Fajarbaru JV buying 44ha site in Balik Pulau

By Sharen Kaur
sharen@nstp.com.my
Published in NST on May 26 2011

A joint venture (JV) between Fajarbaru Builder Group Bhd and Sagajuta (Sabah) Sdn Bhd is on the verge of buying 44ha of land in Balik Pulau, Penang, via a private tender, people familiar with the matter said yesterday.

At least two people with direct working knowledge of the two companies independently confirmed the JV's plan to acquire the land from a local non-government organisation in a cash deal valued at around RM200 million.

According to land brokers, land in Balik Pulau sells at between RM16 per sq ft (psf) and RM35 psf, depending on the type of land.

Among factors taken into consideration are if the land is leasehold or freehold, and whether it is agriculture, industrial, estate, orchard or housing land.


Business Times was told that an announcement by the JV on the matter will be made by as early as next month.

It is understood that the JV intends to undertake medium- to high-end property development projects, which collectively boast a gross development value exceeding RM3 billion.

Securing the project will be a critical boost for Fajarbaru, which is partly controlled by Datuk Low Keng Kok, former managing director of Road Builder (M) Holdings Bhd.

Fajarbaru is a successful medium-sized construction company, but it has been facing a margin squeeze as construction margin here is not as lucrative as before.

For the nine months ended March 31 2011, Fajarbaru posted a lower group level pre-tax profit of RM15.75 million versus a group pre-tax profit of RM19.31 million in the same period a year ago.

This is despite revenue for the period under review growing marginally to RM126.01 million from RM121.27 million before.

Analysts said construction margins are currently between 8 per cent and 12 per cent, while margins for property development vary from 18 per cent to as high as 30 per cent.

The planned township, which will take five to 10 years to develop, will comprise landed and high-rise residences, a commercial hub, mall and leisure properties, a source said.

Zerin Properties founder and chief executive officer Previn Singhe said with strong demand for landed properties in Penang Island, the project will be well-received if given the approval.

"Penang is a strong market. If you build good condominiums, people would buy. We expect sales to be very domestically-driven," he said.

Fajarbaru's partner in the JV, the privately-held Sagajuta, recently gained prominence after it emerged that the Sabah-based company had identified Robert Kuok Hock Nien's Jerneh Asia Bhd as a possible reverse takeover target.

Both companies are now in the midst of trying to finalise the deal, Jerneh Asia's filings to the stock exchange show.

One of the key driving forces of Sagajuta is its managing director Datuk Chan Boon Siew.

In Sabah, Sagajuta is famous for its 1Borneo development project, the first and largest lifestyle hypermall in the land below the wind.
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Malton plans RM2.2b launches over next 3 years

By Sharen Kaur
Published in NST on May 21 2011

Malton Bhd plans to launch eight property development projects worth some RM2.2 billion over the next three years, as well as beef up its construction division.

Executive director Hong Lay Chuan said Malton's construction unit has about RM200 million-odd worth of jobs in hand and that the division currently contributes some 30 per cent to group revenue.

Hong told reporters after the company's shareholder meeting here yesterday that Malton is bidding for design and build projects from the private sector.

He did not rule out tendering for government projects, especially those that come under the Economic Transformation Programme.


"We are bullish on both sectors and hope to do better this year. We do anticipate high cost in land and raw materials but if market sentiments hold up, we should do okay," he said.

For the nine months to March 31 2011, Malton's net profit increased threefold to RM45.7 million on a revenue of RM294.5 million.

On property development business, Hong said Malton foresees the market to be strong this year as demand for new houses is increasing.

Malton's eight new projects comprise medium to high-end residential and mixed property developments, the majority of which are located in the Klang Valley and some in Penang.

Hong said Malton is poised to benefit from the new launches, based on the success of its existing projects in the marketplace since mid-2010.

Malton has five on-going residential and mixed development projects worth some RM1 billion in the Klang Valley.

Hong said the projects in Bukit Rimau and Mutiara Indah in Puchong, which consist of 101 units of shop units and terraced houses respectively, were sold out even before the launch.

"We are looking for landbank to expand our property development division hence the need to raise funds," he said.

Yesterday, shareholders approved Malton's plan for a rights issue to raise between RM139.3 million and RM156.6 million.

Malton will use part of the money to buy land and undertake property development projects. Some RM60 million will be used to pare debt.

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RM6.5b offer for Selangor water bonds?

By Sharen Kaur
sharen@nstp.com.my
Published in NST on May 20 2011

The federal government is poised to make a RM6.5 billion offer today to buy over the Selangor water debts from bondholders.
 
It is understood that the offer will be made through the federal government and Pengurusan Aset Air Bhd (PAAB), the government's water asset management company.

The offer is a RM200 million discount to the value of the outstanding water bonds of RM6.7 billion.

"The federal government is stepping in to buy over the bonds with a slight discount to what the lenders want. The lenders will have to mark the losses in their book," an industry sources told Business Times.

Lenders include Maybank Investment Bank and CIMB Group, which hold about RM1 billion of the outstanding water bonds. Insurance firms and pension funds hold about RM2 billion each while the rest is held by fund managers such as AmInvestment, CIMB Principal, RHB Asset Management and Public Mutual.


A source said the government is dealing directly with the lenders and has been in heavy discussions following the recent approval from the Minister of Finance Inc to take over the bonds.

"The ultimate aim is for the government to own the assets and debts of the water companies in Selangor in an effort to consolidate the water industry," the source said.

This is the first phase of the consolidation as by June 2, the government is expected to make an offer to buy the water assets in Penang for more than RM3 billion.

The Selangor asset owners are Puncak Niaga (M) Sdn Bhd and Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) - both controlled by Puncak Niaga Holdings Bhd - as well as Syarikat Pengeluar Air Sungai Selangor Bhd (Splash) and Konsortium Abass Sdn Bhd.

The source said there is a possibility the debt could be converted into shares at a later stage.

"This is one of the options being discussed," he said.

The national water restructuring plan is meant to relieve the states and concessionaires of the heavy burden of funding future water infrastructure development.

After the restructuring, the responsibility falls under the purview of the federal government and PAAB, which is entrusted to buy over the states' water assets, making them asset-light and allowing them to focus on operations and maintenance.

WCT bids for RM10b projects to expand business, boost earnings

By Sharen Kaur
Published in NST on May 19 2011

Construction and property outfit WCT Bhd has bid for projects worth more than RM10 billion to expand its business and improve earnings.

Chairman Datuk Ahmad Sufian said it has tendered for building and infrastructure projects in Malaysia, the Middle East and Vietnam.

WCT, which has a strong presence in the United Arab Emirates and Qatar, has made inroads into Saudi Arabia and Oman where it expects lucrative government and private sector projects.

