Thursday, 31 July 2014

(The Star) Boost for Penang Sentral project

Malaysian Resources Corporation Berhad (MRCB) has entered into a share sales agreement with Pelaburan Hartanah Berhad (PHB) to acquire the latter’s 51% equity interest in a joint venture firm.

The firm, Penang Sentral Sdn Bhd, was set up to implement the Penang Sentral project.

Under the recent agreement, PHB agreed to sell its stake in Penang Sentral Sdn Bhd to MRCB for a total consideration of RM50.75 million.

With the agreement, Penang Sentral Sdn Bhd will become a wholly owned subsidiary of MRCB.

MRCB Group managing director Tan Sri Mohamad Salim Fateh Din said in a statement that this initiative would give the Penang Sentral project a boost.

“It will help us come up with a definite timeline and completion period,” he said.

(The Star) Hitting the brakes on congestion

With traffic jams becoming worse in the Klang Valley, more people are considering public transportation to get to work.

However, the lack of public infrastructure such as parking lots at LRT stations, forces many Malaysians to drive to work rather than making full use of public transportation. This leads to more cars on the road and traffic jams.

According to the Malaysian Automotive Association (MAA), the forecast number of cars that will be sold this year has been raised to 680,000 units from 670,000 earlier.

In a report by StarBiz earlier this month, MAA president Datuk Aishah Ahmad said the growth is driven by continued positive demand from consumers and aggressive promotional campaigns by car companies.

StarBiz also reported that, because of favourable economic conditions, total vehicle sales grew 6.3% to 333,142 units in the first half of this year, compared with 313,488 units in the previous corresponding period.

All this form the backdrop that led one social entrepreneur see an opportunity to reduce the number of vehicles on the road by encouraging people to use trains instead.

“When we ask people why they don’t use trains to get to work, they say it is because they can’t find a parking spot at the LRT station or don’t have someone to drop them off there. So, they have to drive into the city,” said ShuttleGo founder Hakim Albasrawy.

Hakim and ShuttleGo co-founder Tasnim Hadi conducted informal surveys and spoke to some 200 people outside LRT stations in the Klang Valley and the response was unbelievable.

“Out of the 200 LRT users that we met, 90% were ready to sign up immediately when we shared the idea with them,” said Hakim.

“To anyone that travels into the city for work everyday, the train network is downright amazing, however, getting to the train is another story altogether. Driving through the traffic jams, finding a parking space — all this just makes getting to work unnecessarily burdensome. So, we decided to scratch our own itch and we set up, to make getting to work a happy affair,” he added.

There were 53 million tickets purchased for the LRT last year and this only reassured Hakim and Tasnim that there was going to be a market for their idea.

“We are passionate about getting cars off the road and making getting to work a little bit more pleasant for people, so our shuttle van picks them up from apartment buildings every day and drops them off at the nearest train station.

“We do the reverse in the evening and get them back home from the train station. Customers are charged a monthly fee of RM150 for the convenience of having a reliable service that can ease the daily grind for working people,” Hakim explained.

The shuttle travels from between 7am and 9am and from 5pm to 8pm. And by only serving apartments, customers don’t have to wait for hundreds of people being picked up along the way.

“Our van comes equipped with WiFi so you can start focusing on work while you are en route to work and to give you that much needed morning boost, there is freshly brewed coffee available on our shuttles,” said Hakim.

Currently, ShuttleGo is only servicing the Tropicana area in Petaling Jaya, picking up customers from the Casa Tropicana, Riana Green and Sunway Sutera apartment complexes. They are dropped at the Kelana Jaya LRT stations.

Targeting areas that are within a 12km-radius of an LRT station, ShuttleGo will be available in Mont Kiara, Bangsar and Kota Damansara by end of the year.

With 24 LRT stations along the existing Kelana Jaya line and 27 stations along the Ampang line, ShuttleGo has a large customer catchment area and Hakim believes it will only get larger once the MRT project is completed.

With some 100 customers at the moment, ShuttleGo is looking at building its fleet over the next six months.

“We are looking at several app-based business models including Uber, MyTeksi and ZipCar to grow ShuttleGo. Hopefully, by next year we will have six more vans,” said Hakim.

Despite only operating with one 10-seater van at the moment, ShuttleGo has already been identified as one of the best social entrepreneurship ideas of the year.

