Wednesday, 30 July 2014

(The Edge) CBRE Property Report Malaysia’s economic growth likely to edge upwards in 2014

THE Malaysian economy beat forecasts with its gross domestic product (GDP) growing at 6.2% in the first quarter of 2014 (1Q14), thanks to sustained domestic demand and recovering net exports.

Services and manufacturing sectors contributed to the growth with 6.6% and 6.8% increases year-on-year (y-o-y) respectively.

The trade surplus rose to RM26.4 billion for 1Q14 compared with RM16.4 billion a year ago. Gross exports increased by 10.9% year-on-year while gross imports grew moderately at 5.5%. This highlights the continued strength of global trade activity which will benefit Malaysia’s exports and manufacturing sector.

Malaysia’s economy is expected to continue to expand, driven by sustained growth in private investment activities, whose positive contribution may prove to be the saviour for the economy in 2014 as the pace of private consumption may moderate due to rising consumer prices.

Private investment expected to support economic growth

Private investment continued to rise by 14.1% in 1Q14 (1Q13: 10%) as a result of higher capital spending in the services and manufacturing sectors, while public investments continued to fall, declining 6.4% y-o-y in 1Q14 from 18.4% increase a year ago.

Private investment is expected to remain a big contributor to GDP for years to come, driven by the implementation of the Economic Transformation Programme (ETP) projects and relatively low borrowing costs. Overall, gross fixed capital formation grew 6.3% in 1Q14 versus 13% in 1Q13.

Private consumption edged up to 7.1% in 1Q14 (1Q13: 6.4%), while public consumption’s growth of 11.2% y-o-y was fuelled by spending on supplies and services.

2014 is expected to be a year of robust GDP growth, although contribution to growth will likely shift towards investment and away from consumption.

Significant changes expected in KL city in 2014 after a quiet 2013

KL city recorded its first office completion during the first quarter of 2014 since 2012.

The first quarter of 2014 saw the completion of two blocks of offices.

One of them, Lembaga Tabung Haji Tower @ Platinum Park, is located in KL’s Golden Triangle and represents the first completion in the area since Integra Tower’s completion at end of 2012. The other completion, Menara TSR, is located in Mutiara Damansara.

While Menara TSR is already enjoying a good occupancy rate, Lembaga Tabung Haji Tower has not actively been put on the market yet.

As a result of these two completions, the total supply of office space in Greater KL stood at 94 million sq ft as at 1Q14, up by 0.52 million sq ft over the quarter and up 5.4% on a y-o-y basis.

Several of 2014’s expected completions likely to be delayed
Some 6.10 million sq ft of new office space is expected to be completed in Greater KL in 2014, 4.17 million in 2015, and 5.88 million in 2016, with several completions to be in the form of stratified offices. With several other projects being planned in addition to those under construction and for which details have not been announced yet, the office market will not see any slowdown anytime soon.

Significant completions expected in 2014 include IB Tower, Menara Bangkok Bank and Menara Hap Seng 2, all located within Kuala Lumpur’s Golden Triangle.

The latest update regarding the long-awaited 118-storey Warisan Merdeka shows that foundation works have recently started and it should be completed in 2015. The tower will finally be located where it was initially intended to be built, and not at Bandar Malaysia. The building will cost between RM2.5 billion and RM3 billion and is expected to be completed in 2020.

Rents continue going up at a slow and steady pace
Passing rents slightly increased to RM7.64 per sq ft (psf) as at 1Q14 from RM7.61 psf in 4Q13, based on a basket of selected high-quality offices buildings in KL City.

Very few offices breach the RM10 psf per month mark and the trend of rents going up significantly is unlikely given the risk of oversupply ahead. At the same time, in the context of inflation, it is probable that the best quality buildings will still be able to increase their rents by 3% on average this year.

Vacancy rates in KL City slightly up q-o-q and likely to further increase in 2014

The consequence of the significant office supply in 2013, particularly at the end of that year, was still felt during 1Q14 for vacancy rates of Selangor and KL suburban areas.