In Vietnam, WCT aims to build its retail and hospitality business, which now consists of a mall and hotel in Klang, Selangor, for stable recurring income.

At home, it is expecting some projects under the Economic Transformation Programme and 10th Malaysia Plan, Ahmad Sufian said.

"This is the plan going forward to build our earnings and recurring income," he said after the company's shareholders meeting here yesterday.

Ahmad Sufian said WCT hopes to do better this year, led by new construction and development projects.

WCT has an outstanding construction order book of RM3.7 billion that will last it another two to three years.

On the property development, WCT has projects worth RM7.8 billion in Selangor, Johor and Sabah.

It is expecting RM300 million in new property sales this year, as compared with RM220 million last year.

Ahmad Sufian said WCT's unit WCT Land , which has 120ha in its pocket now, is buying more land in Selangor and the Iskandar region in Johor.

"We have raised RM600 million bonds early this year, which will cater us well for the next three to four years to grow our property investment and property development businesses," he said.

For fiscal 2010, WCT made a net profit of RM141.2 million on a revenue of RM1.71 billion, representing a decrease of four per cent and 63 per cent, respectively.

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Bina Puri powers up in Indonesia

By Sharen Kaur
Published in NST on May 18 2011
Construction outfit Bina Puri Holdings Bhd expects to secure mini hydro-power plant projects in Indonesia, amid rising demand for electricity as massive developments are carried out in the country.

Group managing director Tan Sri Tee Hock Seng said for a start, the company is eyeing smaller projects, costing between US$2 million and US$10 million (RM6 million and RM30.5 million) and generating 2 to 5 megawatt (MW) power.

Tee sees Indonesia, which is experiencing phenomenal growth, as a good market for the company.

"We are looking at a few areas and in talks with the relevant government agencies.

"We are targeting projects with 20 to 25 years' concession," he said in an interview with Business Times recently.

Tee said besides hydro-power plants, Bina Puri is hoping for more diesel-powered plant projects.

The company has secured four contracts to build and operate diesel-powered plants from PT Perbadanan Listrik Negara (PLN), a government agency that operates similarly to Tenaga Nasional Bhd.

This is via its unit Bina Puri Mining Ventures Sdn Bhd, which holds a 80 per cent stake in power plant owner and operator PT Megapower Makmur.

Bina Puri bought Megapower in August last year for RM807,581 to expand its exposure to electricity-generation projects overseas, in a move to establish a larger recurring income base.

Since it bought the stake, Megapower has built and started to operate three of the diesel-powered plants, with a total output capacity of 2MW each.

Tee said the company holds a five-year concession to sell electricity to PLN at 10 sen per kilowatt.

The fourth plant is under construction and will start operation from July, he said, adding that Bina Puri is negotiating a fifth contract with PLN.

Tee also said that Bina Puri hopes to recoup its investments in each of the plants in less than three years.

"We expect the power business to contribute 20 to 30 per cent to our group net profit in the current year," he said.

Last year, contribution from power was less than 1 per cent, recording RM88,000 net profit on revenue of RM1.6 million as the business started only in the fourth quarter of 2010.

Tee said locally, Bina Puri will continue to focus on construction, its bread and butter.

"Power projects in Malaysia are too costly to do. We prefer smaller projects," he added.
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Contractors urge SPNB to speed up payments

By Sharen Kaur
Published in NST on May 18 2011

Contractors are urging Syarikat Perumahan Negara Bhd (SPNB) to speed up payments due to them for building houses for the company, amounting to some RM400 million.

SPNB, a unit of the Minister of Finance Inc (MOF Inc) has in the last three to four years awarded contracts worth more than RM1.5 billion to contractors to build low- to medium-cost houses in Malaysia, in anticipation of demand for its properties.

However, because of weak housing sales, SPNB has been slow in paying the contractors since early 2009.

It is learnt that a majority of the affected contractors are small- and medium-sized Bumiputera companies. Bigger names include Naim Cendera Holdings Bhd and Zecon Bhd.

"Our margins are affected as payments from SPNB have been slow and we still have to pay interest rates for the loans that we took for the projects," said one contractor who declined to be named.

It is understood that SPNB has asked MOF Inc to help pay the contractors.

SPNB managing director Datuk Dr Sr Kamarul Rashdan declined to comment on Business Times' queries.

Sources close to SPNB said among the most affected companies include Naim Cendera, which was awarded three housing projects in Sarawak worth about RM600 million.

Naim has completed the first project and was fully paid about RM100 million. However, SPNB owes the company not more than RM50 million for works carried out on the first phase of a second project.

"The third project has been given the stop-work order, while the remaining phases for the second project are still pending clearance from SPNB," the source said.

Naim officials, when contacted, declined to comment.

SPNB was set up in August 1997 by the MOF Inc to provide affordable homes in Malaysia. It was given seed capital to initiate housing projects, which was later supposed to be self-funded.

SPNB is currently building 14,470 houses nationwide.

Kamarul had said in February that SPNB will launch a mega promotion, where it will offer up to 30 per cent discounts for completed houses, priced RM35,000 to RM250,000 each.

He said SPNB hopes to double sales this year with cooperation from Cagamas Bhd, Malaysia Building Society Bhd and Bank Simpanan Nasional.

In 2010, SPNB sold about 3,000 units of houses worth about RM400 million, and made a pre-tax profit of about RM15 million.

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Shopping village for Sunway City Ipoh

By Sharen Kaur
Published in NST on May 17 2011

Sunway City Bhd (SunCity) says its property investment division will experience growth this year as new properties are added to its portfolio.

Managing director for property investment Datuk Ngeow Voon Yean said there will be new developments at its RM1.5 billion Sunway City Ipoh (SunCity Ipoh) township in Perak.

SunCity plans to build a shopping village worth more than RM1 billion at the township. It will feature the Lost World shopping mall, serviced apartments, SoHo (small office/home office) and food outlets by the riverside.

Besides attracting local and foreign investors, SunCity is looking at generating long-term stable income for the company, Ngeow said in an interview with Business Times recently.

"We want to grow the township as it now contributes less than 5 per cent to SunCity's earnings. The shopping village will give us positive returns," he said

SunCity Ipoh is the largest single integrated township in Perak. The 560ha project, which started in 1995, is a joint venture between Perbadanan Kemajuan Negeri Perak, Yayasan Negeri Perak and SunCity.

It is designed to be the growth catalyst for the Eastern Development Corridor of Ipoh.

Ngeow said some 70 per cent of the land has been developed. Besides houses, it comprises the Lost World of Tambun water theme park, The Banjaran Hotsprings Retreat, Sunway College, Giant and Extreme Park.

Properties under construction include phase two of Lost World Hotel, which will open by end-2011.