ShuttleGo was one of the six winners that received between RM20,000 and RM40,000 each as part of Entrepreneurs For Good event, organised by the Arthur Guinness Projects in partnership with the British Council.

A nationwide roadshow was held early this year to find the best Malaysian social entrepreneurs — those who made the bold choice to set up businesses not focused solely on profit, but on actively benefiting the lives and livelihoods of the communities around them.

Twenty semi-finalists were shortlisted from the nationwide search and were given business mentoring and training over the last six months. The top 12 social ventures out of that were then selected to go into the final stages of the programme.

At a public pitch held in April, the finalist then pitched their winning social business ideas in front of an expert panel of judges comprising of industry leaders and leading social enterprises, out of which the final six awardees were chosen.

“The Arthur Guinness Projects is not all about funding. We pair financial support with business mentoring to work with people to bring their projects and ideas to the next level.

“We’re proud to help them succeed in this work and to help society change for the better among communities across Malaysia,” said Guinness Anchor Bhd marketing director Bruce Dallas.

The programme will also provide training, mentoring and other assistance to help them reach their objectives.

“We are proud to support this movement by providing a platform for budding social entrepreneurs to realise their dreams. Twelve social entrepreneurs have benefited from training under UK experts to develop their business proposals. I believe the six final winners will be able to build their social business ventures to benefit their communities, and to inspire others to follow their path,” said British Council country director Gavin Anderson.

(The Star) Jalan Genting Klang's proximity to city makes it popular for development

Jalan Genting Kelang and its surrounding neighbourhoods are in danger of being overdeveloped as investors and developers continue to flock to the area.

Since the 1980s, Jalan Genting Kelang has been an important route for motorists travelling from Gombak, Wangsa Maju and Ampang to the city centre.

Jalan Genting Kelang lies in between two parliamentary constituencies, Setiawangsa and Wangsa Maju.

Some of the landmarks in the area include Wardieburn Camp, University Tunku Abdul Rahman (UTAR), Royal Selangor Pewter Factory and Hospital Tawakal.

New landmarks include the KL Festival City Mall and Columbia Asia Medical Centre.

With its easy access to the Middle Ring Road 2 (MRR2), Jalan Tun Razak (via Bulatan Pahang) and now the Duta-Ulu Kelang Expressway (DUKE), the area surrounding Jalan Genting Kelang has become a hot property over the past few years.

But with the many high-rise residential buildings and commercial lots that have sprouted in the area within the past 10 years, residents of nearby neighbourhoods are worried more development could affect their standard of living and worsen traffic problems.

Residents’ concerns

Speaking to residents and business owners, many lamented that traffic congestion was the main problem they faced.

A business owner who only wanted to be identified as Lee said it usually taook more than 40 minutes to get to Bulatan Pahang from Setapak.

“During peak hours, the traffic here is at a near standstill. Although this is not an unusual problem here in the city, it is worrying as there are so many new developments coming up which will certainly worsen the problem,” he said.

Taman Setapak Indah resident Janet Goh, 48, who has lived here for 20 years, said it was shocking to see the number of residential blocks being built.

“The Setapak area used to be a suburban area where there were no high-rise buildings.

“It was mostly terrace houses and the area was very peaceful.

“But, when these buildings started coming up, the influx of people became too much.

“The current facilities can not support the number of people living in and around here.

“Parking, for one, has become a nightmare.

“With an established neighbourhood such as this, parking spaces were already limited but manageable.

“Now, it is common to see vehicles double- or triple-parked outside these residential buildings.

“Even worse, sometimes it spills over into other neighbourhoods,” she said.

Meanwhile, Desa Setapak resident Mohammad Hafiz Sulaiman, 62, said the terrace houses in his neighbourhood were deteriorating as more families were moving out.

“This used to be a family-oriented residential area, but many of them have either sold or rented out their homes as they are fed up with the traffic problems here.

“Many have rented out to students who study at nearby UTAR or young working adults who have jobs in the city centre.

“The owners seldom check on the houses and oftentimes, do not maintain the homes and many of them look awful and have fallen into disrepair,” he said.

MPs voice out

Setiawangsa MP Datuk Ahmad Fauzi Zahari said in his constituency alone, some 5,000 housing units were expected to be built within the next 10 years.

