Malaysia’s southern economic region Iskandar expects strong investment flow from neighbouring Singapore, despite an expected economic slowdown in the second half of the year.

In an interview with Channel NewsAsia, the CEO of Iskandar Investment, Arlida Ariff, said she hopes to ride on improved bilateral ties to woo Singapore investments.

Spanning over 2,200 square kilometres, the Iskandar economic region located in southern Johor is three times the size of Singapore.

Since its inception at the end of 2006, Iskandar has attracted more than 60 billion ringgit worth of investment from both local and foreign investors, surpassing its own target of 47 billion.

Singapore is currently the third largest investor in Iskandar, with 3.03 billion ringgit worth of investments committed so far.

They are mainly in electrical and electronics, manufacturing and education.

But according to the CEO of the economic region, Iskandar offers plenty of synergistic opportunities especially in leisure tourism.

CEO Arlida Ariff said: “This is an area Singaporeans as visitors have taken advantage of. But for businessmen (and) investors, this is certainly an area we see potential and opportunities… those are the areas we would like to invite interest from Singapore.”

To boost tourism, Iskandar is opening up two more hotels, a marina, retail malls, an indoor family theme park including Asia’s first Legoland in 2012.

It also plans to add another 5.5 million square feet of commercial and residential space later this year.

CEO Arlida Ariff said: “Very frankly, most long-haul visitors look for location that justifies a stay of 4-5 nights.

“I think, singly, Johor and Singapore do not provide the long-stay conditions. We don’t have enough attractions to justify a long stay.

“(But) working together in collaboration, we can develop packages. It’s a win-win situation, we actually create a bigger market.”

Malaysia expects its tourist arrivals to exceed 18 million this year while Singapore is forecasting 12 million.

Combined, analysts say, both countries stand to reap more from an increased number of tourists who stay longer and spend more.

Source: Channel News Asia, 13 Jul 2010

(DUBAI, United Arab Emirates) A property arm of struggling state conglomerate Dubai World is backing out of a plan to build luxury homes in Malaysia as it looks to shore up its finances.

The cash-strapped company’s Limitless division is selling off its stake in a partnership with Malaysia’s Bandar Raya Developments to develop waterfront land in the southern city of Nusajaya.

Limitless will generate about US$23.8 million in the deal, according to a regulatory filing on Malaysia’s stock exchange. It said in a statement yesterday that it continues ‘to review our business activity to reflect market conditions’. The company’s parent Dubai World needs cash as it works to pay back US$23.5 billion in debt. — AP

Source: Business Times, 12 Jul 2010

Residents, politicians oppose govt plan to redevelop 110 years old settlement in KL

THE enormous potential of the enclave notwithstanding, the proposed redevelopment of a Malay settlement located in the shadows of the Petronas Twin Towers in Kuala Lumpur may take a while to materialise as the settlement has become another political football.

The redevelopment of the 90ha Kampung Baru enclave has been mooted on numerous occasions over the past two to three decades, with Prime Minister Najib Razak being the latest to do so in February.

The total land value could exceed RM20 billion (S$8.6 billion) if its potential were to be fully realised, he said of the 110-year-old settlement where land transacts at an estimated RM350 per square foot (psf).

The desire to unlock its value is understandable given that it is a mere 10-15 minutes’ walk to the iconic twin towers, where the surrounding real estate sells for RM1,500 to RM2,000 psf.

That it remains unchanged is due to various reasons, the main one being the fragmented and complex ownership brought about by syariah inheritance laws, which has resulted in many small subdivided plots.

Putrajaya plans to establish a special body run by a government trustee, which together with state-linked corporations such as national asset management firm Permodalan Nasional and the pilgrims’ fund, will build a mix of skyscrapers, shopping malls, condominiums and residential units in the enclave.

Getting the 1,000-plus owners to agree on a development model was already proving a challenge. (Even within families, members disagree on the action needed.) Attempts by the Selangor Pakatan Rakyat (PR) coalition state government to offer an alternative redevelopment plan could make it even more difficult.

Barisan Nasional (BN) politicians have accused the federal opposition coalition of trying to hijack Kampung Baru to score political points with the Malays. The BN’s Federal Territories (FT) Minister, Raja Nong Chik Zainal Abidin, has asked Selangor Chief Minister Khalid Ibrahim not to interfere as the enclave lies within the FT.