The hotel encompasses two four-storey blocks, housing 127 rooms and 27 family suites. The first block with 96 rooms opened last month.

"If demand for the hotel grows, we will definitely set up more hotels at the township," he said.

The Lost World Hotel and The Banjaran are the first series of hospitality assets at the township.

SunCity's investment division currently comprises a collection of hotels and resorts, shopping malls, office buildings, universities, theme parks and a hospital, mainly located at its Sunway Integrated Resort City in Bandar Sunway, Selangor.

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The Banjaran to have 50 more villas, new facilities

By Sharen Kaur
Published in NST on May 17 2011

Sunway City Bhd (SunCity) plans to expand The Banjaran Hotsprings Retreat at the Sunway City Ipoh township (SunCity Ipoh) in Perak.

Managing director for property investment Datuk Ngeow Voon Yean said the phase two development, which has been approved by the authorities, will be carried out on 12.34ha.

"We are looking to add 50 more villas and new facilities to help promote tourism in Ipoh and put Perak on the world map," he said in an interview with Business Times recently.

The Banjaran was constructed in 2009 at a cost of RM60 million and currently comprises 25 luxury villas with private pool.

Ngeow said there is no economies of scale with 25 units, hence the need to start phase two to attract critical mass.

Besides The Banjaran, SunCity is developing the Lost World Hotel to complement its Lost World of Tambun water theme park and Extreme Park.

Perak Tourism Ministry department director Syahruddin Abdul Hamid said up to RM6 million has been allocated to promote tourism in the state.

Syahruddin said the focus is to promote the 10 icons that Perak has, such as Royal Belum, Taiping Zoo, Orang Utan sanctuary, Pangkor Island and Gua Tempurung.

He said there are more hotels and resorts under the three-star and four-star categories being developed in Perak, especially in Ipoh, which is experiencing growth in tourism.

"Now we are more focused on tourism. We are trying to promote everything, including nature and history. We are not concerned if the 10 icons are government run or privately held...we want to place them on our list," he told Business Times.

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Firm to help bring in foreign investors

By Sharen Kaur
sharen@nstp.com.my
Published in NST on May 16 2011

RSM RKT Group, a member firm of RSM International, is seeking foreign investments for several projects under the Economic Transformation Programme (ETP) worth a few hundred million ringgit.

Girish Ramachandran, the executive director of RSM Strategic Business Advisors said that in the healthcare sector, RSM RKT is close to inking a deal with the world's top 10 private operators to set up shop in Malaysia.

"The financial close will be at year end. We are also working on a few other developments in the east coast, namely palm oil projects and retail. We are helping companies to raise funds to undertake bigger projects," he said.

Girish said RSM RKT is also helping the government to promote the country's halal hub and food security.

"We are doing some work for two of the growth corridors. Basically we are looking at strategic developments for the halal hub," he told Business Times in Kuala Lumpur last Saturday at the company's 33th anniversary.

Under the ETP, there will be RM500 million in investments over the next 10 years in healthcare and about RM10 billion to develop the halal hub.

Founded in 1978, RSM RKT is one of the leading providers of audit, assurance, accounting and tax services to companies in Malaysia.

Girish said the company is building up its consulting service to attract foreign direct investments into Malaysia.

He said countries such as India, China and Indonesia are growing at an alarming rate and looking for alternative investment destinations such as Malaysia.

He added that there is also more interest from investors in the Middle East who are looking at mega projects here.

Meanwhile, Girish said RSM RKT is helping small- and medium-sized enterprises (SMEs) to grow.

"The various opportunities for local SMEs would play a critical role as the sector is expected to drive the Malaysian economy in the long-term to reach a higher growth trajectory," he said.

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RSM expects growth to accelerate in Asia

By Sharen Kaur
Published in NST on May 16 2011

Global accounting and consulting firm RSM International expects growth to accelerate in Asia, led by economic transformation programmes and stimulus packages announced by several nations, including Malaysia.

"While the US and the UK continue to struggle, there is growth and development in Asia. Asia is critically important for us," said RSM chief executive officer (CEO) Jean M. Stephens.

RSM is the sixth largest global accountancy and consulting firm, with 730 offices in 83 countries.

It offers eight services, namely audit and assurance; risk management and internal audit; business processing outsourcing; corporate finance; business strategies; corporate recovery and insolvency; tax consulting and operational data engineering.

Despite the financial meltdown, RSM posted an increase in revenue by 19 per cent in 2008 and 8 per cent in 2009 to record US$4 billion. Last year, revenue was flat at US$4 billion (RM12 billion).

Stephens said she is expecting revenue to surpass US$4 billion this year, driven by growth in Asia.

On Malaysia, Stephens said the country is becoming a strategic place for investments, supported by the government's initiative in the Economic Transformation Programme (ETP) to build up various sectors all over the country.

Stephens said the ETP is timely with the aim to strengthen Malaysia's economic inter-linkages with other sectors and enhance the role of the financial sector as a key enabler and catalyst of economic growth.

"The ETP has not only been the talk of Malaysian business people and corporate giants, but has also attracted people from across the globe," Stephens said in an interview with Business Times here last Saturday.

"Malaysia is emerging from the global financial crisis and seeks to fast track growth through several programmes. These programmes will have spillover effects to Singapore as a key participant of ETP to contribute to the transformation of Malaysia into a developed high-income nation by year 2020," she said.

Stephens said RSM is growing its consulting services where it aims to attract foreign direct investments into Malaysia.

"One of the few key things that Malaysia has is natural resources, oil and gas and minerals and that is something we could capitalise on.

"We believe tourism could be expanded here. In the global world, Malaysia is known as a safe destination. If the government has incentives and it follows through with them, that would be very attractive to foreign investors," she said.

Stephens is the first and only women CEO who is running a global accounting and consulting firm. She has held the post as CEO for six years.

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Maju Assets to unveil RM4b Iskandar project

By Sharen Kaur
Published in NST on May 11 2011

Maju Assets Sdn Bhd, the property arm of Maju Holdings Sdn Bhd aims to launch a RM4 billion high-end project, primarily for the expatriate community in Iskandar Malaysia, Johor.

It is also planning a beach fronting expatriate village in Terengganu for RM200 million, its managing director Adam Radlan Adam Muhammad said.

For the 480-hectare project in Iskandar, it is in the planning stage and will be launched in two to three years, Radlan said.

Radlan said the the catalyst development will be a 18-hole golf course over 120ha.

He said what would make the development appealing are the specially-designed Spanish villas.

Radlan added that the pricing for the villas will start from US$300,000 (RM897,000).

"We are getting Emiliano Armani, a Spanish master planner to design the villas. He will oversee the master plan," Radlan said in an interview with Business Times recently.

The project, which has yet to be named and located in Ulu Tiram, will include semi-detached homes, link houses and a marina equestrian centre.

