Aurora Melbourne Central - Solid long-term investment opportunity

By Sharen Kaur
Published in NST on October 31, 2014

UEM Sunrise Bhd’s Aurora Melbourne Central development has proven to be a big hit among buyers in Malaysia with more than 90 per cent of the 200 allocated units snapped up at a special preview recently.
Aurora Melbourne Central offers a total of 941 luxury residential apartments with prices ranging from A$395,000 (one bedroom) to A$1.1 million (three bedrooms).
The rest of the units are for buyers from Australia, China, Hong Kong, Indonesia and Singapore.
UEM Sunrise chief operating officer for commercial Raymond Cheah said 182 of the 200 allocated units were snapped up during the two-day exclusive preview at the White Box @ Publika Solaris Dutamas in Kuala Lumpur recently.
“They liked what they saw and grabbed the opportunity to own a property there. Aurora Melbourne Central is surrounded by numerous activities from lifestyle and leisure, entertainment and shopping as well as education. It is in a prime location and all units offer an excellent view of Melbourne city,” Cheah told Property Times.
Malaysia is the first country to hold an exclusive preview of Aurora Melbourne Central.
Cheah said the remaining units will be launched in Beijing (October 30), Shanghai (November 1), Hong Kong (November 3), Singapore (November 6), Melbourne (November 8) Sydney (November 10) and Jakarta (November 12).
So far, UEM Sunrise has sold 403 units worth a combined A$202 million during its exclusive previews.
This includes the units sold in Malaysia.
Malaysians are among the main investors in the Australian property market as Australia provides a solid long-term investment environment.
According to a recent report, prices in Melbourne have risen by more than seven per cent over the past year. Until interest rates start to rise, it is likely that prices will continue to move up.
The Victorian state government is spending A$5.1 billion (RM14.8 billion) in major projects, primarily built around road and rail infrastructure, logistics and trade, to support the greater Melbourne potential to become a city of 7.8 million people by 2051, from 4.3 million people last year.
It means that more homes will be required within the city area and outskirts, and this would make buying a property in Melbourne now worthwhile.
The Melbourne CBD (central business district) will benefit from these projects as the multiplier effect takes place.
UEM Sunrise will launch Conservatory, the residential project on Mackenzie street with a GDV of A$300 million next.
Conservatory will be located at the corner of the world heritage-listed, 25.6ha Carlton Gardens and the Royal Exhibition Building.
Cheah said it would also offer an excellent view over the pristine gardens, and with excellent proximity to the activities of the CBD.
The building was designed by COX Architecture, inspired by the classic “Victorian Wardian Case”.

Redefining Melbourne’s skyline

By Sharen Kaur
Published in NST on October 31, 2014

UEM Sunrise Bhd’s Aurora Melbourne Central project on La Trobe Street in Melbourne, its first Australian development, has gone beyond the epitome of location.
Location is about buying properties in prime spots such as in the vicinity of top-rated schools and colleges, near public transportation, hospitals, parks, entertainment and shopping.
As an example, UEM Sunrise has embarked on projects in economically stable neighbourhoods such as Mont’ Kiara in Kuala Lumpur and Iskandar Malaysia in Johor.
Last year, the company made its maiden foray in Melbourne for its strong growth prospects. It picked La Trobe Street, a major street in Melbourne’s central business district (CBD) and home to several precincts and public and private spaces.
UEM Sunrise acquired a 0.4ha site on La Trobe Street and a 0.4ha site on Mackenzie Street for A$65 million (RM189 million) due to the super locations, excellent connectivity and accessibility.
The company plans to build luxury residential apartments with some form of retail at both sites, which will have more than RM3 billion in gross development value (GDV) in the next four to five years.
The first launch, Aurora Melbourne Central, will have a GDV of A$770 million, said UEM Sunrise chief operating officer for commercial Raymond Cheah.
He said Aurora Melbourne Central would create a new epicentre of retail and living spaces, and rise majestically in the Melbourne skyline.
The massive residential skyscraper with 92 floors, the city’s largest to date, will house 941 apartments in three separate collections — Stratus, Cumulus and Australis.
It is behind a soaring double-glazed glass exterior with sophisticated coating system.
“The one-bedroom apartments will sell from A$395,000 while the two-bedroom units will be priced at more than A$550,000 each. Apartments with three bedrooms will sell for more than A$1.1 million,” Cheah told Property Times in an interview, here, recently.
“If you purchase based on location, location, location, Aurora Melbourne Central has gone beyond that. A picture tells a thousand words, and when you buy a unit here, you will have diverse views. There are five parks surrounding the development, namely the Fitzroy and Treasury Gardens, Royal Botanic Gardens, Albert Park with its artificial lake, Flagstaff Gardens and Carlton Gardens.
“The project is also at the doorstep of the education precinct that houses the University of Melbourne, Melbourne Institute of Technology and RMIT University.
“When you talk about public transportation, Aurora Melbourne Central will have direct underground connection to the Melbourne Central train station. A number of tram routes travel along La Trobe Street, including the city circle. The tram stops just outside the building.
“You have parks, universities and train station. Next, you would want shopping. Melbourne central station is connected to the Melbourne Central shopping centre, Emporium, Myer, David Jones and GPO. When Aurora Melbourne Central is fully developed in four years, it will be connected to these malls as we are located above the station.
“The project is also close to two bustling office districts, namely Southbank and Docklands. So how wrong can you go owning a property here? Queen Victoria is located within a 10-minute walk and there is a casino about 25 minutes by foot,” said Cheah.
Notable buildings in La Trobe Street include the State Library of Victoria, Etihad Stadium, the Family Court complex and the former Melbourne Mint.
For the project to be outstanding and iconic, UEM Sunrise had shortlisted COX Architecture, Elenberg Fraser and Fender Katsalidis Architects — three home-grown Australian master-class architectural practices with international presence and accolades.
They were selected based on their established residential and mixed-use oeuvre, international
eminence with local contextual adaptability and their passion for exemplar design, that are sympathetic to the various functional requirements of integrated developments.
The brief for the projects called for a design solution that “stands for something” — unique, inspiring, elegant and highly efficient to live up to the global standards of design and urban living.
Elenberg Fraser’s design was named as the winning scheme. Featuring a Malaysia-Melbourne cultural integration, the design includes a vibrant retail podium with direct underground connection to Melbourne Central station, a sculpted tower that houses the residential units and facilities, and unique star-shaped floor plates offering each residential unit some of the most treasured views in Melbourne.
“This development will offer one of the most generous provision of communal facilities to the residents. The building is not just about a beautiful design, but how end user will enjoy and appreciate the space.
It is kind of a defining moment for the city and we believe the apartments will have strong rental potential. I think this is a terrific investment,” said Callum Fraser, founding partner of Elenberg Fraser.