Notwithstanding the political wrangling, talks between the residents and the FT minister appear to be yielding little. In one instance, Nong Chik proposed allowing non-Malays to lease the commercial buildings on a 40:60 ratio with the Malays. Even though Malays would continue to own the land outright, his proposal was shot down by the residents, despite arguing it would enhance values.

Non-Malays should be allowed to lease the commercial properties for practical reasons – they have greater purchasing power, Pulai member of Parliament Nur Jazlan Mohamed told BT. Recently appointed Urban Development Authority chairman Nur Jazlan said the area has the potential to be immediately successful ‘provided we have the right mix’.

He suggested the government use the Land Acquisition Act to overcome the stalemate. Although there are political risks, he is of the view that the residents will come round to the idea provided they can see progress and benefit from it.

In any event, KL-ites are arguably already opposition-i nclined as in the last general election, 10 out of 11 parliamentary seats fell to PR candidates. ‘You should not give up value for politics,’ he remarked.

Based on a conservative plot ratio of five, CH Williams Talhar & Wong director Foo Gee Jen estimates the land could yield up to 50 million sq ft of gross lettable area of office space.

Even so, the property consultant is not holding his breath. ‘It will take years and I doubt it will be a straightforward case because of the socio-politico constraints.’

Source: Business Times, 7 Jul 2010

It believes focus on premium properties will place it ahead of competition

(KUALA LUMPUR) Sunway City Bhd (Suncity), developer of the Sunway Integrated Resort City in Bandar Sunway, expects prices at its property launches to increase by 20 per cent this year from 2008.

Its managing director of property development in Malaysia, Ho Hon Sang, said this was in line with the current market trend.

‘Suncity’s launches for this year will mainly be in the Klang Valley with a gross development value of RM1.5 billion (S$651 million),’ he told Bernama in an interview.

Suncity, Mr Ho said, believes that its premium pricing strategy of focusing on properties with ‘green initiatives’ that promote quality of life will place it well ahead of competitors.

‘Our property prices are usually 10 to 20 per cent above the competitors,’ he said.

According to Mr Ho, the Malaysian property market is not expected to enter a bubble stage despite rising prices due to the limited supply of land in prime areas, and availability of liquidity at the banks and institutions such as the Employees Provident Fund (EPF).

‘Malaysian property prices are still lower compared to Singapore,’ he said.

Suncity began its green journey back during its Sunway Integrated Resort City in Bandar Sunway, an iconic project which encompasses a township of medical, university, shopping and retail mall as well as resort and hotels.

‘We have also emphasised on security with the implementation of CCTV within strategic roads and location and auxiliary police to ensure proper surveillance,’ Mr Ho said. ‘Sustainable construction is certainly here to stay as Malaysians are becoming more environmentally conscious. Moreover, it is widely practised by other developers overseas,’ he said.

He also said that Lafarge Malayan Cement Bhd’s cement products such as the Phoenix complemented the group’s objective to promote sustainable construction.

The group’s efforts in going green were given recognition when the Sunway Palazzio development in Sri Hartamas, Kuala Lumpur, was awarded the Gold Award in High Rise Residential Development by Singapore’s Building and Construction Authority Green Mark Scheme.

Sunway Palazzio is the first high-rise residential development in Malaysia to receive the coveted award based on five criteria – energy efficiency, water efficiency, site/project development and management, good indoor environmental quality and environmental protection, and innovation. — Bernama

Source: Business Times, 6 Jul 2010

CMA to grant CMMT right of first refusal to acquire Gurney Plaza Extension

METRO Holdings has announced that it exercised its put option to require CapitaRetail Gurney to acquire its interest in the 134,549-sq-ft retail property Gurney Plaza Extension in Penang for RM215 million ($92.9 million).

In 2007, CapitaLand acquired the 700,000-sq-ft Gurney Plaza for $336.8 million. At the time, it said it would form the seed assets for its proposed Malaysian retail real estate investment trust (Reit).

Metro Holdings said the consideration for the disposal of Gurney Plaza Extension was arrived at by negotiations on a willing seller, willing buyer basis and is to be wholly satisfied in cash.

Metro Holdings said that net proceeds of the divestment will be added to the working capital of the group and used to build on the group’s presence and investment in the region.

