Complete Property Market Updates of Singapore

July 8, 2008

Interest in Nusajaya industrial park warms

Filed under: Developer News,General,Malaysia — Propertymarketupdates @ 4:56 am

Initial response may have been cool, but companies in Singapore are showing more interest in Nusajaya’s Southern Industrial and Logistics Clusters (SiLC), where land prices are on a climb.

And according to a diplomat, Malaysia’s political developments should not cloud prospects for the Iskandar Malaysia economic zone.

Nusajaya’s master developer UEM Land said yesterday that SiLC’s Phase 1 has sold over 52.5ha of land, valued at around RM145 million (S$61 million). Some 95 per cent of the buyers, or around 22 companies, are based in Singapore.

Buyers include engineering and construction services provider Yong Nam Holdings and container handling firm Stinis Singapore.

UEM Land was in town to market another 40.4ha of freehold land in SiLC. Prices are likely to be around RM26 psf, a 30 per cent jump from RM20 psf when the land was first sold early last year.

SiLC is a 525.3ha park for advanced technologies, nutrition and health and integrated logistics industries in Nusajaya, a township in South Johor’s Iskandar Malaysia zone. Phase 1 of the park spans 121.2ha and UEM Land expects the remaining land in this phase to be taken up by the year-end.

The roadshow also showcased various developments in Iskandar Malaysia, but a Reuters report on Monday cast doubts over the future of the economic zone. Some investors may be ‘worried that the plans will be shelved if Mr Abdullah loses power’, the report said.

Calling the Reuters report ‘frivolous’, Malaysian High Commissioner to Singapore N Parameswaran said that the claims were ’something that investors need not be concerned about, because this is a project … which enjoys the support of the entire Cabinet’. Referring to political developments in the country, he said: ‘I don’t see that this will affect the project at all.’

The Reuters story also noted ‘lukewarm response from big investors in nearby Singapore’ to the Iskandar Malaysia project. Sharing his experience marketing the SiLC, UEM Land managing director Wan Abdullah said that it was because investors ‘want to see delivery’.

He pointed out that developments in SiLC are taking shape, and that ‘we will continue to further enhance and improve’.

He also said that SiLC’s Phase 2 is under construction and may offer ‘a new value proposition that would make the buyers happy and our shareholders happy’.

Source : Business Times – 6 Jun 2008

June 19, 2008

Mega project slated for Johor

Filed under: Commercial,General,Malaysia — Propertymarketupdates @ 4:25 am

A multi-billion ringgit mixed-development project will be launched in Iskandar Malaysia this year, says a report in The StarBiz.

The project, to be called Airport City or Aeropolis, comes under an associate company of Senai Airport Terminal Services, which is linked to billionaire Syed Mokhtar Al-Bukhary.

The project, on 1,133.11 ha near Senai Airport, will comprise three main components – residential-commercial-hospitality amenities, an air cargo logistic centre and a high-tech park.

The first component will cover 323.74 ha while the other two will occupy 404.68 ha each.

‘The investment in infrastructure – power, water, roads and telecommunications – is estimated at about RM1 billion (S$422 million),’ a source told StarBiz.

The source said that utility providers must be committed in providing uninterrupted supply and services to users in the development area.

The area will be equipped with high-speed broadband for residents and companies to communicate with clients or business associates from all over the globe.

Other facilities will include private medical centres, international schools, hotels and retail malls.

It will be vital to have world-class and uninterrupted utilities and services as the development wants to attract investors from Europe, Japan, Taiwan and the US.

The source said that the company was engaging a consultant from Australia to undertake the master plan study.

The consultant is looking at several well-known high-tech parks in Australia and Taiwan in its study.

‘The high-tech park will be better than the Kulim Hi-Tech Park,’ the source said, adding that unlike the Kedah park, Senai would only engage in research and development activities.

When the master plan study is completed, probably next month, it will be presented to the Johor government and a ground-breaking ceremony should take place towards year-end.