“Some 2,000 units will be around Jalan Air Panas and Jalan Air Jerneh, while the rest is expected to be in Semarak, near PPR Sungai Bonus and PPR Semarak,” he said when contacted.

“Kuala Lumpur City Hall (DBKL) must ensure that before any more projects are approved, all the relevant studies are conducted.

“Traffic impact assessment (TIA) studies are vital and should be made available to the public for transparency,” he said.

Ahmad Fauzi added that DBKL must look into detail the impact of any future developments and ensure that the traffic flow was as smooth as possible.

Wangsa Maju MCA division chief Datuk Yew Teong Look, said the area had a high population density.

“In the Kuala Lumpur City Plan 2020, this area is designated as residential, with many high-rise residential developments.

“With vacant land becoming scarce, the only way is to build upwards,” he said, adding that one building could easily bring in extra 500 families to the area.

“This has contributed to one of the main problems faced by residents, that is traffic congestion especially along one of the main arterial roads ­­- Jalan Genting Kelang, despite it being upgraded to a three-lane two-way road in 2011,” he said.

Yew, who is also the Federal Territory MCA chairman and former Wangsa Maju MP, said DBKL had upgraded a four-kilometre stretch of Jalan Genting Kelang beginning 2008.

Works included widening of the road, as well as the building of drains and pedestrian walkways.

“However, indiscriminate parking, buses and taxis hogging the road, and, an increase in population has made the road as congested as before the upgrade,” he said.

Wangsa Maju MP Datuk Dr Tan Kee Kwong said more attention should be given to upgrading the public transport system in the area.

“Currently, the nearest train station is the Wangsa Maju LRT station and it is well utilised. But, the bus service needs to be upgraded so that those who live further in, can have access,” he said.

Meanwhile, DBKL, in a statement, said was in the process of upgrading Jalan Genting Kelang from the junction of Jalan 1/27A to the MRR2.

“The RM27mil project is expected to be completed by March 2015 and will involve the widening of a portion of Jalan Genting Kelang totalling 1.5km from four lanes to six lanes; earthworks, piling and building of a retaining wall next to a green area and slope of Pusat Latihan Polis Tentera (Pulapot); building of two pedestrian bridges at the crossroads of Taman Bunga Raya and UTAR, realigning and reconstructing a ‘monsoon drain’ totalling 1.5km, as well as the relocation of utilities such as water pipes, electrical cables and telecommunication cables.

“With the implementation and completion of this project, traffic congestion will be reduced along Jalan Genting Kelang with a direct flow of traffic from Bulatan Pahang to the MRR2,” the statement said.

(The Edge) Bina Puri confident of growth

KUALA LUMPUR: Bina Puri Holdings Bhd, confident of its growth, said it is bullish to end the current financial year on a firm note despite sentiment being impacted by the delay in the handing over of the klia2 project.

Group executive director Matthew Tee (pic), said the delay did not have any negative implication for the company, even considering it as “unsolicited publicity” to raise Bina Puri’s name.

He said the company was proud of its klia2 project as everybody worked hard to complete it within the timeframe, be it Bina Puri itself or other parties.

“It’s a difficult job with a lot of complexities, different client requirements and soil conditions.

“But whatever it is, we managed to finish the job and this is where Bina Puri’s reputation comes in handy.

“We never abandon any project ... we always complete it by hook or by crook. No matter how difficult, we have never been sacked half way and have another contractor finish the job,” he told Bernama.

Tee praised Malaysia Airports Holdings Bhd for the way it handled the “bad publicity” on project cost escalations.

“Sometimes date changes for reasons, cost changes for reasons and they can be justified and explained. They don’t have to be scandalous,” he said.

He said the company aimed to record at least 20% upside in pre-tax profit for its current financial year with the construction division being the biggest contributor to the company’s bottom line.

Tee said the company was also working hard to diversify into areas which will bring in more profit, especially property and power.

“This year will see higher turnover with a lot of property projects to be launched, which could contribute to higher margin,” he said.

He said the company was ready for the real property gains tax as well as the goods and services tax, which will start next year.

Tee said the RM1.1 billion Ampang light rail transit extension project, undertaken by the company, is currently over 60% complete and on track for delivery in 2016.