 

 

Battersea Integrated project’s GDV hits £10b

By Sharen Kaur
Published in NST on Oct 28, 2014

BATTERSEA Project Holding Co Ltd (BPHC) chairman Tan Sri Liew Kee Sin said the gross development value (GDV) of the Battersea Power Station regeneration project has reached £10 billion (RM52.6 billion), which is 25 per cent more than the initial estimate in 2012.
Liew expects the project’s GDV to keep rising as the products are value added and property prices in the British capital keep increasing.
“The £10 billion is a minimum estimate. We are selling for much higher than we expected. The key selling point for this project is the total integration of a development unseen before in London. It is also, by far, the biggest regeneration project in the whole of Europe. This is a global project for the world market,” Liew said.
SP Setia Bhd, Sime Darby Bhd (with 40 per cent stakes each) and the Employees Provident Fund (20 per cent), are developing the project.
“At Battersea, we do things that are extraordinary. It will be the most complete development and will have everything, including business and four-star hotels, affordable and luxury apartments, retail, restaurants, cafes and bars, shops, schools, a spa and wellness centre, a specialist medical centre, a high-end education and art centre and a Malaysian Square.
“We are very excited about the Malaysian Square. Our prime minister will unveil this signature development at the appropriate time,” Liew said.
The consortium has secured up to £2.14 billion in financing for Phase 1, 2 and 3 of the iconic redevelopment. About £1.35 billion was secured recently from several banks for Phase 2 and 3, ahead of a roadshow in 13 countries.
BPHC is gearing up for its first global simultaneous launch this week. The company will visit 13 cities in 11 countries to find the most exciting global brands, businesses, restaurants and cafes to bring to the Battersea project.
The global tour will also see the launch of Phase 3A apartments comprising 539 units designed by Gehry Partners and Foster + Partners. The apartments range from studio units and four-bedroom town houses to limited penthouse units with prices starting from £2,000 per square feet (psf).
Liew expects 80 per cent of the units to be reserved within the first three weeks of the global launch.
He said Phase 3A would be one of the most exciting components of the project as it would be anchored by a retail pedestrian high street, to be known as The Electric Boulevard, which will be the gateway to the entire development and the new Northern Line extension.
In addition to roof gardens, Phase 3 will also include plans for the 0.45ha Prospect Park, a communal park for residents and the public designed by Gehry Partners. The park will link Battersea Power Station to the planned £620 million US embassy in Vauxhall, and will include a children’s play area and a 1,900 sqm community hub building.
BPHC has so far launched two phases of the Battersea project. Phase 1, known as Circus West, comprises 866 houses and were sold at more than £1,100 psf. The apartments, built among 110,000 sq ft of retail and leisure units, saw a more than 95 per cent take-up rate within weeks of its launch early last year. Only five penthouses, each worth more than £20 million, are available.
Liew expects the penthouses to be sold when Phase 1 nears completion.
Phase 2, known as the Power Station, which will include the restoration of the Grade II-listed building, saw a 90 per cent take-up rate for the 254 units offered during the launch in the second quarter of this year, with the selling price at more than £2,300 psf.