"The timing is right for this project. The government is pumping in money in Iskandar Malaysia and it has attracted foreign parties. Our immediate market will be Singaporeans," he said.

Three times the size of Singapore, Iskandar Malaysia spans 2,217 sq km and is a mixed use development planned for completion in 2025. The government is targeting investments of US$110 billion (RM329 billion).

For the project in Terenganu, Radlan said the company is targeting players in the oil and gas sector.

The gated community will have villas and serviced apartments, for long-term lease to foreigners.

Radlan said with the award of contracts by Petroliam Nasional Bhd, he expects more expats to live in Terengganu.

"We are talking to Esso, Talisman and Murphy Oil to lease the units when the project is ready," he said.

According to Radlan, this will be the first of its kind project in Malaysia.

The properties will feature modern living with a touch of traditional Malay architecture, preserving the heritage.

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SunCity to launch RM1b Ipoh project

By Sharen Kaur
sharen@nstp.com.my
Published in NST on May 9 2011

SUNWAY City Bhd (SunCity) will launch a mixed use commercial project worth over RM1 billion at Sunway City Ipoh (SunCity Ipoh) in Perak, as one of the catalysts to recoup its investments in the township which started in 1995.

Managing director for property development Ho Hon Sang said the project, earmarked as a shopping village, will comprise a mall, retail, SOHO (small office/home office) and apartments.

"This project will revolutionise the shopping experience in Perak. We are banking on it," Ho told Business Times in an interview at Bandar Sunway, Selangor, recently.

Ho said new projects will include the development of 1,000 units of hillside bungalows, semi-detached homes and apartments, 16 units of lakeside bungalows worth over RM2.5 million each and a convention centre.

The properties are worth over RM300 million and will give good margins to SunCity when launched over the next few years, he said.

SunCity Ipoh, sprawled over 560 hectares, started with infrastructure development but was halted for five years because of the Asian financial crisis.

Work resumed in year 2000 and the first residential project comprising 452 units of semi-detached garden villas was launched in 2002.

As demand for high-end properties improved, SunCity launched bungalows, lakeside villas, cluster houses, and apartments.

The properties were slow to sell but sales picked up as the township grew. The prices had appreciated between 22 per cent and 66 per cent, Ho said.

"Now that the township is mature, we are launching new products, targeting the medium- to high-end segment to give us higher returns," he said.

Ho said SunCity will soon launch the second phase of MontBleu, which is the first gated and guarded community at the township.

MontBleu comprises 220 units of three-storey townhouses with selling prices from RM450,000 onwards. The units range from 1,680 sq ft to 3,336 sq ft with a 25ft backyard garden.

Ho is optimistic that the second phase will sell out, judging from the sales from phase one, which had 98 units and where 70 per cent of the units were sold within two months from its launch in December.

"Many foreigners are buying our properties as their retirement or holiday home under the Malaysia MySecond Home plan. We expect it to continue," Ho said.

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Chase Perdana eyes RM1.5b via bonds

By Sharen Kaur
Published in NST on May 9 2011

CHASE Perdana Sdn Bhd expects to raise RM1.5 billion through a bond sale by as early as next month to part finance the development of its RM2.3 billion campus and hospital project in Serdang, Selangor.

Academic Medical Centre Sdn Bhd (AMC) is the project developer, which in turn is 80 per cent controlled by Chase Perdana.

The remaining share is held by Turiya Sdn Bhd, controlled by Chase Perdana executive chairman Tan Sri Mohan Swami.

Mohan said local and foreign banks will raise the bonds for the debt portion, which amounts to 65 per cent of the project value.

"The remaining 35 per cent or about RM800 million will be financed by AMC shareholders," Mohan told Business Times on the sidelines of the 1st Asean-EU Business Summit 2011 in Jakarta .

The project comprises the development of Perdana University Graduate School of Medicine and a 600-bed hospital on 56.65 hectares.

The Johns Hopkins University, the Johns Hopkins University School of Medicine, Johns Hopkins Medicine International (JHI) and the international arm of Johns Hopkins Medicine in Baltimore, US, will assist with the development of the project.

An agreement was inked between AMC and the respective parties last November.

Under the agreement, John Hopkins will assist in every major aspect of the new medical enterprise, including medical education programmes, campus design and facilities planning, and clinical affairs.

Johns Hopkins will provide guidance on the design and the development of the hospital, known as Perdana University Hospital.

Mohan said AMC has submitted the master planning for the campus and hopes to start construction by August.

He said the campus will be ready by the end of 2013 and it hopes to have 600 students for its medical programmes.

"We are looking to have post graduate courses, allied sciences and other programmes to attract more students," he said.

Mohan said future plans will include building the Perdana University brandname, which is a homegrown brand.

"Perdana University is the first campus for the Chase Perdana Group and we are mulling branching out into Asia to build the brand," he said.

Meanwhile, AMC is in the process of buying the 56.65ha required for the project from the Federal government.

Mohan declined to reveal the amount it is paying for the land.

It is understood that AMC is expected to pay between RM80 million and RM100 million for the purchase of the land.

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PJ Dev to expand hospitality business

By Sharen Kaur
Published in NST on May 2 2011

Property developer PJ Development Bhd (PJD) will build two new residences and a hotel for RM400 million to grow its hospitality business.

Swiss-Garden International Sdn Bhd (SGI) group general manager for sales and marketing Francis Lee said PJD will build the properties starting end of this year for completion in two to three years.

The residences will be located in Butterworth, Penang, and Kuantan, Pahang, and the hotel in Cameron Highlands, carrying the Swiss-Garden brandname.

"We are seeking to expand the hospitality business in line with the expected growth in the tourism sector. We are upbeat on the market and believe there will be strong demand for our products," Lee said.

SGI, the wholly-owned hospitality arm of PJD, currently owns and operates eight hotels, resorts and inns in Peninsular Malaysia and a lodge in Sydney, Australia. It also manages a resort in Sandakan, Sabah.

All the properties have an occupancy of more than 65 per cent per annum.

Lee was speaking to Business Times recently, in conjunction with the soft opening of the Swiss-Garden Residences Kuala Lumpur.

The residences in Kuala Lumpur, comprising two towers with 33 and 37 storeys each, were built for RM330 million.

They have 478 apartments ranging from 550 sq ft to 2700 sq ft, sold with leaseback options.

The property enables investors to buy the units with an annual guaranteed return of 7 per cent per annum for five years.

Lee said the residences in Butterworth and Kuantan will be built and sold with the same concept.

Swiss-Garden Residences group general manager for central region Rayan Komatt said he expects 63 per cent occupancy in the first year of operation, with an average rate of RM330 per room a night.