It has also been reported that Bina Puri is also the front runner, alongside its contender, Mudajaya Group Bhd, in bidding for the proposed RM2 billion 19.9km Kinrara-Damansara Expressway. — Bernama

(The Edge) GuocoLand soars to six-year high

KUALA LUMPUR: The hardly traded GuocoLand (M) Bhd has attracted buying interest of late following its recent acquisition of a property company to expand its land bank and a slew of development plans.

Its share price jumped 33 sen or 22% to RM1.85, the highest close since April 2008, up from RM1.52 last Friday. Its trading volume has soared in the past four trading days. Some 20.61 million shares changed hands yesterday.

Dealers said the sudden surge in interest could be that the property stock was catching up now as it had lagged behind while most mid- and small-cap property counters had rallied.

GuocoLand, the property arm of Hong Leong Group, on July 23 announced its plan to acquire a 9.39% stake in Continental Estates Sdn Bhd for RM4.75 million in cash, as well as 11.88% of cumulative redeemable preference shares in Continental Estates for RM33.14 million from Symphony Life Bhd.

Continental Estates is a property development company and is involved in the operation of an oil palm estate. It is currently 50%-owned by GuocoLand and will be its subsidiary after the completion of the acquisition.

The other joint-venture partners of Continental Estates are IOI Properties Group Bhd and Errigal Investment Holdings Ltd.

GuocoLand said the acquisition of an additional stake in Continental Estates would enable the group to enhance its land bank for future development.

At present, its land bank totals 4,047ha, comprising 2,023ha in Sepang in Selangor, 1,619ha in Jasin, Melaka and pockets of land in the Klang Valley.

GuocoLand also announced its plan to develop a township in Rawang, Selangor, a mixed development in Sepang and a corporate office venture in Petaling Jaya.

On July 18, 2014, GuocoLand managing director Tan Lee Koon reportedly said the company will open the second phase of the residential development in Sepang in the middle of August, while commercial products are also in the pipeline in the area.

The RM2.5 billion gross development value Damansara City is scheduled to be fully completed by mid-2016, ahead of the mass rapid transit Sungai Buloh-Semantan line, which is set to be operational before end-2016.

Tan said the development, which encompasses a shopping mall, will provide a substantial recurring income base for the company.


Wednesday, 30 July 2014

(The Star) SP Setia plans more projects in Penang

GEORGE TOWN: SP Setia Bhd plans to build more varieties of affordable houses over the next five years on Penang island that are within the income levels of Penangites.

Its general manager Khoo Teck Chong told StarBiz that over the last couple of years, the pricing of properties in Penang, on the island in particular, had grown out of proportion with the income levels of the population.

“Due to the stringent loan policies of banks, it has become even more difficult to sell high-end properties,” he said.

In the south-west district, Khoo said the group had about 63 acres which would be used for the development of properties priced within the RM600-RM700 per sq ft range.

“Next year we plan to develop the RM350mil Sky Vista, comprising 426 condominium units, priced at about RM600 per sq ft, which is the current pricing in the market for the properties in the south-west district.

“In 2016, we will introduce the RM350mil Sky 8 and RM150mil Sky Peak projects in Sungai Ara and Sungai Nibong respectively in the south-west district.

“Our feedback shows that properties priced between RM600 per sq ft and RM700 per sq ft are in demand as they are still affordable for Penangites,” he said.

Khoo said the last couple of years had seen the group launching high-end properties in prime locations that were priced from RM1mil onwards.

“Thus, there is a shift in our strategy moving ahead,” he added.

Khoo said the group was targeting to achieve about RM200mil in sales from Penang for the financial year 2014 ending Oct 31.

“We have so far roped in about RM150mil in sales, which is very close to the target.

“This target is down from the RM300mil achieved last financial year. We are lowering our expectation because of the softening property market which started late last year in the country,” he added.

Meanwhile, Eco World Development Bhd chief operating officer Datuk S. Rajoo said the group’s strategy was to focus on landed residential properties in the central, south and northern region.

“We are focusing on strata-titled super-linked properties with built-up of 3,600 sq ft, which were still in demand in the country.

“In Penang, we will launch the RM350mil Eco Terrraces project, comprising strata-titled linked villas with built-up area of 3,600 sq ft in Paya Terubong at the end of this year.