Vacancy rate of KL suburban marginally improved from 20.9% as at 4Q13 down to 20.2% as at 1Q14. In the case of Selangor, vacancy rate did better but remained high at 18.4% as at 1Q14 (4Q13: 20.1%).

In the case of KL City, there was some stability in vacancy rate despite a new completion as the rate remained at 11.3%, only 10 basis points up from 4Q13.

Overall, the Greater KL vacancy rate improved quarter-on-quarter (q-o-q) at 14.6%, but was slightly higher than a year ago (1Q13: 14.4%).

The best offices in the market continue to enjoy strong demand with 1Q14 a continuation of 4Q13 with moderate leasing activity. As most of the best offices in Greater KL already enjoy good occupancy rates, no significant change was observed among prime buildings.

As previously mentioned, Menara TSR has already achieved an excellent occupancy rate, reaching 70%. Completed in 4Q13, Pinnacle Sunway is estimated to be 40% occupied while Menara LGB is also doing well with a 70% occupancy rate.

Transaction of Platinum Sentral is one of the most prominent in KL’s office market
Malaysian Resources Corp Bhd (MRCB) sold its Platinum Sentral office building in KL Sentral to Quill Capita Trust on Jan 29 through a transaction which is said to be the first of its kind in the country (brokered by CBRE).

Indeed, MRCB has become the single largest shareholder of Quill Capita Trust as well as the owner of its management vehicle as a consequence of the deal. Quill Capita Trust is paying RM486 million in cash and RM264 million in new Quill Capita Trust units at RM1.32 each.

Platinum Sentral is a commercial development consisting of five blocks of four to seven storeys each with office and retail components, a multi-purpose hall, and two levels of parking bays. The office component offers 450,000 sq ft of net lettable area and is fully occupied, with major tenants such as SME Corp, the Land Public Transport Commission, and SBM Malaysia Sdn Bhd.


Concentration of retail malls in suburban areas on the rise

The retail market saw two additional completions this quarter, totalling close to 0.9 million sq ft. These completions are Main Place @ USJ21 (237,000 sq ft) and Nu Sentral (650,000 sq ft) which opened their doors in March 2014.

Twelve malls are projected to be completed in 2014, with a total of  approximately 3.6 million sq ft, and exclusively located in KL suburban and Selangor. Among these malls are IOI City Mall (1,350,000 sq ft), Atria Shopping Gallery (500,000 sq ft), and Encorp Strand Mall (300,000 sq ft).

Stagnant occupancy rates and prime rents
As of 1Q 2014, the occupancy rate of retail malls achieved an average 91%, marginally down compared with the previous quarter. This is attributable to the slight drop seen in Pavilion KL, The Gardens, and Sunway Pyramid. Despite the decline, the continued steady occupancy rates were supported by the stable demand in other retail malls.

Prime rents have remained unchanged since 2Q 2013 at RM55 psf in KL city centre and RM31 psf in KL suburban areas, after a Q-o-Q growth of 2.8% and 1.4% respectively in 2Q 2013. These retail malls are categorised as established malls, which have been in the market for more than 10 years.

Challenging year ahead for retailers
The implementation of new policies by Bank Negara Malaysia (BNM) on bank borrowings to control household debt has led to a lower loan tenure of 10 years from 25 years for personal loans. This may reduce the purchasing power of Malaysian households on big–ticket items, particularly furniture and electrical and electronics goods. Regular discounts have to be offered by retailers to attract more shoppers whose purchasing power has been severely affected.

Rising cost of living for the average Malaysian has been felt since the final quarter of 2013 and is expected to be more apparent in the first six months of this year.

Despite the current festive season, the overall retail sales may not improve as the season will only have a significant impact on retailers selling festive goods. However, 2014 is expected to see overall sales growth of 6%, according to Malaysia Retailers Association.

Pressure on tenancies and rents to be felt
The incoming supply of retail space into the market is expected to create pressure on existing outlets to maintain tenancy and rental rates. Retail space is expected to increase by 3.6 million sq ft this year, which will put pressure on existing retail malls to keep tenants and will likely lead to higher vacancy rates.