"We are targeting domestic and foreign travellers and corporate clients from Asia Pacific and Europe. We will operate three food outlets at the residences ourselves and therefore expect a gross operating profit of 45 per cent," he said.

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2010 a record year for local property mart

By Sharen Kaur
Published in NST on April 21 2011

The Malaysian property market hit a record year in 2010 with RM107.44 billion worth of properties transacted and the trend will continue this year.

"There will be an increase this year, but marginally," said National Property Information Centre (NAPIC) director-general Datuk Abdullah Thalith Md Thani.

The property market enjoyed double-digit growth in 2010, with transactions and value expanding 11.4 per cent and 32.4 per cent to 376,583 and RM107.44 billion respectively.

Residential property dominated the overall market, taking 60.2 per cent of total volume and 47.1 of the value of transactions.

Abdullah Thalith said NAPIC expects the property market this year to benefit from the various economic initiatives undertaken by the government.

Projects such as the Kuala Lumpur International Financial District, mass rapid transit in Greater Kuala Lumpur, Warisan Merdeka, the development of federal land in Sungai Buloh and the redevelopment of Pudu prison, which are expected to be implemented this year, will have positive spillover effects, he said.

Abdullah Thalith said the unrest in the Middle East and Japan, which was hit by tsunami, will not dampen growth as he expects the Arabs and Japanese to continue buying here.

He was speaking at the launch of the Property Market Report 2010 by Deputy Finance Minister Datuk Donald Lim Siang Chai here yesterday.

The report showed that in terms of pricing, the Malaysian All House Price Index surged by 8.9 points to 140.7 points.

Lim said Malaysians should not worry about a property bubble as the situation is under control. He urged all states to speed up the process of approving property transactions, especially for leasehold units.

"A lot of states, especially Selangor, are slow in doing this. We have a lot of foreigners buying leasehold properties here. We must address the issue as the foreigners are bringing in money. This will lift the economy," he said.

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CMC, UK partner may win RM700m LRT job

By Sharen Kaur
sharen@nstp.com.my
Published in NST on April 19 2011

CMC Engineering Sdn Bhd and UK's Colas (CMC-Colas) may win a contract worth some RM700 million for electro-mechanical (E&M) system for the Kelana Jaya light rail transit (LRT) extension line.

Business Times understands that Syarikat Prasarana Negara Bhd (Prasarana) is evaluating the three bids it had received for the contract, ranging from RM690 million to RM890 million.

Tenders closed recently and Prasarana may award the contract by early May, sources close to the company said.

Prasarana, a unit of the Minister of Finance Inc, is the asset owner and operator of the LRT Ampang and Kelana Jaya lines.

The source said CMC-Colas is the front runner as it had submitted the lowest bid and is committed to the technical requirements.

CMC is founded by Datuk Abdul Rahman Yusof, formerly general manager of Sapura's Uniphone business.

The two other bidders are Hartasuma Sdn Bhd-Bombardier Inc and Ingress Corp Bhd-Balfour Beatty Rail Sdn Bhd.

The source said tenders for the E&M system for the Ampang Jaya line will close on May 16 and have attracted eight bidders.

They are Scomi Engineering Bhd-Siemens AG, Hartasuma-Bombardier-SNC Lavalin, Ingress-Invensys Rail Systems-Balfour Beatty, Leighton Emrail Sdn Bhd-Ansaldo STS, CMC-Colas, George Kent (M) Bhd-Thales and two Korean consortiums, each led by Daewoo Engineering and Samsung Engineering.

It is learnt the contract is worth about RM1.5 billion as it would involve re-signalling of the existing lines between Sentul, Bukit Jalil and Ampang, stretching 27km.

Meanwhile, the source said Prasarana may delay the open tender for supply of trains for the Ampang Jaya line to June.

Zulkifli Mohd Yusoff, Prasarana group director of project development division, said last month that the tender would be called in April.

The contract is to supply 20 train sets consisting of six-car trains (120 cars), worth more than RM1 billion.

It will attract foreign firms such as Alstom, Siemens, Rotem Korea, ZELC China, Marubeni Japan, CAF Spain and PT Inka Indonesia, who may partner Scomi, Hartasuma, co-founded by Tan Sri Ravindran Menon, and SMH Rail Sdn Bhd, a railway engineering company.

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IJM cements position as major expressway operator

By Sharen Kaur
Published in NST on April 12 2011

While IJM Corp Bhd is more well known for its construction business, it is actually Malaysia's second biggest expressway operator after PLUS Expressways Bhd.

Its most recent wins earlier this month, to build a new major highway and an extension to an existing highway, highlight how the group has evolved into a major conglomerate.

"The inclusion of WCE (the West Coast Expressway) would further solidify IJM's position as the second largest expressway operator in Malaysia after PLUS," AmResearch said in a report.

In fact, IJM Corp made more money from running toll highways than building roads or properties for the year to March 31 2010.

Its concession division made a profit before tax of RM95.8 million for the year, more than three times the PBT that it made under its construction business.

It owns five highway concessions in India and three in Malaysia. It is likely to add to this tally.

Earlier this month, IJM got the approval in-principle from the Prime Minister's Department to build another 10km for its New Pantai Expressway, linking the Pantai toll interchange to Ampang, Kuala Lumpur.

IJM's 22.7 per cent associate Kumpulan Europlus Bhd also received the approval in-principle to build the 380km West Coast Expressway linking Banting, Selangor to Taiping, Perak.

Analysts estimate the two projects to be worth around RM900 million and RM6 billion respectively.

Sean Liong Cheng Fatt, an analyst from MIDF Research believes it is IJM's long-term strategy to build its concession business.

He said the two road projects will not only boast its concession segment but double its current order book of RM4 billion.

OSK Research reckons IJM's construction order book could jump by as much as 70 per cent from the new road projects.

This is the main advantage for IJM when it comes to infrastructure projects. Not only it can build them, giving it profits from construction work, it can also operate them under long term contracts, which provides a stable, recurring income for the group.

"The longer the period that has lapsed since the concessions started, the better the profits. It is good for IJM to build its concession arm," said Pong Teng Siew, Jupiter Securities head of research.

"Some of IJM's existing concessions have run a long time so the absolute amounts in profits have built up to the kind of levels seen now," he said.

Shares of IJM have gained some 2 per cent so far this year, mirroring the gains made in the broader market in the same period.

The stock closed at RM6.39 yesterday.

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Dijaya ventures into hospitality

By Sharen Kaur
Published in NST on April 7 2011

Dijaya Corp Bhd will build a 50-storey hotel-cum-residential block costing RM750 million on a plot of land on Jalan Ampang, where the historical Bok House used to sit.

Dijaya yesterday signed a collaboration agreement with hotel and leisure group Starwood Hotels & Resorts Worldwide Inc to develop the hotel portion, which will be called W Hotel.