Source : Business Times – 23 May 2008

June 10, 2008

Foreigners more upbeat on Malaysian real estate

Filed under: General,Malaysia — Propertymarketupdates @ 4:38 am

FOREIGNERS are more bullish about the Malaysian property market than locals, according to a survey by one of the country’s property websites, thinkproperty.my.

Its chief executive officer Asim Qureshi said in the survey involving 250 participants, significantly more foreigners were positive about Malaysian real estate.

In a statement yesterday, he said 48 per cent of the foreigners surveyed indicated that the outlook over the next 12 months was positive, with 19 per cent negative and the remaining 33 per cent neutral.

Foreign participants believed that Malaysia will be relatively immune from the expected global slowdown as 45 per cent of them said the collapse of the US sub-prime market will not significantly affect local property prices, compared to 38 per cent who believed the impact will be significant.

‘Foreigners are in a great position to be able to compare Malaysian real estate with that in other countries. Most foreign investors will not look at Malaysian property in isolation, but compare Malaysia with a number of other property hotspots,’ Mr Asim said.

‘In my view, foreigners are seeing the bigger picture – a picture in which they see that Malaysia has not had a property boom for over a decade. With robust fundamentals there is a good possibility Malaysia will see its own property boom in the next few years,’ he said.

Mr Asim said reassuringly, Malaysians were positive about real estate in the country, with 33 per cent saying that the outlook was positive, and only 21 per cent opting for the negative outlook.

However, he noted that locals were more concerned about global events, with 43 per cent saying that the US sub-prime crisis will not affect Malaysian property prices significantly compared with 41 per cent who felt otherwise.

The survey also showed that property remained the most favoured investment type by far as indicated by 60 per cent of participants, compared to 26 per cent who favoured fixed deposits as the best performing investment type over the next 12 months, and 14 per cent who chose shares.

‘Participants are unsurprisingly still most positive about residential property and this is likely due to the fact that the residential sector has been the backbone of the property sector and the most resilient property type since the Asian financial crisis,’ Mr Asim said.

He said 28 per cent of those surveyed believed that detached or semi- detached houses will be the best performing asset type in Malaysia over the next 12 months, followed by 22 per cent for apartments and condominiums, and 18 per cent for linked houses.

Foreigners preferred condominiums over linked houses while locals favoured linked houses, and 11 per cent of the survey participants believed that offices will be the best performing property type while 7 per cent opted for the retail sector.

Source : Business Times – 15 May 2008

UE’s Q1 profit falls 90% on fair-value losses

Filed under: Financing,General,Malaysia — Propertymarketupdates @ 2:45 am

UNITED Engineers (UE) has reported Q1 2008 revenue of $133.6 million, up 9 per cent from the same period last year. But net profit was down 90 per cent to $1.22 million.

UE said operating profit was affected by fair-value losses from short-term investments and the carrying value of its interest in Anhui Hefei United Power Generation Company (AHUP).

It said ‘other income’ dropped 95 per cent to $588,000 due to fair-value gains from short-term investments recognised in Q1 2007, while ‘other expenses’ increased 459 per cent to $13.8 million due to fair-value losses of $2.9 million from short-term investments and $8 million (with $4.4 million attributable to the group, after minority interest) relating to the carrying value of AHUP.

AHUP has ceased contributing since Dec 1, 2007 due to proposed divestment approved by UE shareholders and pending finalisation.

In December, UE said it would sell its stake in United Power Corporation (S), which has a 49 per cent stake in AHUP, for US$85.6 million.

Gross profit for Q1 rose 20 per cent to $28.4 million and gross profit percentage was 21.3 per cent, up from 19.2 per cent in Q1 2007. This was attributed mainly to higher rental rates and partial recognition of income from the sale of the condominium project, The Rochester.

Earnings per ordinary share fell to 0.5 cents, from 5.4 cents in Q1 2007.

UE’s share price closed eight cents lower at $3.91 yesterday.