BLR to be replaced by Base Rate in 2015

BNM decided to maintain the Overnight Policy Rate (OPR) at 3% at its meeting on March 6, which means that the Base Lending Rate (BLR) remains at 6.53%, with a typical mortgage rate of BLR minus 2.2%-2.5%.

On March 19, BNM announced a new reference rate framework; the Base Rate is to replace the current Base Lending Rate (BLR) as the main reference rate for new retail floating rate loans effectively on 2 Jan 2015. Nonetheless, the shift to the new Reference Rate Framework should have no impact on the effective lending rates charged to retail borrowers which are determined by various factors, including a financial institution’s assessment of a borrower’s credit standing, market funding rates and competitive considerations.

Total loans applied for purchase of residential property was RM47.81 billion in 1Q 2014, down 7.1% from 1Q 2013.

This was mainly due to lower loan applications during the first two months of the year. However, the loan approval rate recorded a higher amount of RM25.42 billion during the same period, an increase of 6% over 1Q 2013. Banks seemed to have been indulgent on residential mortgage approvals, with approval rate reaching 53.3% for 1Q 2014, compared with an approval rate of 47% during the same period in 2013.

Indirect impact of the implementation Goods & Services Tax (GST) to be felt
Under Budget 2014, the Government announced a GST to be implemented from April 1 next year at a fixed rate of 6%. The introduction of GST has been alerted by some developers as a factor of increase for property prices, even ahead of the implementation of GST.

Indeed, while the government announced that residential properties will be exempted from implementation of GST, it should be noted that there will be a rise in construction and service costs incurred that will in turn impact real properties’ prices in the near future.

Market outlook for 2014
A few launches were recorded during 1Q 2014, but we expect developers to advertise more projects in the next two quarters with the improvement of market sentiment. The end-user market should remain healthy, and we expect to see greater interest in both the primary and secondary markets especially for residences located in good locations.

In addition, we expect primary market projects that have certain USPs, such as good design and quality finishing, unique facilities and exceptional locations, to continue to do well, as these types of products are still somewhat limited.

1Q 2014 remains in continuity of previous quarters
As at 1Q 2014, for the entire Greater KL, which includes in the case of the residential market Kuala Lumpur, Selangor, and Putrajaya, the total existing supply of residential properties stood at about 1.79 million units.

The breakdown of residential supply shows the same  predominance of landed residential properties as for the previous quarters, as they account for 43.6% of the total stock, followed by non-landed properties at 34.9%. The remaining 21.5% is represented by low-cost housing properties.

There is an on-going trend of slow supply growth since end-2012, with a growth rate of less than 2%. This is part of a wider slowdown in supply growth seen since 2006. Because of the measures announced in 2013 by the government and currently being implemented, there is an expectation that the housing market will be slow in 2014. Anecdotal evidence shows that some developers have been putting on hold some projects since the beginning of the year. But this may somehow lead to an increase in demand in the near future and further drive activity once launches resume.

Majority of Malaysians not willing to spend more than RM0.5mil for property
Location-wise, 75.9% of the total 1.79 million units are located in Selangor, 23.8% in Kuala Lumpur, and the remaining 0.3% in Putrajaya. This breakdown has not significantly changed for some time.

According to a recent study conducted by iProperty among 7,000 respondents from Malaysia, 68% of them have a budget of a maximum of RM500,000 to purchase a property while those who intend to buy a residential unit priced above RM1 million only account for 5% of the total respondents. Interestingly, 63% of the respondents favour terraced houses, possibly as the compromise between their preference for a landed property and for more affordable houses, than semi-detached and detached houses. Lastly, fewer respondents than a year ago are willing to purchase a property within six months to possibly see how the market evolves first.

Incoming supply edges up Q-o-Q
There was a total of 207,013 units classified as incoming supply as of 1Q 2014, up 4.4% Q-o-Q. Incoming supply is defined as units for which construction permits have already been approved but for which construction has not necessarily already started. In terms of breakdown, the pattern is very similar to the existing Greater Kuala Lumpur unit distribution. In terms of units under construction, 196,528 units have been classified as such, which means that construction works have begun on 94.9% of the units granted a construction permit.