Gurney Plaza Extension is a nine-storey retail block located along Gurney Drive in Penang. It is part of the Gurney Park development.

Separately, CapitaMalls Asia (CMA) said yesterday that it will be granting CapitaMalls Malaysia Trust (CMMT) a right of first refusal to acquire Gurney Plaza Extension after the finalisation of all the terms and conditions of the acquisition.

CMA announced in June that it would make an RM848 million initial public offering (IPO) for Malaysia’s largest ‘pure-play’ shopping mall Reit.

CMA said that CMMT is still in the midst of its IPO and is likely to make a decision on whether to acquire Gurney Plaza Extension only after its listing on Bursa Malaysia Securities Berhad, the securities exchange of Malaysia.

The units for CMMT are tentatively priced at RM1.08 each, although the final price could change as it will be determined only after a book-building exercise undertaken by the listing’s joint global coordinators, CIMB and JPMorgan.

CMMT’s prospectus expects the trust to be the largest Reit on the Kuala Lumpur stock exchange with a market capitalisation of RM1.46 billion on an asset base of RM2.13 billion. It will also be the most liquid with a free float of up to 67 per cent.

Metro Holdings said that the divestment is not expected to have any significant impact on the consolidated net tangible asset per share and the consolidated earnings per share of the Metro Group for the year ending March 31, 2011.

Source: Business Times, 6 Jul 2010

CapitaMalls Asia could raise RM864m from spin-off’s retail offering

CAPITAMALLS Malaysia Trust (CMMT) launched its retail offering yesterday as part of its listing on Malaysia’s main share market.

The real estate investment trust (Reit) has been spun off from CapitaMalls Asia and will contain the parent company’s three Malaysian malls.

It is offering 786.5 million units to institutional investors in Malaysia and overseas as well as Malaysian retail investors. The units will not be available to retail investors here.

About 719 million of the units will be offered to institutions, and the indicative price is RM1.10 (47 Singapore cents). There are 67.5 million units earmarked for Malaysian retail investors at a maximum price of RM1.08.

The price levels suggest CapitaMalls Asia could raise as much as RM863.8 million from the initial public offering (IPO).

The retail offering opened at 10am yesterday and will close at 5pm next Monday.

The institutional offering opened last Friday and will close next Wednesday.

CapitaMalls Malaysia Trust is expected to list on July 16.

CapitaMalls Malaysia Reit Management (CMRM) chairman Kee Teck Koon said in a statement that the listing of CapitaMalls Malaysia Trust will provide access to capital markets and accelerate the growth of its shopping mall business in Malaysia.

CMRM is the manager of CapitaMalls Malaysia Trust.

CMRM chief executive Sharon Lim said: ‘Going forward, the fragmented ownership of shopping malls in Malaysia presents opportunities for growth through acquisition.’

CapitaMalls Asia will retain a stake of 41.74 per cent in CMMT, but if an over-allotment option of up to 117.98 million units is exercised, its stake could go down to 33 per cent.

The Employees Provident Fund Board of Malaysia and Great Eastern Life Assurance (Malaysia) have signed up as cornerstone investors in the IPO. They will subscribe to an aggregate of 90 million units, or 11.4 per cent of the 786.5 million units being offered in total.

They have agreed to pay RM1.10 per unit or the institutional price, whichever is lower.

Bloomberg said the CMMT offering is set to become Malaysia’s second-biggest IPO this year while the Trust says it will become the largest ‘pure-play’ shopping mall Reit in Malaysia.

AmTrustee, which is the CMMT trustee, values the shopping mall portfolio at RM2.13 billion.

The assets are Gurney Plaza in Penang, The Mines in Selangor, as well as an interest in Sungei Wang Plaza in Kuala Lumpur. The portfolio has a total net lettable area of approximately 1.88 million sq ft.

At the indicative price of RM1.08, the retail offer will provide a forecast distribution yield of 6.9 per cent for 2011, said CMMT.

CMMT’s market capitalisation is expected to be about RM1.4 billion, it added.

The CMMT statement said that CapitaMalls Asia plans to have a Malaysia retail property fund to acquire and develop property, especially malls in the country.

CapitaMalls Asia lost two cents to $2.14 yesterday.

Source: Straits Times, 29 Jun 2010

BETTER late than never, one could say of Frasers Hospitality and Malaysia.