Battersea Project Holding Co Ltd chairman Tan Sri Liew Kee Sin (left) and chief design review officer C.Y. Tan with a model of the Battersea project.

Eye-catching play of ideas

By Sharen Kaur
Published in NST on Oct 28, 2014

INNOVATIVE: Battersea Power Station project set to stand out among London’s iconic structures
AN ICONIC structure includes a design that is “ground breaking” and sets new standards in its field. Such a design also stands the test of time and will be admired for generations.
An example is the Chrysler Building, an Art Deco-style skyscraper in New York City. At 319 metres, the structure was the world’s tallest building for 11 months before it was surpassed by the Empire State Building in 1931. It is still the tallest brick building in the world, albeit with an internal steel skeleton.
The Swiss Re Building in London designed by Foster + Partners shook up the design of skyscrapers in the British capital, and influenced buildings further afield. Abandoning the standard rectilinear point blocks, Norman Foster went for a curvaceous form that soon became dubbed “The Gherkin”.
But an iconic design or structure should not always follow a formula of fame and visual appeal. Take for example the Battersea Power Station regeneration project in London. This project is an eye-catching play of innovation and ideas that come from all those involved in the project development.
Battersea Power Station is one of London’s best loved landmarks after providing the city with electricity for 50 years. It was built in the 1930s but has stood dormant since 1983, despite many failed attempts to redevelop the site.
The site was placed into administration in 2011 with Ernst & Young after Lloyds Banking Group and Ireland’s National Asset Management Agency called in debt against the struggling Irish developer, Real Estate Opportunities, which controlled the power station.
In 2012, a Malaysian consortium of investors called the Battersea Power Station Development Company (BPSDC) acquired the 15.6ha site for £400 million (RM2.1 billion).
The consortium, comprising SP Setia Bhd, Sime Darby Bhd and the Employees Provident Fund (EPF), is turning the site into a luxury accommodation and leisure development for the world market.
Wandsworth Council has said the deal was “potentially very good news”.
Rob Tincknell, the chief executive of BPSDC, said in 2012 the project was finally happening, thanks to the right combination of financial muscle, political will and shared commitment from everyone concerned.
The three Malaysian companies all come with impeccable credentials. SP Setia is Malaysia’s leading property developer, with a track record of large-scale developments; Sime Darby is a multinational conglomerate and the world’s biggest planter with a market capitalisation of around £10 billion; and EPF is one of the world’s most liquid pension funds.
The SP Setia and Sime Darby Property plans involve the development of a sustainable multi-use real estate regeneration project that will provide economic impetus for the creation of a new vibrant centre for southwest central London, and also, for the world.
They have roped in two of the world’s award-winning architects — Frank Gehry and Norman Foster — to design a series of buildings as part of the £8 billion redevelopment.
Gehry will collaborate with Foster to carry out Phase Three of the Rafael Viñoly-designed master plan, adding a shopping street to connect the old Victorian power station with a new London Underground station, and building residential neighbourhoods on either side.
Foster, through his London officer Foster + Partners, will add residential buildings to the east, while Gehry, via Gehry Partners, will work on the residential zone to the west — the architect’s first major project in the United Kingdom.
The two will also co-design The High Street, a retail stretch that will comprise shops, restaurants, a hotel, a library and a leisure centre.
Battersea Project Holding Company Ltd (BPHC) chairman Tan Sri Liew Kee Sin said the consortium was extremely pleased with the political support that the project has received at the local and national levels.
“The Battersea Power Station regeneration is a remarkable project. We never expected it to go so fast. It is beyond expectations, thanks to the support from local and international bankers and customers, as well as the Malaysian and British governments.
“This is a 10-year development and we are already planning the global launch of Phase 3. In terms of Phase 1 construction, we are restoring the chimneys while repair on the bricks works are on schedule. Sales for Phase 1 and 2 are also way beyond our expectations and that of any developer in London.
“This project is no longer about SP Setia, Sime Darby or EPF but rather a Malaysian project carrying the Malaysian flag, and we are very proud of it,” Liew told Property Times in an interview, here, recently.
The Grade II-listed structure, designed with the help of Sir Giles Gilbert Scott, the man behind red telephone boxes, is the largest brick building in Europe with four chimneys.
As part of the redevelopment, the chimneys, which provided a backdrop to Alfred Hitchcock’s thriller film “Sabotage”, will be removed and rebuilt one by one.
It will take nine months to rebuild each chimney, and three years for this part of the project to be completed. The magnificent Art Deco structure will remain.
The cost of the redevelopment is £203 million, which is for the restoration of the power station, construction of 3,400 new homes, 1.7 million sq ft of offices, 550,000 sq ft of retail space, new hotels, and an entertainment district that will include a cinema as well as the extension of the London Underground’s Northern Line. The development will also have a 7ha park.
Infrastructure work around the power station started late last year, while construction on Phase 1 started in the last quarter of the same year. The first phase of the redevelopment is expected to be completed by 2016.
Phase 1 involves 864 apartments being built around the power station, with work then moving to the power station itself. Phase 2 will have 254 apartments.