Fewer launches of high-end condominiums

There was only a total pool of approximately 1,500 new units launched during the review period, including TWY Mont’ Kiara, Vortex (KLCC), The Ritz Carlton Residences Berjaya Park (KLCC), and the Expressionz Professional Suites (KLCC).

Take-up rates for these new launches remain strong despite the ban of DIBS schemes from Jan 1.

Other upcoming new developments in Kuala Lumpur include projects such as Serviced Apartments @ Bangsar South (YNH Property Berhad), Anjali (North Kiara), Phase 2 of Residensi 22 (Mont’Kiara), Kiara 163 Serviced Residence (Mont’Kiara), Weida Mont’Kiara, Verve Suites (KLCC), The Ambangan (Embassy Row), Lidcol Garden (KLCC), and Angkasa Raya Serviced Residence (KLCC) among others.

Moreover, during the review period, there was a total of five new completions with a total of 1,090 units, including Westside One (Desa Park City), Camelia Serviced Apartment (Bangsar South) and Vue Residence. Projects completed during 1Q 2014 but with expected full vacant possession in 2Q 2014 include Kenny Hills Residence, Glomac Damansara Residential Tower 1, The Elements (Ampang) and Nobleton Crest (U-Thant), while completion of others has been pushed to a later date.

Trend of activity in the secondary market remained moderate during 1Q 2014. We continue to see a slight increase in the average price for secondary transactions of condominiums in the study areas of KLCC, Bangsar and Mont’Kiara (up 0.97% Q-o-Q to RM826 psf).

Price movements during the period were the most significant in Mont’ Kiara (up 1.95% to RM634 psf), followed by KLCC (up 0.71% to RM1,033 psf) and Bangsar (up 0.56% to RM812 psf). Capital values in Mont’Kiara and Bangsar have climbed by 14% and 15.63% respectively since the beginning of 2011.

This suggests that investors continue to view opportunities in the secondary market of these prime markets as they can offer good value deals, especially compared to rising prices in the primary market; however, the challenging rental market remains a concern.

Average asking rentals in KLCC are approximately RM3.96 psf per month, while the rents in Bangsar and Mont’Kiara are RM3.27 psf per month and RM2.93 psf per month, respectively.


Wolo Hotel opens after several quarters of  delay

As of 1Q 2014, our figures show a total supply of 3- to 5- star hotel rooms in Kuala Lumpur of 27,162 rooms, representing an increase of 168 rooms from Q4 2013. The quarter witnessed the opening of the much anticipated 168-room boutique Wolo Hotel. The hotel expects to obtain a 4-star rating from the Malaysian Ministry of Tourism and Culture.
Of the existing 3- to 5-star hotel supply, the majority of existing hotel rooms are located within the Kuala Lumpur’s Golden Triangle (GT) at 12,268 rooms or 45.2%. This is followed by Decentralised Areas (DA) at 8,279 rooms or 30.5% and the Central Business District (CBD) at 6,615 rooms or 24.3% of the total supply.

Hotels expected to be completed by the end of 2014 include the 4-star 198-room Allson Capital Hotel and 203-room Holiday Villa Kuala Lumpur. These 401 rooms will add 1.5% to the existing stock. Looking further, an expected 1,249 rooms within six hotel developments will be added to the market by end-2016, assuming all projects are completed as scheduled. This will increase the hotel supply by 4.6%.

Major hotel developments expected to be completed in 2015 include the 5-star 208-room St Regis Hotel and Residences, KL Sentral, the 4-star 200-room Holiday Inn Express located along Jalan Sultan Ismail, the 3-star 216-room Best Western Bangsar located in Plaza Pantai, Bangsar and the 5-star 50-room Banyan Tree @ Banyan Tree Signatures Kuala Lumpur. 2016 meanwhile will witness the expected completion of the 4-star 275-room Arcoris Mont Kiara and the 5-star Clermont Hotel Damansara. The majority of future supply will be located in DA, followed by GT locations.