“This is a very unique project as conventional landed strata-titled projects comprised small size linked properties,” he added.

(The Star) Titijaya eyes more projects

PETALING JAYA: Property developer Titijaya Land Bhd is mulling over development projects on two parcels of land in the Klang Valley to beef up its already large gross development value (GDV).

Sources said that Titijaya was in the process of submitting a proposal to KTMB Bhd to build a massive commercial building on the piece of land that is located between the Subang Jaya Komuter station and Shah Alam. It is believed that there is an option for the building to be KTMB’s new headquarters.

It has been speculated that KTMB is looking to unlock the values of some of its land, including its current corporate office, which is a heritage building located in the heart of the city.

The proposal is also subject to approval from the Railway Assets Corp, a Federal statutory body under the Transport Ministry.

“Even if the authority gives the green light, the project may take time and was unlikely to commence until 2016, as they have to realign the KTM track first,” said a source.

The other parcel that Titijaya is targeting is located in the popular spot in Ampang near Mah Sing Group Bhd’s M City project.

The land, measuring less than 4.05ha, is near the Ampang-Kuala Lumpur Elevated Highway.

Sources said the high-rise mixed development had a GDV of some RM1bil.

It is unclear though who is the seller or the asking price for the Ampang land.

After Titijaya’s announcement of a RM2.5bil project in Jalan Eaton recently, analysts estimated Titijaya’s GDV at close to RM10bil.

RHB Research said the property player’s growth prospects were strong and underpinned by its stable stream of projects and gross margins that were higher than the industry average.

The brokerage said its gross margins ranged from 35% to 40%.

Titijaya has also ventured into Penang after it acquired an 8.1ha parcel near the Penang second link from its major shareholder and group managing director Tan Sri Lim Soon Peng for RM126mil.

In April, it signed a joint-venture agreement with Bina Puri Holdings Bhd to develop the RM1.3bil mixed development in Brickfields.

(The Star) Greater Kuala Lumpur property outlook bright

PETALING JAYA: In Greater Kuala Lumpur, the residential and commercial property markets are expected to see healthy growth, while the region’s industrial property markets will likely lag behind in terms of new supply this year, says property consultant CBRE Group.

In its latest MarketView report, CBRE said new residential project launches, albeit coming up at a slower pace than last year, were expected to increase the total existing supply of residential properties at about 1.79 million units in Greater KL, which encompasses Kuala Lumpur, Selangor and Putrajaya.

“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,” it added.

CBRE said it expected to see greater interest in both the primary and secondary residential property markets, especially for units in good locations, in 2014. It, however, noted that a recent survey had shown that most Malaysians (68%) were not willing to spend more than RM500,000 for a property.

Meanwhile, in the commercial property space, CBRE said that Greater KL should see 6.1 million sq ft of new office space and 3.6 million sq ft of retail space added to the market by end-2014.

The office space additions would be supported by the completion of significant projects such as IB Tower and Menara Hap Seng 2, while new retail space would come from the 12 malls scheduled for completion this year such as IOI City Mall, Atria Shopping Gallery and Encorp Strand Mall.

On the hospitality front, an additional 401 rooms from new hotels such as Allson Capital Hotel and Holiday Villa were expected to add to the existing stock of 27,162 rooms in Greater KL, while 1,040 serviced apartments would be added to the existing stock of 6,196 units by the end of 2014, thanks to the completion of three new developments, including The One @ Bukit Ceylon and Fraser Residence.

The industrial property segment, on the other hand, was expected to continue seeing negligible growth in new supply, a trend observed since 2011.

As for the rental market in Greater KL, CBRE said office space and industrial properties would likely see improvement in rates, while rates for retail and residential spaces would likely remain muted this year.

In the first quarter of 2014, the average rental rates per sq ft for office space stood at RM7.64, up slightly from RM7.61 in the preceding quarter, while that for industrial space stood at RM1.62.

“Anecdotal evidence shows an increased interest for warehouse facilities that may possibly incur price increases in Greater KL,” CBRE noted.

In the first quarter of 2014, prime rents for retail space remained unchanged since the second quarter of 2013 at RM55 per sq ft and RM31 per sq ft in KL suburban areas.