Source : Business Times – 13 May 2008

May 12, 2008

UEM Land eyes new projects

Filed under: Developer News,General,Malaysia — Propertymarketupdates @ 3:33 am

Move comes ahead of its Sept listing; firm may also invest overseas from 2010

UEM Land Sdn, developer of Malaysia’s biggest commercial and housing project, plans to start real estate investment trusts (Reits) and new property developments as it prepares for a listing this year.

State-controlled UEM Land may also invest overseas from 2010 to emulate CapitaLand Ltd, South-east Asia’s largest property company, managing director Wan Abdullah Wan Ibrahim said on Tuesday. The Kuala Lumpur-based company now derives almost all its earnings from the Nusajaya development in Johor state.

‘We aspire to be something of that size and that diversified,’ Wan Abdullah said in an interview in Kuala Lumpur, referring to Singapore-based CapitaLand. ‘We even have initiatives like Reits on the table. We cannot rely on just Nusajaya to be our bread and butter.’

UEM Land, controlled by UEM World Bhd, is due to start trading in Kuala Lumpur by September in a reorganisation to attract investors to the group’s real estate unit. The company wants to cut its reliance on Nusajaya, a 9,712ha development backed by the Malaysian government.

Malaysia’s ruling coalition, in power since independence in 1957, suffered its worst election losses on March 8. Some analysts raised concern the result may slow state-backed projects such as Nusajaya.

‘Investors still fear for some reason that projects may not be deployed as strongly as they would have been,’ said Vincent Khoo, head of research at Aseambankers Malaysia Bhd in Kuala Lumpur. ‘There’s enough uncertainty on this project.’

Shares of UEM World, Malaysia’s third-biggest construction company, yesterday climbed 1.8 per cent to RM3.38 as of 11.01am in Kuala Lumpur, giving the company a market value of RM4.7 billion (S$2 billion).

UEM World has dropped 18 per cent since the plan to list UEM Land was announced on Feb 15, and is down 14 per cent this year. Other government-linked stocks including power producer Tenaga Nasional Bhd have declined since the March election.

CapitaLand is up 8 per cent in 2008 and valued at S$19.1 billion. Its Reits and investments span more than 20 countries, according to the company’s website.

Under the UEM reorganisation, investors in UEM World will receive 125 UEM Land shares and RM125.8 in cash for every 100 UEM World shares held.

Wan Abdullah said UEM Land plans to sign an agreement next month to buy a 100 acre plot in Selangor, the state surrounding Kuala Lumpur, for about RM110 million. The company is also considering buying land in Kuala Lumpur and Penang, he said.

The Nusajaya project in Johor includes a marina, a hospital, offices and homes. Malaysia’s government said last month it is in talks with Walt Disney Co and other theme park operators for a resort at the development.

Any overseas investments by UEM Land will be made in 2010 ‘at the earliest’, Wan Abdullah said. Even with other investments in Malaysia, Nusajaya will provide about 80 per cent of the company’s profit, he said.

‘For the next two years, we have to focus on the delivery on Nusajaya,’ he said. ‘But that does not mean that we totally hide ourselves from global opportunities.’

The company plans to announce as early as this month the sale of 16 ha of land to a foreign company at the Nusajaya marina, and a joint venture with a local business, Wan Abdullah said. He declined to give a value for the transactions. — Bloomberg

Source : Business Times – 8 May 2008

Asian Finance Bank plans Islamic property fund

Filed under: Financing,General,Malaysia — Propertymarketupdates @ 3:31 am

Asian Finance Bank, one of three foreign Islamic lenders in Malaysia, plans to set up an Islamic property fund of up to US$500 million next year to tap what it considers to be an undervalued market.

The bank, owned by Qatar Islamic Bank, RUSD Investment Bank Inc of Saudi Arabia and Global Investment House of Kuwait, also plans to set up a fully fledged Islamic bank in Indonesia by 2010 as part of its effort to build in-roads into Asia.

Faisal Alshowaikh, chief executive of Asian Finance Bank, said in an interview that the property market was relatively subdued following the global credit crisis and it was not something that he would pursue aggressively. However, he saw the potential for a property fund in Malaysia.