Hotel occupancy rates down due to seasonal factors, but up on a yearly basis
The hotel market saw a dip in occupancy rates across the board, but this was widely anticipated as the first quarter of the year is traditionally a subdued period. Average occupancy rates saw a decrease from 76.4% in 4Q 2013 to 68.5% in 1Q 2014. However, this was an increase on a year-on-year basis for the three hotel segments, as average occupancy rate in 1Q 2013 was 67.4%.

ARRs meanwhile saw an increase to RM272 (US$83) per night, up from RM271 per night from the previous quarter.

However, ARRs have been generally flat, growing a steady 2.5% year-on-year over the past seven years.

(NST) Ipoh Parade to unveil its new facade next week

IPOH: THE Ipoh Parade Shopping Mall will be unveiling its new animated graphics facade at its entrance which will be lighted up on Aug 8.

In conjunction with the launching of the facade, the mall will kick off a month-long celebration entitled the “Festival of Lights” where shoppers will be entertained by a series of performances by stilt walkers, magicians, fire eaters and jugglers.

The celebrations will take place on weekends from Aug 8 until 10, Aug 17, Aug 24 and Aug 30 and 31.

Visitors can watch performances by K-Pop boy band AlphaBAT, B-Boy 1 on 1 Battle, The Malaysia Champ voice 2014 and NTV7’s On The Brink promotional tour as well as dance performances by d’Artiz Streetdance Studio and Yencci Dance Studio.

There will also be a fashion show, yo-yo performance, a 24-festive drum show and an LED dragon and lion dance performance and a lantern-making competition.

Lion Ipoh Parade centre manager Chan Yu Yin said the grand celebration was to mark a major milestone for Ipoh Parade as it completed its modern upgrading, propelling neighbouring communities into a future that delivers a retail experience on a whole new paradigm.

“The celebration also aims to give back to the community where we will be hosting a “Give Chance A Dance” competition to raise funds for the Soroptimist International which promotes the welfare of women and children in need in the city here,” he added.

(NST) Pandora opens first outlet in Johor

PANDORA, the international jewellery brand well known for its handcrafted charm bracelets, opened its first outlet in Johor at the Komtar JBCC Mall here recently.

This is also the brand's 24th outlet in the country.

The opening of the brand's 24th outlet in the country follows requests by Johoreans to have one in the city.

The outlet carries jewellery from its iconic Moments collection. Shoppers could also take a look at the latest Pandora's High Summer 2014 collection here.

During the launch, Pandora Malaysia managing director Datin Zarida Noordin said the opening of the outlet was to make the jewellery brand even more accessible to all Pandora's fans.

"Johoreans either go to Kuala Lumpur or Singapore to buy Pandora's jewellery. With this outlet, they need not travel far.

"We are hoping to attract Singaporeans as well since it is cheaper to buy jewellery in Malaysia."

Pandora has been creating timeless jewellery for women since 1982. Its collection of charms, pendants, clips and rings are all designed to help women express their unforgettable moments through elegant, modern and genuine jewellery pieces.

Zarida also said that Pandora is set to open its second outlet in Johor early next year.

For details about Pandora's latest products, visit its website

Tuesday, 29 July 2014

(NST) Putrajaya to have more hotels in next two years

PUTRAJAYA will see the unveiling of more hotels over the next two years, raising fears among the existing operators who are scrambling for business with 1,267 rooms available currently.

The latest opening was the 382-room Everly Hotel by Putrajaya Holdings Sdn Bhd.

The hotel is managed by the Everly Group and is linked to Alamanda Shopping Centre, the main shopping and leisure attraction in Putrajaya.

The longest serving hotels in Putrajaya are the four-star Palm Garden Hotel that opened in 1995, the five-star Putrajaya Marriot Hotel that started operating in June 2002, while Putrajaya Shangri-La opened in 2003.

Pullman Lakeside Putrajaya, which opened in 2008, is managed by French-based Accor group. The five-star hotel, with 281 rooms, currently enjoys 65 per cent room occupancy.