The pact marks the entry of Dijaya into the hospitality industry.

Dijaya managing director Datuk Tong Kien Onn said it will continue to build its interest in hotels, especially in the three- and four-star categories.

"We hope to have a long-term partnership with Starwood. The tourism sector is building and we thought to grow ourselves, the next good thing is to diversify," Tong said at the signing of the pact, witnessed by Tourism Minister Datuk Seri Dr Ng Yen Yen.

The W Hotel will have 150 rooms and will take up the first 10 floors of the building. It will carry a six-star rating catering to discerning travellers, including businessmen.

The residences, which will be occupying 27 floors of the block, will be launched next year with estimated RM650 million in gross development value.

It will have 350 units ranging from 700 to 1,600 sq ft each and selling at between RM1,600 and RM1,800 per sq ft, Tong said.

Dijaya expects to start the development by the end of this year for completion in 2016.

Ng, meanwhile, said Malaysia will need 40,000 new hotel rooms by 2020, to cater to the estimated 36 million tourist arrivals.

Currently, there are 161,117 hotel rooms in Malaysia, including 30,000 in Kuala Lumpur, generating RM56 billion in revenue for the tourism industry.

Ng said her ministry is looking to increase this threefold to RM168 billion by 2020.

"We are trying to get more direct flights from as many destinations as possible, including the US. We are in discussions with several airlines.

"At the moment, we are focusing on transit passengers and talking to hoteliers to build this segment," she added.

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Ex-IIB CEO pledges full cooperation

By Sharen Kaur
Published in NST on April 7 2011

Arlida Ariff, the former chief executive officer of Iskandar Investment Bhd (IIB), says she will give full cooperation with any investigation on alleged fraud.

"I will cooperate fully with whatever investigations to be carried out by the relevant authorities so that we can move on and not lose focus on what is important, that is ensuring the success of Iskandar Malaysia," Arlida said in a statement yesterday.

Early this week, it was reported that the IIB board had filed a police report against its former senior managers on April 4.

It was also reported that an Ernst & Young (EY) forensic audit showed fiduciary lapses and highlighted the need to strengthen key controls.

Johor police chief Datuk Mokhtar Shariff yesterday confirmed that the state police contingent had received the report.

"We have forwarded the report to the Malaysian Anti-Corruption Commission (MACC) for further action," Mokhtar said, without elaborating.

It is learnt that the case will be handled wholly by the MACC, without any involvement of the state police's commercial crime department.

Since IIB was set up in November 2006, the company had awarded over RM3 billion worth of construction jobs in Iskandar Malaysia.

Some RM1.7 billion worth of jobs are still ongoing such as Legoland Malaysia, campuses and housing projects.

IIB, 60 per cent-owned by Khazanah Nasional Bhd, is responsible for developing projects that would transform Iskandar Malaysia, the country's special economic zone in Johor.

Arlida said despite internal and external pressures, she had performed to the best of her ability.

IIB had shown positive performance with substantial profits per year, she added.

"The company did not fail to deliver on its obligations to shareholders and partners alike.

"Iskandar Malaysia has also grown from strength to strength, surpassing investment targets set by its stakeholders," she added.

Arlida - currently managing director of Karambunai Corp Bhd, the developer for the Karambunai Integrated Resort City (KIRC) in Sabah - claimed that she was instrumental in installing clear and transparent processes and procedures for both procurement and investments during her three-year tenure with IIB.

She is now focusing on KIRC to be an anchor in support of the government's efforts under the Economic Transformation Programme, as tourism is one of the National Key Economic Areas.

"I am now equally delighted to be given the opportunity to contribute to this important development in Sabah," Arlida said.

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Right signals from Iskandar Investment

By Sharen Kaur
Published in NST on April 6 2011

ALTHOUGH the scandal at Iskandar Investment Bhd (IIB) may temporarily hurt its image, industry observers think it also sends the right signals to potential investors.

IIB's responsibility is to develop projects that can jump start Iskandar Malaysia, the country's special economic zone. It has reportedly attracted some RM70 billion of investments ranging from theme parks and universities to hotels, malls and offices.

It is also a long-term development slated for completion in 2025, and is designed to woo foreign investments and in turn help boost the Malaysian economy.

IIB on its part, seems unperturbed after its board filed a police report against former senior managers.

"We believe the market, in particular our business partners as well as our employees, will view this positively as this reflects our seriousness in ensuring proper governance is in place and irregularities and malpractices will not be tolerated," IIB chief executive officer Datuk Syed Mohamed Syed Ibrahim told Business Times.

While IIB is the catalytic developer for the Iskandar region, the main driver is its parent, Khazanah Nasional Bhd, assisted by other local property developers. This would include names like UEM Land Holdings Bhd, Mulpha International Bhd, Bandar Raya Developments Bhd, SP Setia Bhd, WCT Bhd and Bina Puri Holdings Bhd, which all have a stake in the development of Iskandar with several projects in hand.

Infrastructure works are ongoing while work has also started on major projects like Legoland Malaysia, the 1Medini residential project and several foreign campuses.

Zerin Properties founder and chief executive officer Previn Singhe said foreign investors may keep a close watch on recent developments but it is likely to be temporary.

"Foreign investors are cash rich and something like this won't bother them for long. At the end of the day, it is always money-driven," he said.

UOB-Kay Hian Malaysia head of research Vincent Khoo thinks foreign investors may look at the episode positively as it shows the country's improved transparency. He also does not think there will be any setbacks as Khazanah is fully committed to roll out its plan for the region.

"While I do not know or have details of the charges, I don't think it would impact IIB and its plans to develop the Iskandar region," Khoo said.

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Mah Sing builds war chest for expansion

By Sharen Kaur
Published in NST on April 4 2011

Mah Sing Group Bhd is buying more land in Greater Kuala Lumpur/Klang Valley, Penang Island and Johor Baru that has potential to generate over RM7 billion in gross development value (GDV).

"We are building our war chest for further expansion," group managing director and group chief executive Tan Sri Leong Hoy Kum told Business Times recently.

The company, which has 300ha of undeveloped landbank, will use its internally generated funds and loans for land acquisitions and new projects.

As at December 31 2010, Mah Sing has RM309 million cash in hand.

Last year, Mah Sing was the most active developer in terms of land banking, completing 10 transactions valued at RM756 million.

Leong said these land deals have potential to generate about RM4 billion in GDV.

Mah Sing currently has 33 ongoing developments with remaining GDV and unbilled sales of RM11.4 billion, compared with 23 projects in 2009.

Meanwhile, Leong said Mah Sing is on track to achieve its sales target of more than RM2 billion this year, having achieved almost 18 per cent or RM363 million in the first two months.