 

 

 

MRT link for Elmina?

By Sharen Kaur
Published in NST on October 28, 2014

ENHANCING CONNECTIVITY: Sime Darby to submit request for line extension from Sungai Buloh, sources say
SIME Darby Bhd is lobbying for MyRapid Transit (MRT) connectivity to its City of Elmina development located along the Guthrie Corridor Expressway, here.
City of Elmina is a group of townships with a gross development value of more than RM25 billion.
Sime Darby Property Bhd, its unlisted property arm, is developing the townships spread across 2,000ha, which also form part of the Selangor Vision City (SVC).
SVC is a sprawling 17,200ha area that includes City of Elmina, Bukit Jelutong, Kota Elmina, Lagong Mas, Bukit Lagong and the existing areas of Kampung Kubu Gajah, Subang Puteri and Kampung Melayu Subang.
Business Times understands that Sime Darby will be submitting a request to the Land Public Transport Commission (Spad) to extend the MRT Sungai Buloh-Kajang line (Line 1) to the township.
Work on the 51km Line 1 started in July 2011.
Line 2 from Selayang to Putrajaya and costing an estimated RM23 billion will be implemented next year.
“Spad’s role is to determine the alignment. It will undertake a feasibility study on Sime Darby’s request to extend the MRT line from the Sungai Buloh station to the township. If viable, Mass Rapid Transit Corp Sdn Bhd (MRT Corp) will undertake the construction,” one source said.
MRT Corp, which is wholly-owned by the government, is the MRT project developer and owner.
The source said the extension would cost around RM2 billion to RM3 billion, or between RM250 million and RM300 million for each kilometre of elevated line implemented.
Sime Darby will provide the land to build an MRT station, the source added.
City of Elmina, which will take up to 18 years to complete, is projected to attract about 30,000 households and a population of around 150,000.
“If MRT Corp extends Line 1 to the City of Elmina, there may also be a possibility to link it further to Klang and integrate the system with light rail transit (LRT) Line 3,” the source said.
The LRT Line 3 project linking Bandar Utama and Klang will begin by the end of next year.

The Punjabi Sikhs

Published in New Sunday Times on October 19, 2014


LIKE other Indian communities, the Punjabi Sikhs also have their calendars anchored to the Festival of Lights, or Diwali, as they call it.
However, for the Sikhs, Diwali has a different significance, retired civil servant Saran Singh, 70, told the New Sunday Times.
“It is to celebrate the day when the sixth Guru of the Sikhs, Guru Hargobind, returned to Amritsar, Punjab, after being held captive by the Moghul Emperor Jahangir.
“Jahangir locked him in the Gwalior prison for some time in 1611.
“When the Guru was released, he informed the emperor that he would leave the prison only if 52 other imprisoned rajas (princes) were also released.
“The emperor agreed on the condition that only those who could hold Guru Hargobind’s chola (robe) could leave with him. The wise Guru split his robe into 52 strands and this enabled the rajas to hold on to his robe and, thus, free themselves.
“Once the Guru arrived at the Golden Temple in Amritsar, the Sikhs celebrated the occasion by lighting Deep Malla (a chain of colourful oil lamps),” Saran said, adding that the event is also called ‘Bandi Shor divas (Day of Liberation, or Prisoners’ Release Day), which falls a few days before Diwali.
Saran said to this day, the Sikh community celebrated the historical event, and those who migrated to Malaysia had retained the tradition of observing it on the same day Hindus celebrated Diwali.
On the morning of Diwali, Sikhs clad in traditional clothes — men in kurta, women in salwar kameez and dupatta — visit the nearest Gurdwara to offer prayers and thank God for the happy occasion and other blessings.
“The priest sings hymns and recites verses from the Sri Guru Granth Sahib Ji (the Sikh holy book),” said Saran, who celebrates the joyous day with his wife, children and grandchildren.
After prayers, the congregation is served with Guru Ka Langgar (blessed food), which consists of vegetarian dishes, such as chapati and mixed vegetables, as well as desserts.
They then adjourn home for merrymaking, where sumptuous feasting begins. Both vegetarian dishes, such as palak paneer (spinach and goat’s cheese) and non-vegetarian dishes, such as mutton rogan josh and chicken curry, are among the delicacies served.
Other traditional dishes served during Diwali in a Punjabi household include chicken masala, aloo gobi (potatoes and cauliflower with spices) and chicken biryani.
Saran’s cousin, Updesh Kaur, 61, said that during tea-time an array of Indian sweets and tidbits are served with hot masala tea. These include Punjabi sweetmeats, such as jalebi, ladoo and barfi.
“We also serve pakora (fried vegetable fritters) and samosa (fried pastry with spicy filling) for those who prefer savoury snacks,” said Updesh, who runs a restaurant.
For Sikhs, Diwali is not only a family affair, but also a day to celebrate with neighbours, colleagues and the rest of the world.
This is also true for both Saran and Updesh, who welcome guests to their houses to join the festivities.
Besides the convivial atmosphere, a Sikh house will also usually be adorned with traditional décor, which include colourful flowers and bright candles emulating the Deep Malla – to commemorate the Bandi Shor divas.