Its general manager Christophe Keramaris said he is aware that there will be a blooming scene for the hospitality industry, with new hotels opening in Putrajaya. 

The Mayland group, controlled by Tan Sri David Chiu, is opening the Dorsett Putrajaya Hotel with 218 rooms later this year. 

IOI Properties Group Bhd, which owns Palm Garden Hotel and Putrajaya Marriot, is opening Le Méridien Putrajaya next year, while the United States-based Starwood Hotels & Resorts Worldwide Inc will manage the 350-room five-star hotel for the property group.

Keramaris said the new hotel openings will pose a threat to Pullman Putrajaya and other properties within the vicinity. 

“We are pushing hard on the direct-selling channel through for more direct bookings to boost the occupancy. We are also collaborating with the Putrajaya Council and corporate companies from Cyberjaya to tap on their shared market,” he said in an interview.

Sunday, 27 July 2014

(NST) Pacific Regency eyeing more hotels, resorts

PACIFIC Regency Hotel Group (PRHG) will invest in five-star and four-star express hotels and resorts in order to be a competitive hotel operator in the local market.

PRHG general manager Jaya Kumar is upbeat on growth in the tourism industry, in view of the government’s target of 36 million tourist arrivals and RM168 billion in tourist receipts by 2020.

This is as outlined under the Malaysia Tourism Transformation Plan 2020, which is part of the National Key Economic Areas.

For Visit Malaysia Year 2014, the government is targeting 28 million tourist arrivals and RM76 billion tourist receipts. 

According to Jaya Kumar, PRHG will add three new hotels to its portfolio by the end of 2016.

“PRHG will not forego any segment in the hotel business. We will have more hotels coming up in 2017 and onwards,” he said, here, recently. 

Currently, the group operates two properties in Kuala Lumpur, namely the five-star Pacific Regency Hotel Suites and four-star Pacific Express Hotel.

Pacific Regency Hotel, which was set up in 2008, currently enjoys a 75 per cent occupancy rate and has an average room rate of RM280.

The 207-room Pacific Express Hotel, located near the Central Market, here, opened last month. Its room rates start from RM135 a night.

Jaya Kumar said PRHG will venture into hotel management services to diversify its earnings.

The group aims to manage five properties over the next five years, he added.

“We want to grow steadily, despite the current market conditions.

“We are optimistic of every opportunity that comes by. We are open to proposals on hotel operations. 

“We will train our talents to meet international standards in managing properties. Along with that, we will focus on keeping the guests in mind,” said Jaya Kumar.

He is bullish on Pacific Express Hotel, which is competing with other four-star hotels within a 5km radius. 

“We are very dependent on the Internet platform and ‘viral’ marketing strategy to promote the hotel in Asia, including in China, Japan and South Korea,” he said.

(NST) Promising future

GROWING PRESENCE: Bina Darulaman looking for opportunities outside Kedah

BINA Darulaman Bhd (BDB), which is involved in property development, construction, and road and quarry businesses, is bullish on its performance over the next few years, driven by new and ongoing projects.

Group managing director Datuk Izham Yusof said the listed Kedah government-linked company expects to embark on numerous projects next year.

At present, he said BDB is working on several projects that will help maintain its growth of about eight per cent this year.

The company posted a net profit of RM21.1 million last year on the back of a RM281 million revenue.

“In the past four years, BDB’s focus had been on the development of Kolej Universiti Insaniah (Kuin), which was completed last year. The project contributed significantly to our earnings during that period.

“Now, we are working on other projects and have identified new ones that will come into fruition next year and beyond,” he told Business Times, here, recently.

In the property segment, BDB is developing the Taman Tengku Intan Safinas township on 202.34ha in Bandar Darul Aman.

The project, which will be developed in several phases, has an estimated gross development value of RM500 million and will keep the company busy for the next five years.

Another project is the development of a residential area in Kuala Ketil near the Kuin campus, which will be completed next year.

Izham said the company is building 2,400 housing units, of which 90 per cent have been taken up.

BDB will also restart its 60.7ha residential project in Sungai Petani in the fourth quarter that was put on hold due to tough market conditions.