Average monthly rentals in the KL city centre were RM3.96 per sq ft, while the monthly rents in Bangsar and Mont’Kiara stood at RM3.27 per sq ft and RM2.93 per sq ft during the first quarter of the year.

(The Star) Tourist arrivals to grow despite mishaps

PETALING JAYA: While the recent plane tragedies and the ongoing security concerns in Sabah are expected to cast a shadow on Malaysia’s tourism industry, observers say the country will still likely register growth in the number of international tourist arrivals in 2014.

They explained this was because the bulk of international arrivals made up of visitors from Singapore (50%) and Indonesia (10%).

“In terms of the number of international arrivals, we think Malaysia can achieve its target for 2014, as arrivals from nearby countries are expected to remain strong,” one analyst told StarBiz.

“But there will be questions about whether the country could achieve its targeted tourism receipts, as recent developments could have a negative impact on arrivals of big-spender tourists from China and Europe,” he said.

Latest data from Tourism Malaysia show the number of international tourist arrivals to the country between January and April this year has increased 10% to 9.27 million, compared with 8.43 million over the corresponding period in 2013.

During the period in review, tourist arrivals from China only registered a marginal decline of 0.7% to about 652,000, compared with 657,000 previously. Tourists from China on average account for about 7%-8% of international tourist arrivals to Malaysia annually.

Malaysia is eyeing to attract a new record of 28 million international tourist arrivals and RM76bil in tourism receipts in this Visit Malaysia Year.

Last year, the country attracted about 26 million visitors and RM65bil in tourism receipts. “Despite this being a Visit Malaysia Year, the business mood in the tourism industry certainly does not reflect the same exuberance,” an observer said.

“It is still too early to assess the impact of the latest plane tragedy (MH17), but it is undeniable that sentiment has been dented since the early part of this year because of the fallout from the disappearance of flight MH370 in March and repeated kidnapping incidents in Sabah,” she added.

The observer pointed out that the United States, United Kingdom, Australia and Taiwan, had already issued warnings against travel to Sabah islands.

Reflecting the dented sentiment in the Malaysian tourism sector is a recent survey done by the Malaysian Institute of Economic Research (Mier). According to the think tank, sentiment in the industry had sunk to a “new low” in the second quarter of 2014, with the Tourism Market Index (TMI) dropping 19.1 points to 96.7 from the preceding quarter. Compared with the corresponding period last year, Mier’s gauge of tourism sentiment in the second quarter this year showed a decline of 15.9 points.

The benchmark 100-point is the demarcation between positive and negative sentiment. Mier executive director Dr Zakariah Abdul Rashid attributed the weak sentiment in tourism industry mainly to security concerns in Sabah islands and the impact from the disappearance of MH370 on tourist arrivals from China.

(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.

(The Star) Habib Jewels expands to Kuantan and Johor Baru

KUANTAN: Habib Jewels opened its 33rd outlet in the country at the East Coast Mall here in time for the festive season.

Branch manager Yusof Chan said RM5mil was spent on the outlet.

Yusof said if response was good, another outlet would be set up in Kuantan to tap opportunities.

“We have three showrooms under one roof comprising Habib, hand-finished jewellery maker Pandora from Denmark and Ice Watch from Belgium.

”Our signature products are Oro Italia 916 which is manufactured in Italy using 916 gold, Hearts on Fire from the United States and Aura collection which offers hijab wearers more ways to style their outfits,” he said during the grand opening recently.

Yusof said they were confident of hitting the targeted monthly sales of RM850,000 or about RM12mil a year.

Meanwhile, Pandora and Ice Watch have also made their debut in Johor Baru at Komtar JBCC

Pandora managing director Datin Zarida Noordin said that the company decided to open its latest and 24th outlet in Johor Baru to meet demand from customers in the southern region.

Zarida said she is confident locals would embrace the brand.

“We hope to open a second outlet in Johor Baru by the beginning of next year,” she told reporters.

Meanwhile, Habib Jewels Sdn Bhd managing director Datuk Meer Sadik Habib said fans of Ice Watch can look forward to six more outlets being opened in Malacca, Seremban, Sabah and Sarawak by the end of this year.

Habib was established in 1958 by founder Datuk Habib Mohamed Abdul Latif in Penang’s Pitt Street.