Saran Singh blessing his granddaughter Nerisha Kaur as his family members look on.

BU-Klang LRT3 project to begin end of next year

By Sharen Kaur
Published in NST on October 15, 2014

KUALA LUMPUR: CONSTRUCTION on the much-anticipated third light rail transit (LRT3) line linking Bandar Utama and Klang is expected to begin by the end of next year.
Land Public Transport Commission (SPAD) chief executive officer Mohd Nur Ismal Mohamed Kamal said the commission was in the midst of approving the feasibility study on the route alignment proposed by Prasarana Malaysia Bhd.
More than 300,000 commuters are expected to benefit from this line.
“We (SPAD) are refining the alignment of the 36km-long project before we submit it to the railway scheme application soon.
“Prime Minister Datuk Seri Najib Razak, who is also the finance minister, will take a look at it and give the conditional approval before we can release it for public display,” he told the New Straits Times yesterday.
Nur Ismal said the public could give their suggestions and comments on the proposed alignment during the three-month display period before it was submitted for the final railway scheme application.
“We will refine the plan for the proposed LRT3, including the alignment, before implementing the initiative.”
Nur said the RM9 billion project would begin from the Bandar Utama Mass Rapid Transit station, which was under construction.
“The line will go on to Tropicana before cutting across Hicom-Glenmarie Industrial Park, heading for Shah Alam via Section 13 near the Shah Alam Stadium, Universiti Teknologi Mara in Section 2 and i-City in Section 7.
“The train will then travel down Bukit Raja to the Klang KTM Komuter station before heading further south for Bukit Tinggi and Johan Setia,” he said, adding that there would be 26 stations in the route.
He said there would be 10 park-and-ride stations and four integrated stations, which would connect the MRT, LRT Kelana Jaya line, RapidKL’s Bus Rapid Transit and Komuter services.
Najib, during the tabling of the 2015 Budget, had announced an allocation of RM9 billion for the development of the LRT3 project to boost connectivity and mobility among residents in Greater Kuala Lumpur.
Tenders to build the LRT3 line will be called around June.
Prasarana group managing director Datuk Seri Shahril Mokhtar told the NST yesterday that he hoped that construction could start four to five months after the tender was awarded.
He said Prasarana would start to craft out the programme for the construction with a project delivery partner (PDP) as early as next year.
Prasarana is a wholly-owned government unit set up by the Finance Ministry and is the operator and asset owner of LRT lines.
LRT3 will be developed on a PDP concept and the tender for this would be called within the next one to three months, said Shahril.
“It will be an open tender and anyone can bid for it to render their services as a PDP, but they have to meet the criteria. We are setting the criteria now (and this) will be announced within the next month.
“Once we have appointed the PDP, we will sit down with them and craft out the programme for the project. The target is that the project should start the latest by the fourth quarter of next year.”
The PDP concept has been adopted in the Klang Valley My Rapid Transit (MRT) Line 1 development from Sungai Buloh to Kajang.
MMC Gamuda KVMRT Sdn Bhd was appointed as PDP for the MRT Line 1 in February 2012.
Under the agreement, the PDP will receive a fee of six per cent of the total aggregate work package contract value.
Should the eventual total cost of the project be less than or equal to the target cost, the PDP shall be entitled to the full fee. But if the project cost is more than the target cost, the PDP fee shall be reduced in accordance with an agreed formula.

SPAD chief executive officer Mohd Nur Ismal Mohamed Kamal says plans for the 36km line are being refined

‘Positive for property sector’