To be developed over four years, Izham said Darulaman Perdana will ride on the eco-living concept, featuring terraced and semi-detached houses costing between RM200,000 and RM300,000.

Besides that, it is also working on a few projects with the Kedah water authority.

“This will help grow our property segment’s topline and earnings. If you do property development well, the sister companies will also enjoy good business.

“On road works and quarry, we can say that our quarry deposit will last for about 100 years. We also have work coming from Projek Penyelenggaraan Lebuhraya Bhd and the Public Works Department, so we are quite busy this year.”

Izham said BDB is exploring business opportunities at the national level and working to increase awareness of its capabilities with the opening of its office at Wisma Glomac in Damansara Utama, here.

He said expansion outside Kedah will expose the group to greater opportunities.

“Our presence here will boost the confidence of future strategic partners on our capabilities and commitment,” he added.

Saturday, 26 July 2014

(NST) Plenitude to buy hotel in Penang

KUALA LUMPUR: Plenitude Bhd’s wholly-owned subsidiary Plenitude International Sdn Bhd has sealed a sale and purchase agreement with the Employees Provident Fund to buy a 259-suite hotel, known as the Gurney Resort Hotel & Residences in Penang, for RM160 million. Plenitude said Gurney Resort Hotel formed part of Menara Gurney, which is a 37-storey building with one basement level, a hotel and retail and office components. The retail units are located on the ground to second floor of the retail podium. The hotel has retail units and 551 car park bays.

Friday, 25 July 2014

(The Edge) Plenitude buys Gurney hotel for RM160m

KUALA LUMPUR: Plenitude Bhd is acquiring the 259-room Gurney Resort Hotel & Residences in Georgetown, Penang from the Employees Provident Fund (EPF) for RM160.01 million, as part of its plans to expand its hotel business and operations.

This confirms The Edge weekly’s April 7 report that the Johor-based property developer was one of the bidders for the hotel situated in one of the busiest strips in Penang.

DTZ Nawawi Tie Leung Sdn Bhd is the exclusive marketing agent for the sale.

In a filing with Bursa Malaysia yesterday, Plenitude said its unit Plenitude International Sdn Bhd yesterday signed a sale and purchase agreement with the EPF for the proposed acquisition.

Gurney Resort Hotel & Residences forms part of Menara Gurney which is a 37-storey building with one basement level comprising hotel, retail and office components.

Plenitude said the proposed acquisition will be financed by a mix of internal funds and borrowings, and it is expected to be completed in the fourth quarter of 2014.

Plenitude currently owns one hotel in Penang — Four Points by Sheraton Penang.

(The Edge) Boustead buys Pulau Indah land

KUALA LUMPUR: Boustead Holdings Bhd (BHB) has proposed to acquire nine parcels of land totalling 69.88 acres (28.27ha) in Pulau Indah, Selangor for RM310 million, which include prime sea-fronting land and the Port Klang Cruise Centre (PKCC).

It is understood that BHB, via its unit Boustead Heavy Industries Corp Bhd (BHIC), may develop parts of the land into a fabrication yard that specialises in oil and gas (O&G) support services. Some parts of the land are strategically located alongside a 10-metre deep water frontage.

The Edge weekly on July 14 reported that BHIC was looking to acquire fabrication yards as part of plans to expand its O&G activities and reduce its dependence on government-related defence jobs.

BHIC’s primary business is in shipbuilding and ship repairs as well as offshore fabrication for the O&G industry.

In a filing with Bursa Malaysia yesterday, BHB said the proposed land acquisitions form part of the group’s strategy to continue exploring growth opportunities with a view to unlocking its potential and adding value to its stable of businesses.

“Coupled with BHB group’s existing businesses via our heavy industries division (BHIC), this improves our capability to provide a wide range of services for the naval and maritime industries, and cements our position in the maritime sector while enlarging our presence in the O&G sector,” said Boustead deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin in a statement yesterday.

“In addition, the cruise terminal (PKCC) is one of the few maritime gateways to Malaysia, and provides an opportunity to further expand our existing husbandry business to service a larger range of ships in the Asia-Pacific region, and move up the value chain with an already well-established client base,” he added.

