Pa International Property Consultants (Kl) Sdn
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MONTH: August 2012 ISSUE: 08/2012 Property News PA International Property Consultants is a registered real estate firm committed to providing a comprehensive range of property solutions to meet the needs of investors, occupiers and developers. The Research Division provides core real estate information to clients and internal departments in order to ensure accurate real estate decision-making. Our research team has completed market studies and research work for various ongoing development schemes within Klang Valley, providing comprehensive economic analysis, property PA INTERNATIONAL market information, forecasts and consulting advice based PROPERTY CONSULTANTS (KL) SDN BHD on reliable sources. Phone: 03-7958 5933 We constantly strive to present the most up-to-date Fax: 03-7957 5933 Website: http://www.pa.com.my market knowledge in order to ensure clients are well- Email: [email protected] armed with sufficient data to make the right property decisions. Issue 08: 1- 31 August 2012 GENERAL ECONOMIC & PROPERTY MARKET 1. Mah Sing may land up to RM150m deals in Klang Valley (Business Times, 09-August-2012) . Mah Sing Group Bhd (Mah Sing), the sixth largest property stock by market capitalisation, is expected to ink one or two deals to buy land in the Klang Valley for between RM100 million and RM150 million in the next quarter. The group is targeting to acquire land with gross development value (GDV) of RM5 billion this year. The group has acquired land in Rawang, Kota Kinabalu and Bandar Baru Bangi for a combined RM452.3 million, which is 73 per cent of its GDV target. The land cost translates to about 12% of the RM3.65 billion GDV that it has achieved. According to Group managing director and group chief executive Tan Sri Leong Hoy Kum, Mah Sing is buying a large piece of land in the Klang Valley to build mixed landed properties. He declined to elaborate on the proposed development and land cost. Mah Sing has 39 residential, commercial and industrial projects, with remaining GDV and unbilled sales of RM18.2billion. Its undeveloped landbank of 613ha has an estimated GDV of RM15.6billion. According to its 2011 annual report, its cash and bank balances stand at a healthy RM665 million. Its borrowings are at RM705.5 million plus redeemable convertible secured bonds of RM268.3million. 2. TMC sells shares, Penang property (Business Times, 09-August-2012) . TMC Life Sciences Bhd (TMC) has sold shares in Tropicana Medical Centre (Penang) Sdn Bhd (TMCP) for RM2.6 million. TMC Life Sciences also announced the sale of property in Penang by TMC Properties Sdn Bhd, its wholly- owned subsidiary, for RM11 million cash. The buyer for the property and shares is Carl Corryntan Holdings Sdn Bhd, an investment holding company. The share sale is in line with its objective to divest investments which yield negative returns and re-deploy resources for more productive purposes, TMC said in a filing. 3. KSL allocates RM200 million to increase Klang Valley landbank (The Star, 21-August-2012) . KSL Holdings Bhd, the Johor-based developer is in the process of increasing its current 500-acre landbank in the Klang Valley. Khoo Soon Lee Realty Sdn Bhd, a unit of KSL, is to embark on its maiden Klang Valley project, Canary Garden, at Bandar Bestari, Klang. Project director Patrick Khoo Keng Ghiap (the one who is responsible to oversee the project) said that the company had allocated RM100 million to RM200 million to increase its landbank in the Klang Valley in a year. Khoo added, KSL’s gearing of 0.3 is relatively low New project: Khoo Soon Lee Realty sales and compared to the other players, hence KSL marketing head Chris Fong showing a model of the Canary Garden project in Klang definitely has to buy new land in order to generate income. Our philosophy is simple: A unique combination of People, Intellectual Property, Relationships, Services and Commitment 1 Issue 08: 1- 31 August 2012 . Currently, quality land in the Klang Valley is limited, and KSL just have to wait for the right opportunities, said Khoo. Some of the factors to consider when acquiring land are the plot ratio and location. Khoo said that KSL would like to focus on the Klang Valley and did not have plans to expand to other states like Penang or Malacca at the moment. Khoo explained that the developer want to do it one step at a time and would like to build their name as a main developer in Klang. The developer moved from its base to the Klang Valley due to better margins, Khoo said. KSL is also working on the next project, a 50-unit condominium development in Ampang Hilir, Kuala Lumpur. It will sit on a 0.8 acre and is expected be completed in 2015. The condominium, starting from 2,000 sq ft, works out to RM2.6 million or more per unit. 4. Developers face tougher