By Sharen Kaur
Published in NST on October 11, 2014

KUALA LUMPUR: Real Estate and Housing Developers Association Malaysia (Rehda) president Datuk Seri FD Iskandar Mansor says the 2015 Budget was fairly positive for the property sector and hopes banks will ease their lending rules for first-time house buyers.
“We are happy as the issues faced by youths were addressed in this budget. We hope the banks will take to lending. It is their job to lend. We developers want to build more affordable houses. But if people can’t borrow, then how are we going to build?” FD Iskandar told Business Times.
The government is increasing house ownership with the Youth Housing Scheme, which offers a funding limit for a first house not exceeding RM500,000 for married youths aged between 25 and 40 years and with household income not exceeding RM10,000.
Under the scheme, the government will provide a RM200 monthly financial assistance to borrowers for the first two years to reduce the burden of monthly instalments.
The government will also give a 50 per cent stamp duty exemption on transfer documents and loan agreements for properties worth up to RM500,000 until December 31 2016, and 10 per cent loan guarantee so that they could obtain 100 per cent financing.
Borrowers will be allowed to withdraw from their EPF Account 2 to top up their monthly instalment.
“The government understands how difficult it is for people to come up with upfront money and is sensitive to their needs. Waiving 50 per cent on stamp duty is a step in the right direction. We hope the banks will follow,” he said.
FD Iskandar also said the allocation of RM1.3 billion to build 80,000 homes under the 1Malaysia People’s Housing Programme was encouraging for the sector.
“The National Housing Department is going to build 26,000
 units for RM644 million while Syarikat Perumahan Negara Bhd will construct up to 37,000 homes. This will help to address the issue of house ownership at affordable prices.
“We, developers, are not running away from building affordable homes. Since both the federal and state governments have the land to build, let us, developers, focus on building homes for the whole nation,” he said.

Housing issues faced by youths were addressed in the 2015 Budget.

 

 

 

 

SP Setia-I&P merger?

By Sharen Kaur
Published in NST on October 13, 2014

BRAND BOOST: PNB considering tie-up to form country’s largest property player by asset value, sources say

PERMODALAN Nasional Bhd (PNB), the country’s largest fund manager, may merge SP Setia Bhd and I&P Group Sdn Bhd to revive the former, which is losing ground to rivals after more than 300 talents, including top executives, left, sources said.
“PNB is considering merging SP Setia with I&P to form the country’s largest property player by asset value and enlarge its product offerings. It will be a good marriage as SP Setia focuses on premium properties while I&P is a township developer, offering medium- to low-end houses,” one of the sources said.
As at August 31, SP Setia has 33 ongoing projects and 1,852ha of undeveloped landbank. The gross development value (GDV) is RM93 billion, of which SP Setia’s effective stake is RM64 billion.
I&P, best known for its flagship Bandar Kinrara development in Puchong, Selangor, has 2,090ha in the Klang Valley and Johor Baru, with potential GDV of RM32.4 billion.
Sources close to SP Setia said the company “lost it” following the resignations of former boss Tan Sri Liew Kee Sin and other big guns, including acting president and chief executive officer Datuk Voon Tin Yow.
“The SP Setia brand is not as strong as it used to be. People are losing faith in the company. Most investors are seasoned players in the game and they know about the management move from SP Setia to Eco World Development Bhd (EcoWorld).
“That is why you see strong take-up rates in EcoWorld launches despite the expensive products. Its Eco Majestic project, although located far away in Semenyih, is doing well and this is because of the people, brand and township concept,” the source said.
EcoWorld is linked to Liew through his son, Tian Xiong, who is a director of the company. A majority of the staff and key executives who left SP Setia have joined EcoWorld.
“PNB raised its stake in SP Setia a few years ago thinking that it would grow into a bigger entity with several international projects. But the plan has backfired as the key players in SP Setia have left for EcoWorld,” another source said.
“The (potential merger) goal is not to sail the boat, but rather to help the boat sail itself. Knowing that SP Setia doesn’t have this high-calibre management, buyers have doubts on the company’s future projects, whereas for I&P, they don’t have that association. On its own, I&P is doing well and it is a strong brand,” the source added.
RHB Research analyst Loong Kok Wen thinks PNB may merge SP Setia with either I&P or Sime Darby Bhd’s property division, or both.
“(The plan is) to revive or re-strategise SP Setia,” she told Business Times.
Mercury Securities head of research Edmund Tham said it was possible and plausible to merge SP Setia and I&P.
“We are looking at synergy, combination of landbank, operations and management as the possible reason behind the merger,” Tham said.

RM76b boost for highway, rail sector

By Sharen Kaur
Published in NST on October 11, 2014

BETTER PUBLIC TRANSPORT: Second MRT line, Pan-Borneo Highway and third LRT link among proposed projects

HIGHWAY and railway developers have received a RM76 billion boost with several projects being lined up to start next year.

Topping the list of new projects are Line 2 of the Klang Valley My Rapid Transit (KVMRT), the RM27 billion Pan-Borneo Highway and the third line for light rail transit (LRT).

The construction of the 1,663km Pan-Borneo Highway — 936km in Sarawak and 727km in Sabah — will kick off next year, said Prime Minister Datuk Seri Najib Razak during the tabling of 2015 Budget, here, yesterday.

Several new highway projects will also commence in the Klang Valley, he added.

They include the 59km Sungai Besi-Ulu Klang Expressway (RM5.3 billion), the 276km West Coast Expressway from Taiping to Banting (RM5 billion), the 47km Damansara-Shah Alam Highway (RM4.2 billion) and the 36km Eastern Klang Valley Expressway (RM1.6 billion).