Cruise lines currently utilising the terminal include Cunard Lines, Royal Caribbean, Princess Cruises, Costa Cruises and Star Cruises.

BHB’s wholly-owned unit Bestari Marine Sdn Bhd yesterday signed four conditional sale and purchase (S&P) agreements with Glenn Defense Marine (Asia) Sdn Bhd (GDMA) for the acquisition of three parcels of land for RM72.49 million.

Bestari Marine also signed S&P agreements with GDMA’s subsidiary Port Klang Cruise Centre Sdn Bhd to acquire two parcels of land which include PKCC for RM164.31 million. The cruise terminal sits on 11.82 acres and comprises a five-storey building and jetty.

Both GDMA and Port Klang Cruise Centre Sdn Bhd were placed under receivership and Duar Tuan Kiat of Messrs Ernst & Young was appointed as the receiver and manager of all the two companies’ assets and undertakings. It was reported that GDMA had bought over PKCC from Star Cruises Terminal Sdn Bhd for RM118 million back in 2009 and had planned to develop a third container terminal with a 1.5km wharf at the PKCC site.

In addition, Bestari Marine signed with Glen Management Sdn Bhd and Glamourous Trendy Sdn Bhd for three parcels and one parcel of land for RM62.37 million and RM10.82 million respectively.

“The unique nature of the land involved will enable BHB Group to strategically tap multiple opportunities including O&G, shipbuilding and ship repair, while developing its existing business in ship husbandry on the back of the cruise centre,” said BHB in the statement.

Upon completion of the acquisitions that are slated by the fourth quarter of this year, the group plans to invest RM100 million in the development of the land.

The RM310 million purchase consideration will primarily be funded by proceeds of RM200 million from the group’s Perpetual Junior Sukuk Programme, and the balance via internal funds and bank borrowings.

“We are excited about the potential value this move can bring to the group as it is very much in line with our ongoing strategy to build up our portfolio of investments and strengthen our earnings potential,” said Lodin.

“The acquisition puts us in an advantageous position to enhance our group’s prospects,” he added.

BHIC currently has three yards across Malaysia, in Lumut, Jerajak and Langkawi which is now mainly utilised for BHIC’s shipbuilding and ship repair businesses.

Shares of BHB closed up 4 sen or 0.78% at RM5.19 yesterday, while BHIC’s stock ended the day was unchanged at RM2.65.

(The Edge) Sunway and Daiwa to build prefabricated houses together

KUALA LUMPUR: Sunway Group and Japanese developer Daiwa House Industry Co Ltd will collaborate to build prefabricated houses in the future. This was revealed at the signing of a memorandum of understanding (MoU) on Tuesday to study the benefits and feasibility of building prefabricated houses in Malaysia. No date has been set as to when the product will come into market.

“The collaboration between Daiwa and Sunway brings together the expertise of two large and reputable industry players to offer alternative and innovative products into the market anchored around prefabricated housing, eco and smart home technologies,” said Ong Pang Yen, joint managing director of Sunway Bhd property development division for Malaysia and Singapore.

A prototype bungalow house was built with Daiwa’s proprietary prefabrication technology in the group’s Sunway Eastwood development in Seri Kembangan, Selangor.

It was completed in five months and this 3-storey bungalow unit with a built-up area of 3,968 sq ft is decked with Daiwa and other high-tech devices and technology as a test bed to ascertain what works best in Malaysia.

“We are proud to partner Sunway which has an indisputable track record of 40 years as a community builder here in Malaysia,” said Isao Mizutani, director of Daiwa’s single housing division.

“We are confident that this partnership will effectively introduce Daiwa’s technology into the region, which is supported by our strength in R&D.”

He added that Malaysia will be the launch pad for Daiwa to enter more countries in the Asean region. Already it has projects in China, Vietnam, Indonesia and the US.

Ong revealed that a show village will most likely be built in Sunway Iskandar, Johor, to showcase and educate the public of what prefabricated houses can offer.