‘When you look at Indo-China and other countries like Korea, Singapore, Hong Kong, I think the property market is very much undervalued in Malaysia,’ he said.

The global Islamic finance market is one of the fastest growing in the world. Islamic assets are growing at an annual pace of 20 per cent and are set to hit US$2 trillion in 2010 from the current US$900 billion, thanks largely to a flood of petrodollars, Ernst & Young said in February.

Asian Finance Bank currently has a representative office in Indonesia, a country analysts say has the potential to become a major player in global Islamic finance because around 85 per cent of its population is Muslim.

‘It is a big market for Islamic banking which needs to be aggressively explored,’ Mr Alshowaikh said on the sidelines of an Islamic banking conference in Jakarta.

‘We have plans to make this representative office into a fully-fledged Islamic bank in Indonesia. In this part of the world, with a population of 229 million – and a relatively small percentage of the market here is Islamic – I believe we can do more on the retail side and do more on wealth management.’ Indonesia’s Islamic finance market lags those of neighbouring countries Malaysia and Singapore because of tax and accounting framework issues.

But analysts expect sharia financing to take off after Indonesia’s parliament passed a long-awaited sharia finance law last month.

Indonesia’s central bank says that the Islamic banking industry in the world’s most populous Muslim nation is set to meet its target of a 10-15 per cent share of national banking assets by 2015, from less than 5 per cent now.

Asian Finance Bank was incorporated in Malaysia in 2005 and aims to develop a regional banking network providing a wide range of services. — Reuters

Source : Business Times – 8 May 2008

February 29, 2008

S$150m bid for DRB-Hicom mall

Filed under: Commercial,Developer News,Malaysia — Propertymarketupdates @ 4:54 am

But management is unlikely to sell the mall, in S’pore’s Little India area, anytime soon

Malaysia’s largest integrated automotive concern, DRB-Hicom Bhd, has received a S$150 million offer for a shopping mall it owns in Singapore’s Little India area, Malaysia’s Business Times reported, citing people familiar with the matter.

The offer is some 50 per cent more than what the company received in 2006. However, it is unlikely to sway the management team to sell the Singapore asset anytime soon.

‘There won’t be a fire sale of assets. Instead, there are plans to make additional investment into the asset before a transparent sale can be considered,’ said a person representing a shareholder of the company, speaking on condition of anonymity.

It is believed that DRB-Hicom intends to pump in between RM10 million and RM20 million (S$4.37 million and S$8.74 million) to refurbish and rebrand the six-storey Tekka Mall, which sits on 6,332 sq m of commercial land between Serangoon and Sungei Road.

DRB-Hicom bought the land a year before the Asian financial crisis and started developing it 2002. It is estimated that its cost of investment, including the land, is about S$188 million.

Tekka Mall (the automotive group’s first property venture abroad), alongside Raba Nyrt (Hungary’s only publicly traded vehicle parts maker), is among assets deemed as non-core. They have been earmarked for sale to raise about RM500 million in fresh capital.

DRB-Hicom, under the stewardship of managing director Mohd Khamil Jamil, has been doing a juggling act of selling assets and buying new ones. This is aimed at reducing debts and adding more urgency to the group’s focus.

Although a mainstay in the automotive sector, DRB-Hicom has sizeable interest in property development, defence and services.

It also has interest in the plantation business via its ownership of the fully matured Connemara Estate, which sits on 6.26 million sq m of land in Ulu Langat, Selangor.

The estate land could be converted for property development. But for now, DRB-Hicom is content to reap dividends from firm palm oil prices.

Mr Mohd Khamil declined to speak on specifics, but told the Malaysian business paper that the management team’s efforts thus far had been helped by the free hand given by major stakeholders of the company.

The major shareholders are tycoon Syed Mokhtar Al-Bukhary (15.4 per cent), the Employees Provident Fund (17.48 per cent) and Khazanah Nasional Bhd, the government-owned investment arm (10.33 per cent).

Since his appointment to the job in February 2006, Mr Mohd Khamil’s team has shaved off almost RM505 million of the group’s debts by getting rid of non-core businesses and improving operational and financial efficiency to strengthen the group’s balance sheet.