times with global uncertainties and price hikes (The Star, 22-August-2012) . Property developers in Johor must be ready to face tougher times within the next 6 to 12 months in view of the uncertainties in the global economic growth. Johor Real Estate and Housing Developers Association (REHDA) branch chairman Koh Moo Hing said they should be optimistically cautious as the outlook was not expected to be rosy. Koh said property price in Johor, especially in Iskandar Malaysia, would also be increased by at least 5% in months to come as the hike was unavoidable. He said with the prices of building materials especially cement, likely to go up and shortage of workers, developers would have not much choice but to pass the cost to consumers. Koh advised developers to carefully plan when launching a project this year and next and go for products that could still sell in an unfavourable property market. Although there will be a hike in prices of properties in Iskandar Malaysia, it is still not as high as those in the Klang Valley and Penang, Koh said, adding that developers could expect demand for properties in Iskandar Malaysia to remain positive especially from time house buyers and upgraders. On that note, Koh said many developers in Iskandar were now going for high-density living to fully utilise or maximise the cost of buying the land. There is a shift in demand for high-rise apartment living in Iskandar from younger house buyers in their late 20s to early 30s. Koh said unlike the older generation who still preferred landed properties, the younger generation were more receptive to apartment living because of the safety and security issues as well as easy maintenance for their abode. He added, the popular locations included Skudai, Nusajaya, Taman Sutera Utama and IOI Kempas Utama, Kempas, with a selling price of RM400 to RM450 per sq ft for a 1,200 sq ft apartment unit. 5. EPF finalises land purchase for RM2.28 billion (The Edge Property, 27-August-2012) Descriptions . Kwasa Land Sdn Bhd, a wholly-owned subsidiary of the Employees Provident Fund (EPF) has finalised the purchase price at RM2.28 billion for 93.2 hectares (2,330 acres) of prime Rubber Research Institute (RRI) land in Sungai Buloh. New Kwasa Damansara . According to Kwasa Land Chairman Tan Sri Samsudin Osman, the new Kwasa Damansara township township development would incorporate plans that are befitting of a city, replete with infrastructure and modern facilities, both residential and commercial that aim to serve the entire Damansara area, if not the Klang Valley. The proposed township development is expected to create abundant opportunities for developers and contractors to participate in developing residential and commercial properties, main infrastructures and public amenities for an expected 150,000 population. Our philosophy is simple: A unique combination of People, Intellectual Property, Relationships, Services and Commitment 2 Issue 08: 1- 31 August 2012 . Among key features in the design and layout plans are a development hub comprising modern residential, commercial, recreation and education facilities. It will also incorporate an integrated transportation system that links the township via Mass Rail Transit (MRT) to the rest of the Klang Valley. Notes . Kwasa Land has established itself as a master developer and an investment holding company for the entire development of the township that has been given a 15-year construction lifespan. 6. EPF’s investment creates fresh competition (Business Times, 29-August-2012) . Tan Sri Lee Kim Yew, the founder of Country Heights Holding Sdn Bhd said that the entry of the Employees Provident Fund (EPF) as a big investor in real estate will create more challenges for the sector. According to Tan Sri Lee Kim Yew, EPF is going to be one of the biggest developers in the recent land acquisition in Sungai Buloh. There is also competition from boutique developers and government agencies that have embarked on property development. The EPF’s wholly-owned unit, Kwasa Land Sdn Bhd, has acquired 932 hectares of Rubber Research Institute (RRI) in Sungai Buloh from the Malaysian Rubber Board for RM2.3 billion. Tan Sri Lee Kim Yew said, other challenges faced by the industry included inconsistent government policies by booth federal and state governments. He added, the building of low cost houses in creating a slump in the market place and does not fulfil the requirement of a quality lifestyle. Since the 1980’s, developers are required to build low-cost houses priced RM42,000 a unit and below. However, the increasing cost of raw materials is causing them to lose money from each house built and the take up by the lower income group has been slow. The issue has been raised numerous times by the Real Estate and Housing Developers’ Association (REHDA), which comprises more than 1,000 members for several years now.