He said the spillover demand from 2010, coupled with the confluence of strong fundamentals and its branding, location, concept and products, will make 2011 another good year for the company.

Leong is also encouraged by external catalysts for growth. He said the multiplier effect via the 10th Malaysia Plan and the Economic Transformation Programme would enhance Malaysia's appeal as an attractive investment destination.

Leong said Mah Sing is keen to participate in government land privatisation projects and is currently looking at several deals.

It also plans to partner good business associates to tap on each other's strength and expertise to build and enhance potential business opportunities.

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Maju Assets: Unrivalled projects coming

By Sharen Kaur
sharen@nstp.com.my

Maju Assets Sdn Bhd, a member of Maju Group plans to launch several projects, which it claims to be of unrivalled quality, that will help it be one of the country's top-notch developers.

The company - known for its Bandar Tasik Selatan township development in Cheras, Kuala Lumpur - has ample landbank in Kuala Lumpur, Johor and Malacca, which could rake in more than RM7 billion in gross development value (GDV).

Over the next three years, it will launch three projects worth some RM5.6 billion in Kuala Lumpur and Johor.

Next month it will launch Maju Linq @ Lingkaran Maju in Bandar Tasik Selatan, being the last piece of land for development at the township, which started in 1991.

The RM310 million Maju Linq will comprise six units of seven to eight-storey office blocks, each with built up of 50,000 sq ft and a 200,000 sq ft 29-storey office tower.

Maju Assets chief operating officer Fatimah Wahab said the company is bullish the project will sell out within 12 months.

She told Business Times in an interview recently that Maju Assets has received en bloc offers for the office blocks, which are worth RM160 million, collectively.

For the officer tower, it has received some requests from local corporate clients to buy the building, or lease it on long term.

Fatimah declined to name the clients, but said the offers range from RM100 million to RM130 million.

"Once completed by mid-2014, Maju Linq will be an iconic project in the area. It will be the tallest development in its surrounding," she said.

By the end of 2011, Maju Assets will launch Infinity, a mixed development in Sungai Besi, Kuala Lumpur, worth RM1.3 billion, featuring retail, small-office-home-office, serviced apartments and office towers.

In Johor, it will launch a high-end development on 520ha in Ulu Tiram, earliest by the end of 2013. The eco-friendly project, which is under planning, is expected to generate some RM4 billion in GDV, Fatimah said.

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Sarawak remains builders' sweet spot

By Sharen Kaur
Published in NST on March 28 2011

WHILE other Malaysian construction companies have ventured abroad to grow, those based in Sarawak seem content to stay at home as there are still a lot of work.

The chiefs of several Sarawak construction companies admit they are dependent on local projects, but they do not intend to venture elsewhere for the time being.

They feel that they will be kept busy due to sizeable projects coming up under the Sarawak Corridor of Renewable Energy (Score) and the 10th Malaysia Plan (10MP).

But analysts think that these companies may lose out in the longer term if they continue to stay focused on Sarawak.

But companies like Naim Holdings Bhd said it is not that they don't want to go abroad, but it is because there is so much to do in Sarawak.

"We have offers to do projects in other states, in the Middle East and Indonesia, but we are not keen yet. This is because we are more familiar with Sarawak and there are plenty of projects here to keep us busy," its senior director of corporate affairs Ricky Khoo said.

Phase Two of Score (2011-2015) comprises projects to build dams, roads, housing and flood mitigation, worth several billion ringgit. Under the 10MP, the government has allocated RM4.6 billion for infrastructure and building projects.

Cahya Mata Sarawak Bhd (CMS), Naim and Hock Seng Lee Bhd, which have construction projects only in Sarawak, are among the players expected to benefit from new jobs.

CMS group managing director Datuk Richard Curtis told Business Times it has bid for construction projects worth over RM1 billion and expects some awards over the next few weeks.

"We are supplying a lot of construction materials and are well aware of the growing activities in this industry," he said.

But RHB Research analyst Joshua Ng feels Sarawak has been quiet as "federal money is not coming in".

Last year, tenders for 27 road packages mostly leading to upcoming new hydro electric dam projects worth some RM2 billion had closed. The contracts have not been awarded.

Hock Seng Lee, which has RM1.9 billion ongoing jobs, is keen on Tanjung Manis and Mukah, areas which will be developed under Score, its corporate affairs manager, Sonja Gan said.

"Sarawak has a lot to offer. We expect to benefit in reclamation, marine engineering and sand dredging. We are a specialist in this area where competition is minimum," she said.


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Pressure on owners to refurbish old buildings

By Sharen Kaur
sharen@nstp.com.my
Published in NST on March 17 2011

THERE will be pressure on owners of old office building in the Klang Valley as they will be forced to refurbish or redevelop their properties to keep tenants.

Landlords of aging buildings will face a threat with 17.1 million sq ft of new office space coming into the market by 2013, said CH Williams Talhar & Wong Sdn Bhd managing director Foo Gee Jen.

To face off competition, Foo said, the landlords will have to consider installing green features and modern facilities to flow with the current trend.

"The only way forward is to demolish the buildings and rebuild," Foo said yesterday in Kuala Lumpur, at the launch of the company's 2011 property market outlook report.

Old buildings in Kuala Lumpur that will be demolished to make way for new projects include Kompleks Antarabangsa and Crowne Plaza Mutiara Hotel on Jalan Sultan Ismail, and Wisma Angkasa Raya on Jalan Ampang. Bangunan MAS, meanwhile, will be upgraded.

Foo said it would cost landlords some RM250 per sq ft (psf)to build a new tower and about RM150 psf to refurbish an old building, of more than 25 years.

"With a fresh look and new facilities, they can raise their rental rates," he said.

Currently, a building more than 10 years old is tenanted at around RM5.00 psf while less than that is going for RM6.00 to RM6.20 psf. For the new office supply, the asking price is RM7.00 to RM7.50 psf, Foo said.

On the new supply, Foo said there could be a challenge by the building owners to fill up the space but it may be overcome if the entry point projects (EPP) under the Economic Transformation Programme (ETP) are implemented yearly.

Foo said with the EPP and ETP, more multi-national companies (MNCs) are expected to relocate here.

"There is strong interest from MNCs from the US and Europe involved in oil & gas, pharmaceuticals and information technology," Foo said.

He said the ETP and EPP will also strengthen the market for residential properties, retail and hotels.

"The landed residential segment will remain the most active this year while we expect moderate growth for the rest of the sectors," Foo said.

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Prasarana to call for trains supply tender next month

By Sharen Kaur
sharen@nstp.com.my
Published in NST on March 12 2011

SYARIKAT Prasarana Negara Bhd will call for an open tender next month for the supply of trains for the Ampang light rail transit (LRT) extension line.