To date, DRB-Hicom has outlined plans on the sale of its stake in EON Capital Bhd and Uni.Asia Capital Sdn Bhd, which will raise about RM2 billion cash.

As at March 31, 2007, DRB-Hicom had debts of about RM2.2 billion. Interest on the debts for the year under review stood at RM143.69 million, or about 94 per cent of its net profit of RM156.53 million.

Source : Business Times – 14 Feb 2008

February 28, 2008

Growth in S-E Asia property market sustainable: DTZ

Filed under: Agency News,Commercial,Indonesia,Malaysia,Rental News,Vietnam — Propertymarketupdates @ 4:16 pm

THE property markets of South-east Asia are expected to sustain the buoyant growth seen in 2007, says DTZ Debenham Tie Leung.

DTZ said that residential markets in the region are expected to continue to grow, ‘driven by steady economic expansion, increasing affluence and increasingly attractive projects as developers strive to refine concepts’.

In Vietnam, DTZ noted that demand for residential properties, which was already growing fast, was bolstered by the recent relaxation in rules for housing ownership, allowing foreign land ownership terms to increase from 50 to 70 years. DTZ said this also encouraged foreign developers to build residential properties there.

In Malaysia, DTZ said take-up was encouraging for high-end condominiums in Kuala Lumpur, with a complete sell-out for several luxury projects. This was supported by the relaxation of rules for foreigners to buy residential properties and the waiver of real property gains tax last April. While monthly average gross rents remained unchanged at RM4 (S$1.25) per square foot, average capital values increased 3 per cent year-on-year to an average RM500 (US$152) psf.

The residential market in Thailand is also expected to recover, as the political situation improves and developers are encouraged to launch projects which have been withheld.

In the office sector, DTZ says demand for office space in Vietnam is expected to continue to be underpinned by limited potential supply. It said that in Vietnam, most potential supply comprises non-prime office buildings, ‘which will lead to greater competition for prime office space’. Occupancy remains high, at above 95 per cent, while Grade A rents average US$3.70 psf per month in Hanoi and US$4.37 psf per month in Ho Chi Minh City.

The office market in Kuala Lumpur was also active, with increasing demand by the services, oil and gas, information technology and financial sectors. Together with limited new supply, prime office rents rose 7.8 per cent year-on-year to RM62.65 (US$18.16) psm.

Jakarta also saw office occupancy rates of over 90 per cent. Rents did, however, remain at about US$0.76 psf per month amid fluctuations in exchange rates.

The Bangkok office market was the only one that was subdued, with a negative net absorption for H1 2007. DTZ said this was due to a less favourable operating environment which affected investors’ confidence.

Source : Business Times – 5 Feb 2008

February 27, 2008

Survey shows Malaysians hot on property trail

Filed under: Financing,Malaysia,Property Investment — Propertymarketupdates @ 10:32 pm

MALAYSIANS are keen property purchasers, and many are still on the lookout for investment opportunities, according to a recent survey.

Real estate website iProperty.com said that a significant 88 per cent of those polled online over six weeks in November and December expressed an intention to acquire a property within the next 12 months. Nearly half or 48 per cent of the 2,066 respondents claimed that they had purchased at least one property over the past 24 months, and 10 per cent said that they had acquired two or more.

Given the current economic uncertainties, developers who were concerned about weaker demand would be heartened to know that a fair number of Malaysians are apparently still hot on the property trail and planning to maximise loan arrangements.

More than three-quarters of respondents told iProperty that they would fund their properties by taking loans that provide 80 to 100 per cent financing. This practice allows the buyer greater disposable income to invest in other assets, Robert Kiyosaki, an investor and self-help author, told BT.

An investor who declined to be identified has acquired three apartments over the past three years and regularly attends new launches.

In his books, Mr Kiyosaki advocates investing in assets that generate passive income so that one can eventually live off those sources of funds.