(The Star) Opportunities for secondary market properties within Iskandar Malaysia

JOHOR BARU: The Malaysian Institute of Estate Agents (MIEA) Johor Branch will be organising its first Malaysian secondary property exhibition (MASPEX Johor 2014).

Chairman S. Vadeveloo said the three-day event would give opportunity to prospective house buyers looking for secondary market properties within Iskandar Malaysia.

“The event is also an alternative platform for house buyers to look for ready residential properties instead of buying them from new launches,’’ he told StarMetro.

Vadeveloo said a study conducted by MIEA found that more than 70% of the property sector was made up of the secondary market while the balance from the primary market.

He said the secondary market has been the biggest driver in the overall property sector in the country even though it was not highly publicised.

Vadeveloo said a similar event was held in Klang Valley and Penang in 2013 and 2014, attracting 13,000 and 7,000 visitors with 350 and 500 transactions done respectively.

“Not everybody, especially first-timers, can afford to buy a new house in Iskandar Malaysia as the average selling price is beyond the reach of many,’’ he said.

Vadeveloo said more than 2,000 properties would be showcased at the three-day event made up of 70% residential properties and 30% commercial, industrial and land.

He said most of the properties were located in mature and established locations with ready amenities and facilities such as schools, banks, shopping complexes, hypermarkets and police stations.

The areas include Skudai, Tampoi, Perling, Bukit Indah, Nusa Bestari, Nuasajay, Senai, Kulai, Mount Austin, Johor Jaya, Permas Jaya, Pasir Gudang, Masai, Sentosa and Taman Pelangi.

“Contrary to popular belief, it is actually between 20% and 30% cheaper to buy properties from the secondary market and it is good as the properties are ready and completed,’’ said Vadeveloo.

MASPEX Johor 2014 is sponsored by Maybank and will be held from Aug 8 to 10, at Sutera Mall, from 10.30am to 10.30pm.

For details contact Derek Siow 012-709 0950 or email:

(The Star) Residents happy with Jengka Sentral terminal

MARAN: Residents warmly welcomed and gave their thumbs-up to the Jengka Sentral integrated transportation terminal, replacing the old bus and taxi station, which is now in operation.

Built by East Coast Economic Region Development Council (ECERDC), the new terminal will be operated by the Maran district council.

Some 15,000 locals, mainly Felda families living in a cluster of towns sprawling across Pahang Tenggara, as well as 8,000 outstation undergraduates from the Universiti Teknologi Mara Jengka campus, will stand to benefit.

Jengka assemblyman Datuk Wan Salman Wan Ismail during a recent visit to the site said he was impressed with the new facility.

Wan Salman said the project created at least 100 jobs for the people and 27 business opportunities for bumiputera entrepreneurs.

“This is a new iconic landmark and will help accelerate growth and development for Bandar Tun Abdul Razak and Pahang Tenggara.

“Jengka Sentral has made inter-city commuting more organised, comfortable and safer.

“I foresee more children of Felda settlers returning home on weekends to spend time with their families,” he said.

ECERDC chief executive officer Datuk Jebasingam Issace John said Jengka Sentral was designed with safety, convenience and comfort in mind for all users, including the disabled.

“Jengka Sentral is envisaged as a meeting place for the local community, who can also shop, dine and relax.

“The terminal comes with 16 retail lots, six kiosks, 10 food bays and a bowling alley,” he said, adding that other facilities include surau, ATMs and parking lots.

The RM1.3mil Jengka Superbowl is scheduled to become fully operational after the Hari Raya Aidilfitri holidays, providing a healthy recreational activities for families and youths.

For first-year computer science undergraduate Nurul Amierah Abdul Rahman, 18, the new terminal was the best thing to have happened in Jengka.

“It is now easier and more convenient for me to take a bus back to my hometown in Klang.

“The waiting area is much bigger and air-conditioned unlike the previous terminal which was cramped and hot,” she said.

Nurrahwani Ridzwan, 18, also a first-year undergraduate, the free WiFi service enable her to do assignments and surf the Internet while waiting for the bus back to Shah Alam.

Taxi driver Ismail Abdul Ghafar, 50, said the state-of-the-art and contemporary design was something locals could be proud of in line with the country’s rapid progress.

(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.