Having finally established a maiden property in the country, Fraser Place Kuala Lumpur is already proving a right fit. Occupancy rates at the 215 apartments have averaged 70 per cent in the six months since its soft opening in December, and are expected to exceed 80 per cent next month.

‘It’s been very, very encouraging,’ Frasers Hospitality chief executive Choe Peng Sum told BT in an interview.

The latecomer to Malaysia intends to play catch-up, and is already planning a second property – Fraser Residence Kuala Lumpur – which will also be located in the city’s golden triangle.

Both properties – the first sited in Jalan Perak and the second in Jalan Sultan Ismail – are a stone’s throw from the iconic Petronas Twin Towers, and a joint collaboration with Malaysian stock exchange-listed developer YNH Property.

Ultimately, Mr Choe sees Fraser establishing three properties under Fraser and another under Modena.

If the hospitality player rues missing out on MARC Residences – jointly developed by a local company and CapitaLand in 2003 – it has decided to move on. ‘We had been looking for a property around the KLCC area and looked at the MARC but thought the price was rather high. We never knew it would climb up so high.

‘But this is exactly where we want to be.’

Johor is another possibility, but ‘probably still early days’.

The expansion is aggressive elsewhere. Frasers Hospitality will open 10 to 12 properties this year, and another 14 next year. Besides Kuala Lumpur, debuts are earmarked for Budapest, Doha, Dubai, New Delhi, Osaka, Bahrain, Chengdu, Suzhou and Tianjin.

‘While people may be more hesitant, this is the window we have to expand. Our type of business is adding more and more properties. It’s a numbers game, and every property is a testament to the next.’

Given the average 90 per cent occupancy rates enjoyed by its European properties – an area arguably suffering the greatest economic uncertainties – its contrarian approach isn’t entirely misplaced.

The pound and euro have also depreciated significantly in the past 12 months, although property prices have recovered. The company owns a third of the 35 properties it manages and any acquisition it makes is benchmarked against the weighted average cost of capital and internal rate of return (IRR). In Kuala Lumpur, it is aiming for double-digit IRR.

But its year-on-year compounded annual revenue growth of about 16 per cent is an indication of healthy customer support. Corporate customers make up about 85 per cent of all guests, half of them mid to long-term guests.

With 5,000 individual residences in 21 cities worldwide – and another 6,000 residences to be added by end-2012 – Mr Choe attributes Frasers’ ability to retain the increasingly discerning business traveller to brand consistency and high levels of service.

The grand opening of Fraser Place Kuala Lumpur was attended by Fraser & Neave chairman Lee Hsien Yang and officiated by Malaysia’s Tourism Minister Ng Yen Yen.

Source: Business Times, 25 Jun 2010

(SINGAPORE) Sunway Real Estate Investment Trust (Reit) plans to sell shares for 90-98 sen (S$0.38-0.42) each in an initial public offering in Malaysia, according to a sale document obtained by Bloomberg News.

The company, controlled by property and hotel group Sunway City Bhd, began offering the shares yesterday as it seeks to raise as much as US$515 million in what would be Malaysia’s biggest Reit IPO, according to the document. The sale is being managed by a group of banks led by Credit Suisse Group AG and RHB Capital Bhd.

The Malaysian property trust, which includes hotels and malls valued at RM3.7 billion, is set to be the biggest in the South-east Asian nation as it taps a resurgence in investor appetite for real-estate stocks amid an economic rebound from last year’s recession. The funds will be used for acquisition of properties, according to the term sheet. Sunway Reit will determine the final price of the shares on June 25, and the company will begin trading in Malaysia on July 8, according to the document. — Bloomberg

Source: Business Times, 15 Jun 2010

Kuala Lumpur: Living in an apartment in the middle of the city, but looking for a suntan by the sea? Just head to the rooftop.

Developer Bukit Kiara Properties (BKP) has come up with a unique feature for its latest condominium, the Vox Tower, in Kuala Lumpur’s posh suburb of Mont Kiara: A beach with real sand and palm trees, perched high up on the 37th floor.

It appears to be a first for the country, as developers keep trying to outdo one another with increasingly creative attractions to draw buyers.

Not too long ago, developer One KLCC completed One KL, a posh 35-storey condominium opposite the Petronas Twin Towers, which boasts a private pool in every unit.