For railway projects, Najib said the 56km KVMRT Line 2, costing an estimated RM23 billion, will run from Selayang to Putrajaya.

Line 1 of the KVMRT links Sungai Buloh and Kajang, and has a projected cost of RM30 billion, which includes RM23 billion for systems and construction, and RM7 billion for consultant fees and reimbursables.

For the LRT project, a new line costing an estimated RM9 billion will be built to link Bandar Utama to Shah Alam and Klang.

The upgrading of KTM Bhd’s east-coast railway line along Gemas-Mentakab, Jerantut-Sun-gai Yu and Gua Musang-Tumpat will also take place at a total cost of RM150 million.

To further improve the public transport system, the government will provide Electric Train Service from Ipoh to Butterworth starting April next year.

The target is to raise the public transport modal share to 25 per cent by 2015 and 50 per cent by 2020.

A Budget for first time buyers?

By Sharen Kaur

ADDITIONAL RELIEF: Economists expect more incentives to boost medium- to low-cost market
THE 2015 Budget is expected to introduce some relief for first-time house buyers following the broader policies governing the property sector that were introduced prior to budget tabling, says analysts.
According to MIDF Research property analyst Ahmad Annuar Abdul Rahman, policies such as a 50 per cent discount on stamp duty and/or Developer Interest Bearing Scheme (DIBS) for first time buyers could be introduced to aid purchases.
Ahmad Annuar felt the government may also introduce Goods and Services Tax (GST) rebate for building materials that are certified as being used to build medium- to low-cost properties.
“Assuming our expectations prevail, this should benefit companies such as LBS Bina Group Bhd, Glomac Bhd and IJM Land Bhd, which have a good mix of medium- to low-cost properties.
“To a lesser extent, UEM Sunrise Bhd could also benefit due to its product mix as well as landbank sale,” he told Property Times.
On Real Property Gains Tax (RPGT), Ahmad Annuar believed there will be no changes to the current ruling.
Prime Minister Datuk Seri Najib Razak, who is also the Finance Minister, will announce details of the annual budget next Friday.
With Malaysia aiming to become a high-income nation by 2020 with a US$15,000 (RM48,750) gross national income per capita target (US$10,400 in 2013), the budget will play its part in formulating a consistent and sustainable policy framework towards reaching this goal.
The budget will focus on stimulating growth, improving Malaysia’s fiscal position and raising the people’s standard of living.
For the property sector, economists believe there may be more cooling measures for the market, including raising the interest rates and tighter lending.
In the previous budget, Najib announced a significant increase in the RPGT rates to further curb speculative activities.
For gains on properties disposed of within the holding period of up to three years, RPGT rate was increased to 30 per cent, and for disposals within the holding period of four and five years, the rates were raised to 20 per cent and 15 per cent, respectively.
For disposals made in the sixth and subsequent years, no RPGT is imposed on citizens, while companies are taxed at five per cent.
A GST regime was also introduced. It has been proposed that the GST rate be fixed at six per cent, effective April 1 next year.
The sale, purchase and rental of residential properties are expected to be exempted from GST while there will be implications for commercial and/or industrial titles.
There is also an increase in the threshold for foreign purchases of real estate in Malaysia — from RM500,000 to RM1,000,000.
In addition, there was a ban on DIBS, aimed at controlling property prices. This measure prohibits developers from implementing projects that have DIBS features so as to prevent them from incorporating interest rates into housing loans during the construction period.
The slew of cooling measures have impacted the property market.
According to the Property Market Report 2013 released six months ago by the National Property Information Centre (Napic), the number of new launches fell last year to 48,290 units after three straight years of growth.
The report also showed that transaction volume fell 10.9 per cent to 381,130 units last year. The value, however, rose from RM142.84 billion in 2012 to RM152.37 billion.
This is clear that property prices have gained strength despite the measures to curb speculation.
The Malaysian House Price Index jumped to 192.9 points last year against 172.8 points the year before. Average prices rose 10 per cent, from RM241,591 to RM266,304.
Houses priced between RM250,000 and RM500,000 were the most popular, capturing 27.3 per cent of total transactions, while demand for those in the low-cost RM100,000 to RM200,000 category softened.
Ahmad Annuar said he expected property prices to continue to rise despite government efforts to curb speculation through the 2014 Budget as it only addressed one of the causes for the increase in real estate prices — speculators.
Land, construction and compliance costs, as well as unfair and unreasonable conditions imposed by state and local authorities remain to be addressed.
“We expect the increase in prices to be mitigated by GST exemption on the affordable houses below RM600,000. The high-end properties are likely to be less sensitive to the GST.”
He said this year’s budget surprises might include further increase in the threshold for property acquisition by foreigners.
“This could be a setback for stocks that have more sizeable exposure to high-end properties, such as Eastern & Oriental Bhd, SP Setia Bhd and Sunway Bhd. We are neutral on the (property) sector as we see the GST imposition may lead to some reduction in disposable income and dampen consumer sentiment in the near term.
“However, we think this could be offset by the government’s targeted measures aforementioned while longer term prospects remain positive against the positive outlook for the domestic economy,” he said.
Maybank Investment Bank Bhd (Maybank IB) chief economist Suhaimi Ilias said the property sector would be spared from any bad news in the upcoming budget.
“We do not expect further property cooling measures or curbs. Indications are already pointing to an easing property market and financing after the drastic measures taken in the 2014 Budget that were followed by some state government measures, Bank Negara Malaysia’s 25 basis points hike and the banking system’s more stringent loan approval and risk management process.
“At this juncture, major surprises will be the government relaxing measures currently in place, tightening existing measures, introducing further measures such as raising RPGT and increasing stamp duties, as well as restrictions on bank lending to developers and buyers.
“But again, we think this is very unlikely. Whatever is already in place for the property sector with regard to GST and RPGT will remain,” Suhaimi said.
RHB Research property analyst Loong Kok Wen does not expect new drastic measures on the property sector nor relaxation of policies.
She also thinks there would unlikely be any announcement on the RPGT structure nor the re-introduction of the DIBS scheme.
“But if it does happen (re-introduction of DIBS), it’ll be good news for the property market as it will encourage more buying activities. Topics on GST are widely expected. I hope the government will provide more details on the GST structure, because for the property sector, there are still a lot of grey areas to be resolved.
“For now, I expect demand to pick up in the first quarter of 2015, just before the implementation of GST, as more and more people are increasingly aware of the GST impact on property prices. After the GST comes in, the property market will likely be subdued for three to six months,” she said.
On stock picks, Loong finds affordable housing players such as Tambun Indah Land Bhd, Matrix Concepts Holdings Bhd and Hua Yang Bhd the safest bets.
Edmund Tham, head of research at Mercury Securities, is also not expecting anything groundbreaking from the 2015 Budget.
“It is hard to say what this year’s budget will offer or whether the property sector would be spared from any bad news. What we can expect is some news on GST, such as who or what will get exemptions,” Tham said.
Tham is not so bullish on the property sector but expects strong demand for affordable residential housing.
“And this will put a floor on prices,” he said.