In general, locals continue to show an interest in residential units over high-rise development.

iProperty said that 62 per cent of respondents, citing potential capital appreciation gains as the main reason – corresponding with their primary attraction to the property investment – indicated their preference for landed units.

This is consistent with other surveys. Over the past three years, property consultants CH Williams’ CEO opinion survey has revealed Malaysian investors to be most interested in terraced/link residential units, followed by semi-detached/detached houses. In comparison, residential condominiums/apartments are top of the property list for foreign buyers.

Buyers prefer landed properties as they tend to appreciate more over the longer term than apartments, but that is because the scarcity of land in Klang Valley, for example, has resulted in fewer houses being built.

Still, some residential apartments in prime areas are selling like hot cakes as evidenced by the following:

Over the past month, 65-70 per cent of the 318 units of Twins Damansara in the upmarket suburb of Damansara Heights, which retails from upwards of RM700,000 (S$307,160), has been sold. In November, 90 per cent of the 90-unit One Jelatek condominiums situated 10 minutes from an LRT station in Ampang were signed up in less than two hours.

Within a week of its launch this month, Gaya Bangsar saw 95 per cent of its 285 units priced between RM350,000 and RM900,000 snapped up. The developer expects the units, which were sold at an average RM550 per square foot, to appreciate by 20 to 30 per cent in the next three to four years.

The Internet is increasingly the medium used in property searches, with half of iProperty’s respondents turning to it first, and up to 86 per cent using it primarily for its speed and convenience.

Source : Business Times – 31 Jan 2008

January 9, 2008

Land price hits a high at Johor’s Iskandar region

Filed under: Malaysia — Propertymarketupdates @ 1:26 am

LAND prices in the Iskandar Development Region (IDR) continue to spurt, with a transaction done last week at RM50 (S$21.7) per square foot (psf), compared with RM43 psf four months ago and several times the price two years ago.

It was announced last Friday that a consortium between Dubai’s Limitless Holdings (60 per cent) and Malaysia’s state-owned UEM World (40 per cent) would embark on a high-end, waterfront development on 45ha of land at Nusajaya that it had bought for RM242 million, or RM50 psf.

Nusajaya, almost in the middle of the IDR, is where a new state administrative capital is being constructed.

The IDR – a special economic zone three times the size of Singapore – has been made a development priority by the administration of Prime Minister Abdullah Badawi. Special incentives, including tax holidays, liberal investment rules and the absence of affirmative action policies that favour ethnic Malays, are aimed at drawing in foreign investment.

The Dubai-UEM World transaction is the third sizeable land purchase in the IDR in as many months.

Recent land purchases totalling RM5.8 billion epitomise a mindset shift by the policy-makers in Kulala Lumpur, who are trying to attract new foreign investment by opening up Malaysia’s property markets in selected areas like the IDR.

So far, the new investors have all been well-heeled Middle Easterners with a development track record in other countries.

This influx of predominantly Islamic investment into predominantly Muslim Malaysia has obviated criticism from ethnic Malays disgruntled by Mr Abdullah’s suspension of affirmative action policies in the IDR.

The continuing inflow of foreign investment into the area could also jump-start the relatively slow-moving project as it will not only diminish execution risk but, in the nature of a virtuous cycle, also attract other investors beguiled by rising land prices.

The authorities certainly seem to think so. Last week, New Straits Times quoted Johor Chief Minister Ghani Othman as saying at least RM7 billion of projects in the IDR will begin by April this year. They include highways, river clean-ups, residential and office complexes and leisure facilities.

Analysts are excited by the effect of rising land prices in Johor on the share prices of companies with large land banks there. The biggest beneficiary is reckoned to be UEM World, a listed entity that still owns 4,137ha at Nusajaya.

‘Its current share price (around RM3.90) imputes an average valuation (of its land bank) of RM12.50 a square foot despite the fact that bungalow and industrial lots are already transacting above RM20 a square foot,’ a recent UOB KayHian report estimated. ‘At RM50 a square foot, UEM World’s real net asset value would jump to RM12.46 a share.’

Source : Business Times – 3 Jan 2008

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