One KL’s apartments come at a price, though: RM4.5 million (S$1.9 million) and more for the larger units covering 300 sq m to 350 sq m.

By comparison, a five-room HDB flat in Singapore is typically 110 sq m in size and costs up to $500,000.

BKP’s rooftop beach, which it calls the Versilica Sky Beach, is touted to be Malaysia’s first. It has recreational rooms, a bar, jet pool, lap pool, garden and terrace.

BKP’s group managing director N.K. Tong told The Sunday Times that the idea had come from a brainstorming session.

‘Most of the ideas that came from my staff had sun, sand and surf,’ he said. ‘Building a sky beach sounded really silly at first, but as we did more brainstorming, we found the idea quite possible after all.’

BKP did not want to reveal the cost of the Vox Tower, but the sky beach and rooftop facilities alone are estimated to cost between RM2million and RM3 million.

The sandy beach covers about 370 sq m, and sits next to a 20m by 3m lap pool.

The condo is selling well, but Mr Tong and his team have yet to figure out how and where to source for the sand, and which type of sand to use. To add a greater touch of reality to the idea of a sky-high beach, the team also plans to use salty chlorinated water in the pool.

The Vox Tower is one of four blocks in BKP’s Verve Suites project, and is expected to be ready by end-2013.

Prices range from about RM580,000 for a 43 sq m one-bedroom unit to RM1.8 million for a 130 sq m three-bedroom unit.

Mr Tong says BKP is targeting mainly local buyers who are ‘young at heart’ – and presumably, those who want a seaside visit without stepping out of their condo.

Source: Sunday Times, 13 Jun 2010

They will be listed in a property trust on Bursa Malaysia

CAPITAMALLS Asia plans to list its three Malaysian malls, worth nearly $1 billion, in a property trust on Malaysia’s main bourse – raising as much as RM995 million (S$426 million) in the process.

In a statement yesterday, it said that it has received approval from the Securities Commission of Malaysia to list CapitaMalls Malaysia Trust (CMMT).

The newly spun-off company will be listed on the main market of Bursa Malaysia.

CMMT will be Malaysia’s largest listed ‘pure-play’ shopping mall real estate investment trust (Reit) by market and property value if the listing goes ahead.

CapitaMalls Asia will offer 786.52 million units, and retain a stake of 41.74 per cent in CMMT.

If an over-allotment option of up to 15 per cent of the proposed offering – or 117.98 million units – is exercised, it will retain a stake of 33 per cent.

CapitaMalls Asia will hold 70 per cent of the Reit manager post-listing.

CapitaMalls Asia said the Employees Provident Fund Board of Malaysia and Great Eastern Life Assurance (Malaysia) have signed up as cornerstone investors to buy 90 million units at RM1.10 a unit or the institutional price, whichever is lower. At this price, the estimated distribution yield is 6.5 per cent for the eight-month period ending December this year and 6.8 per cent for next year.

The company said its decision to proceed with the listing depends on a number of factors. It has yet to price the offering.

Still, the listing could raise as much as RM995 million based on the cornerstone investors’ price.

The trust will hold the firm’s Malaysian malls: Gurney Plaza in Penang, Sungei Wang Plaza in Kuala Lumpur and The Mines in Selangor. This initial portfolio has a total net lettable area of about 1.88 million sq ft and is valued at about RM2.13 billion.

Some Malaysians have written off The Mines as a viable mall. But CapitaMalls Asia said it has introduced many changes and created an extra net lettable area of some 80,000 sq ft in the mall, with higher average rents and occupancy as a result.

Malaysia is a ‘key growth market’ apart from Singapore and China, said CapitaMalls Asia chief executive Lim Beng Chee.

He said there will be good opportunities for growth as the retail market there is fragmented.

Most of its rivals are owners of single malls.

CapitaMalls will be able to ‘recycle’ cash of some $200 million from the listing to acquire assets, Mr Lim said.

CMMT will be given a right of first refusal over retail properties in Malaysia that CapitaMalls Asia targets for acquisition.

This includes the Gurney Plaza Extension which would bump up its asset size by 11 per cent to 12 per cent.

CapitaMalls Asia plans to have a Malaysian retail property fund to acquire and/or develop retail property, primarily malls in Malaysia.

Yesterday, CapitaMalls Asia closed unchanged at $2.10.

Source: Straits Times, 12 Jun 2010