Bombardier in KVMRT talks with local fir

By Sharen Kaur

RAIL technology specialist Bombardier Transportation is in talks with local parties to form a consortium and bid for Line 2 and Line 3 of the Klang Valley Mass Rapid Transit (KVMRT) project.
“We hope to form the consortium in time for the tenders. We will need different divisions such as signalling, systems, electrification and rolling stock. Hence, we are talking to more than five parties,” said Bombardier president of systems division Pierre Attendu.
“We have existing partners working with us on the KVMRT Sungai Buloh to Kajang line, such as Global Rail and Hartasuma for the light rail transit extension project.
“Whether or not they want to work with us again depends on them but we are talking.”
In 2012, Bombardier secured a five-year RM281 million contract from project developer Mass Rapid Transit Corp Sdn Bhd to supply its Cityflo 650 control system for the 51km Sungai Buloh-Kajang (SBK) Line.
Cityflo 650 is an automatic train control solution for driverless or unattended train operations.
For the Kelana Jaya line, Bombardier is supplying linear induction rail for the 17km extension to the system, as well as delivering the mid-life overhaul of the original vehicle fleet (210 cars) and supplying 14 new four-car Bombardier Innovia Metro 300 trains to provide additional capacity.
Global Rail is installing the signalling system for Bombardier for the MRT contract and Hartasuma is working on vehicle assembly for the LRT extension.
Attendu said Bombardier is bullish on prospects in Malaysia.
“We have seen copies of the strategic development plan here and are impressed. The high speed rail will be a major investment, followed by the MRT and LRT. In addition, there is the Klang Valley commuter line upgrade.
“These projects will run for the next five to 10 years. We have been here for 20 years and delivered more than 300 rail vehicles and turnkey signalling system.
“We have a refreshed product line from high-speed train to medium speed, and intercity commuter trains. So we are ready for the next big challenge,” Attendu said.
He said in addition to new projects, Bombardier is constantly looking at the ageing fleet that it supplied in the past and supporting the customer in terms of overhaul.
Bombardier is a supplier of onboard and wayside automatic train protection, interlocking and train detection equipment to Keretapi Tanah Melayu Bhd, Malaysia’s state-owned rail operator.
Its delivered projects include the Kelana Jaya LRT system, the automated people mover system at the KL International Airport, as well as the KL Sri Petaling and Ampang Lines, formerly known as STAR (Sistem Transit Aliran Ringan), where Bombardier was the lead supplier for this full turnkey system.