It is learnt that the contract, which is to supply 20 train sets consisting of 6-car trains, is worth more than RM1 billion.

According to Zulkifli Mohd Yusoff, group director of project development division, the tender exercise might attract five to six bidders, made up of local and foreign firms. He declined to comment on the contract value.

"When we called for a tender for the Kelana Jaya LRT extension line, it attracted three bidders. We expect more this time because we are looking at sets of trains with off-the-shelf technology," he said.

Bombardier Inc, a Canadian aircraft and electric trains manufacturer was awarded the contract to supply 35 train sets consisting of 4-car trains for the Kelana Jaya Line, worth RM1.2 billion.

Meanwhile, Zulkifli said he does not expect the cost of Ampang and Kelana Jaya LRT extension lines to exceed RM7 billion.

He said the project is running within budget and it will be done by mid-2014.

At a media briefing in Kuala Lumpur yesterday on the progress of the project, Zulkifli said Prasarana had mapped out a contingency plan for unforeseen issues.

So far, 15 per cent of advance works, involving the relocation of telecommunication and TNB low voltage cables as well as sewerage pipes have been carried out, while the main facilities works will progress, starting the end of this month, Zulkifli said.

"Based on the progress, the RM2 billion we have is enough for this year. We think the construction would not exceed RM7 billion. We will raise another RM5 billion via bonds in 2012," he said.

A recent report quoting Prasarana group managing director Shahril Mokhtar said the company plans to raise RM5 billion to RM10 billion more over the next five years via a bond sale to fund the LRT extension

Some RM7 billion is for the extension lines and RM3 billion for infrastructure and to buy new buses.

In 2009, Prasarana raised RM2 billion via a bond sale to fund the LRT extension. It has used less than 10 per cent for advance works and main facilities works for the Ampang and Kelana Jaya lines.

The value for advanced works for both the lines is around RM150 million and RM1.7 billion is for the main facilities works.

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I-Berhad plans mixed REIT

By Sharen Kaur
sharen@nstp.com.my
Published in NST on March 11 2011

I-BERHAD, an integrated ICT developer, aims to launch a mixed real estate investment trust (REIT) worth more than RM1 billion in four to five years.

The idea is to unlock the value of investments at i-City, the company's 29ha knowledge and tourism hub in Shah Alam, Selangor.

I-Berhad chief executive officer Datuk Eu Hong Chew said the REIT will comprise data centres, an office tower, hotel, mall and carpark block.

"We are growing our property portfolio. When we have developed 30 to 40 per cent of i-City, we will launch the REIT," Lee told Business Times recently.

I-City, the first private initiative to be awarded the Malaysian Super Corridor Cybercentre status, is currently 20 per cent developed. The project started in 2005.

The company has so far built cybercentre office suites, data-centres and innovation centre with a combined 500,000 sq ft of space.

Al Rajhi Banking Group owns 200,000 sq ft of the space and the rest have been leased to multi national firms and small- and medium-sized enterprises.

Lee said I-Berhad will double the existing 1,000-bay carpark block within the next two years to enhance its value.

It has RM50 million in cash to fund the construction of new properties for the next three years.

Lee added that the company will not borrow from banks at this point. It plans to plough back future profits for its investments in i-City.

The company, helm by its executive chairman Tan Sri Lim Kim Hong, aims to be profitable in fiscal 2011 with expected growth in all its three divisions - property development, property investment and tourism.

For the nine months ended September 30 2010, I-Berhad posted a net loss of RM1.73 million on revenues of RM6.4 million.

State-owned investment fund Permodalan Nasional Bhd holds 20 per cent of I-Berhad.


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ETP will boost property mart, say developers

By Sharen Kaur
sharen@nstp.com.my
Published in NST on March 11, 2011

PROPERTY developers are upbeat that they will do better with hints of better market conditions ahead due to the Economic Transformation Programme (ETP).

More developers will be launching new projects nationwide in the second half of the year, findings by the Real Estate and Housing Developer's Association Malaysia (Rehda) showed.

These include terrace houses, condominiums and apartments priced from RM100,000 to RM500,000, and service apartments, semi-detached houses and bungalows worth RM500,000 to more than RM1 million.

The survey showed developers will raise the prices for new houses by an average 13 per cent this year.

Some have indicated their prices may rise by 20 per cent to 50 per cent, depending on the locality of the projects.

Rehda president Datuk Seri Michael Yam said while the housing market may have strong underlying demand due to the country's demography, young population, and now the ETP, the pressure of increased building materials, labour costs and land prices pose huge challenge to industry players.

The survey had 135 developers responding to market conditions in 2010 and their outlook for 2011.

Fifty-nine per cent of them said the ETP is expected to add value to their developments.

Rehda national council member NK Tong said despite the price rise, he believes demand for new houses will be higher.

"People will buy in anticipation of a brighter economy. People who are trying to predict the property market will have to view the local and global economy, which for this year looks positive," Tong said.

The ETP aims to generate RM76 billion for the country by 2015. Since the launch in October 2010, the government had announced 60 projects, including the Mass Rapid Transit and the greater Kuala Lumpur Light Rapid Transit extension.

The government is aiming for a population boom in Greater Kuala Lumpur/Klang Valley (Greater KL/KV) to 10 million by 2020 from the current six million, with foreigners making up some 20 per cent of the population. Tong said the additional 1.6 million foreigners expected in Greater KL/KV by 2020 from the current 540,000 will help boost property sales.

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No rush to change forecasts

By Sharen Kaur
sharen@nstp.com.my
Published in NST on March 10, 2011

THE latest announcements of projects under a government plan could help lift the mood of stock market investors but their effects on the economy would only take place in a few years with effective implementation.

The government announced nine new Entry Point Projects (EPP) with a promised investment of RM2.34 billion on Tuesday.

But analysts are not rushing to change their market forecasts as they have already factored in numbers from projects under the Economic Transformation Programme (ETP) launched last year.

HwangDBS Vickers Research is maintaining its year-end target at 1,730 points and Maybank Investment Bank at 1,710.

RHB's head of research, Lim Chee Sing, is also maintaining year-end target of 1,700 points. The FBM KLCI ended up 6.03 points to close at 1,523.69 points yesterday.

"The 131 EPP projects are not new and the implementation will take between three and five years.

"The market has moved up slightly this week. However, it is not caused by the EPP but the easing of oil prices, which has led to the regional market performing quite well," Lim told Business Times.

Maybank chief economist Suhaimi Ilias said the implementation of ETP will boost private investment.

This is crucial ensuring a healthier, balanced and sustainable gross domestic product (GDP) growth.

Malaysia is targeting 5 per cent to 6 per cent GDP growth this year.

Maybank is looking at private investment to expand 11 per cent in 2011 and accelerate to 13.2 per cent next year following the EPP rollout.

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