. Prices will remain stable, with asking prices, not values, becoming more reasonable as owners check their values to real pricing,” he said.

Despite the uncertain global economy which could edge towards a slowdown, Previndran believes the Malaysian property market will not weaken but will soften in early 2012 and improve thereafter.

“At present, overall purchasing sentiment is down due to the eurozone financial crisis and double-dip fears,” Previndran told The Edge Financial Daily.

KUALA LUMPUR: The Ascott Ltd has been appointed managers of the Somerset Puteri Harbour serviced residences in Johor upon its completion.

Scheduled to be launched next month, the 204-unit serviced residences — located in the waterfront development of Puteri harbour in Nusajaya, Johor — is being developed by Nusajaya Consolidated Sdn Bhd (NCSB), a joint venture between United Malayan Land Bhd (UM Land) and UEM Land Holdings Bhd. The units range from studios to three bedroom units with prices starting from RM80 psf.

NCSB has on Tuesday, Oct 25 inked an agreement with Ascott to provide technical advisory services during the development of the project and another agreement for Ascott to provide management services upon completion of Somerset Puteri Harbour in 2013.

Present at the signing ceremony were NCSB director Pee Tong Lim, who is also UM Land group CEO, Ascott regional general manager for Singapore and Malaysia Tan Boon Khai and UM Land director of operations Zulkifly Garib. Also present was NCSB director and managing director/CEO of UEM Land Datuk Wan Abdullah Wan Inbrahim.

Maintain overweight: Desa Park City’s latest offering — The Mansions, comprising 127 units of  terrace houses — was launched over the weekend with about 85% of the units sold at average pricing of RM620psf to RM650psf. The Mansions came in three variants — 2½-storey, 3-storey and 3½-storey units.

The 2½-storey houses — 33 units on offer — have been expected to sell well given the overwhelming interest. Hence, the sale was done via balloting with prices starting at RM2.7 million. Each unit has a built-up of about 4,400 sq ft with a land area of 2,200 to 4,000 sq ft. We understand the bulk of the purchasers for these units are investors.

The response to the 3-storey and 3½-storey units with prices starting at RM3.6 million and RM4 million — which come with a lift in each unit — was strong as well with an average 80% take-up. The 3-storey units boast a bungalow-like built-up of 6,100 sq ft with land area ranging from 3,100 to 4,200 sq ft . Each of the 3½-storey units has a built-up of 6,500 to 7,200 sq ft.

We are not surprised that the take-up has been strong despite the premium pricing given that Desa Park City is a matured and very well-planned township featuring good security, accommodating the ever-changing demands of property buyers.

Extract from The Edge (11/05/11)

Underscoring their defensive characteristics, earnings results for 1Q2011 for the two largest real estate investment trusts (REIT) on the local bourse were broadly in line with market expectations. No major surprises.

CMMT cmpletes first post-listing acquisition

CapitaMalls Malaysia Trust (CMMT) — the second largest REIT on the local bourse by market capitalisation — has just completed its first property acquisition since its debut on Bursa Malaysia in July 2010. The purchase of Gurney Plaza Extension was finalised at end-March 2011 — and its contributions will be reflected in the current quarter’s results and beyond.

To recap, the new acquisition is a nine-storey retail extension block adjoining the Gurney Plaza mall in Penang with a RM215 million price tag and added almost 140,000 sq ft of net lettable area (NLA) to CMMT’s portfolio of assets under management. That is equivalent to an area expansion of roughly 7.5% and raised its total NLA to just over two million sq ft.

Extract from The Edge (09/05/11)

KUALA LUMPUR: BERTAM ALLIANCE BHD []’s unit has inked a joint development agreement for a mixed development project of residential and commercial shoplots in Johor with a gross development value (GDV) estimated at no less than RM400 million.

In a statement Monday, May 9, Bertam said its wholly owned unit UH Capital Sdn Bhd had entered into an agreement with GJH Development Sdn Bhd for the joint development of 270 acres of land at Mukim Seroh in the district of Ledang in Johor.

UH Capital owns the land, and GJH is the developer.

Bertam said the land would be developed in two phases and the planned joint development was expected to commence upon receiving approval from the relevant authorities, with completion expected within six years.

Extract from The Edge (29/04/11)

KUALA LUMPUR: Residential property prices may see corrections this year. Having escalated too quickly last year, property prices may soften for certain products in certain locations, said Swhengtee International Sdn Bhd founder and president Gavin Tee.

“It will depend on the type of property and location. You have seen prices rising since 2007, and last year’s level was especially high. Areas that don’t normally have high appreciation have also seen impressive capital gains. I expect some corrections this year,” he told The Edge Financial Daily at the Third Anniversary Swhengtee Property Talk on Wednesday.

At the talk, Tee advised participants that some “very hot” markets could overheat. He noted that property cycles in some so-called property investment “hot spots” were also getting shorter.

“Investors must learn to study the product and verify the information about it. They shouldn’t make their buying decisions based on their impressions of the product or the salesperson,” he added.

Extract from The Edge (29/04/11)

KUALA LUMPUR: Hatten Group Sdn Bhd is stamping its mark in Melaka with a RM2 billion mixed commercial development known as Hatten City.

“The 20-acre project will be the largest new development in the historical city,” said Hatten Group managing director Colin Tan.

The project is situated just 2km from Dataran Pahlawan Melaka Megamall in Melaka Raya, currently the largest mall in Melaka, also by the developer.

To be developed over two phases, the first phase comprises 800 retail units, 700 residential units and two hotel towers. The retail units with built-ups between 120 sq ft and 2,000 sq ft will be housed over levels 1 to 4 and priced between RM1,200 and RM1,500 psf. Called the Elements, the retail portion occupies some 2.4 million sq ft gross floor area and 1.5 million sq ft of net lettable space. The first phase will be launched today.

Extract from The Edge (22/04/11)

KUALA LUMPUR: The Malaysian Developers’ Council (MDC) wants the government to expand the coverage of the newly launched My First Home Scheme.

It proposed that the RM100,000 minimum housing price for eligibility under the scheme be lowered to benefit lower income homebuyers of medium low-cost housing, said MDC in a statement. The eligibility however, should exclude low-cost housing.

Under the scheme launched by the government with the collaboration of national mortgage company Cagamas Bhd and financial institutions, first time homebuyers earning less than RM3,000 per month can obtain 100% financing for houses priced between RM100,000 and RM220,000 with a repayment period of 30 years.

Although the scheme will boost the housing market by promoting home ownership among Malaysians, it needs to be reviewed to benefit more homebuyers, said MDC.