Plan for 2 convention centres in Iskandar to capture Mice market

JOHOR BARU: Two new international convention centres will be built in Iskandar Malaysia within the next three years to capitalise on the meetings, incentives, conventions and exhibitions (Mice) market.

Iskandar Regional Development Authority (Irda) chief executive officer Datuk Ismail Ibrahim said the multi-billion ringgit projects would be located in Medini, Nusajaya and the Senai-Kulai flagship development zones.

“The Mice market is rapidly growing in Iskandar Malaysia in recent years but we lack facilities of international levels to cater to the needs,” he said after witnessing the signing of the hospitality partnership between Metropoint TAFE College and Double Tree by Hilton Hotel, Renaissance Hotel and Traders Hotel here yesterday.

He said the Persada Johor International Convention was not enough to cater to the Mice segment.

Ismail declined to provide details on the upcoming convention centres including the gross development value and the developers.

“It is good to have them (the centres) in Nusajaya and the Senai-Kulai zones instead of the city centre as we need to spread the Mice business to other zones in the economic region,” he said.

He said there was a shortage of hotel rooms in Iskandar Malaysia as the 6,600 hotel rooms to be available by 2015 would be insufficient to cater to tourist arrivals.

“Hotels in Iskandar Malaysia recorded good occupancy rates and we need 5,000 rooms especially five-star hotels for business travellers,” said Ismail.

Most of foreign and domestic tourists visiting Singapore preferred to stay in Johor Baru as the hotel rates here were much cheaper than those in the republic.

Launched on Nov 4, 2006, Iskandar Malaysia covers 2,217 sq km and is three times bigger than Singapore and double the size of Hong Kong.

It is divided into five flagship development zones – the JB City Centre, Nusajaya, Eastern Gate Development Zone, Western Gate Development Zone and Senai-Kulai.

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Guocoland to launch projects worth RM2.5bil over 3 years

BY CHERYL POO

KUALA LUMPUR: Guocoland Malaysia Bhd is planning to build and sell properties worth RM2.5bil over the next three years in the Klang Valley area.

The projects include a township development in Rawang, a mixed project in Sepang and a corporate office venture in Petaling Jaya.

The planned new launches will add to the group’s ongoing RM2.5bil flagship Damansara City development, which is expected to be fully completed by mid 2016.

The construction of Damansara City was awarded to two South Korean contractors – SsangYong Engineering & Construction Co Ltd and Daewoo Engineering and Construction Co Ltd.

SsangYong is undertaking the construction of two upscale residential blocks (DC Residency), elevated parking as well as five to six levels of basement car park, for RM431.1mil.

Daewo, meanwhile, will build a 300,000-sq ft four-storey retail mall, a five-star hotel and two office towers – for RM538mil. The hotel will be run by Clermont Kuala Lumpur.

“I expect DC Residency to be fully sold by next year. We are actually not in a hurry as prices will go up after the mass rapid transit lines are ready in the area,’’ managing director Tan Lee Koon told reporters after the topping out ceremony of the DC Residency project yesterday.

Guocoland has a total 4,046ha of land-bank in Petaling Jaya, Rawang, Cheras and Sepang. It also owns some 1,618ha in Jasin, Malacca.

Tan said phase one of the terrace housing project in Sepang had been fully taken up and that construction of phase two would begin mid next month.

“These projects will bring about a substantial stream of recurring income to our books,” he added.

For the third quarter ended March 31, 2014, Guocoland’s net profit soared 79% to RM15.71mil from RM8.79mil last year due to more recognised profit from PJ City and Damansara City.

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YTL Hotels launches Kasara brand in Japan

PETALING JAYA: YTL Hotels will be launching Kasara, a new hotel brand in Niseko Village in Hokkaido, Japan in December, according to a press release on Wednesday.


The brand will make its debut with the opening of the Kasara Niseko Village Townhouse within the group’s existing integrated ski resort, Niseko Village on Dec 1. This hotel component will be a new build comprising eight units of 3-bedroom townhouses.

A stay here will begin at US$2,000 (RM6,359) per night. The luxury townhouse hotel will provide bespoke services and priority privileges exclusively for its guests.

The Kasara Niseko Village Townhouse will add to the existing inventory of accommodation within the village, namely Hilton Niseko Village and The Green Leaf Niseko Village. Construction on the hotel started in May and is slated for completion in November.

Beyond the eight initial townhouses there will be an option to pre-select and purchase freehold townhouses in the next development phase.

Kasara will encompass a collection of unique luxury hotels, resorts and residences in exotic locations to be opened globally including Hokkaido, Japan; Koh Samui, Thailand; and Pulau Tiga in Borneo.

“It is with great excitement that we now reveal Kasara,” said Luke Hurford, vice- president of sales and marketing at YTL Hotels. “The privilege of early morning access to hidden powder stashes guided by a local Niseko Village expert, native fishermen in long-tailed boats serving up a sumptuous seafood feast in Koh Samui, holistic immersion into natural mud baths in Borneo and free-diving into the aquamarine waters of the Coral Triangle — these are some of the authentic experiences which await the Kasara guest, alongside stunning properties in exotic locations.”

The new brand will add to YTL Hotel’s current collection of 24 resorts, hotels and spa villages. “Kasara will expand its presence to Koh Samui in early 2016 and Pulau Tiga, shortly thereafter.

“We will definitely be looking into growth in other exotic destinations if they inspire the Kasara brand DNA in offering an experience of luxury, authenticity and timelessness,” says Hurford.

Targeting affluent travellers, Kasara will differentiate itself from other brands by the incorporation of local influences, culture and tradition into their hotels in order to create a compelling experience that resonates with each destination. The design of each hotel under the brand will be driven by the location’s environment, such as alpine, rainforest or beach.

YTL Hotels is the hospitality arm of YTL Corp Bhd and it owns and manages resorts, hotels and spa villages in Malaysia, Thailand, Indonesia, China, Japan, France, and the UK. The hospitality arm has seen much expansion over the past decade with the acquisition of the Niseko Village, the Marriott hotels in Sydney, Brisbane and Melbourne in Australia, as well as the upcoming heritage-listed The Gainsborough Bath Spa in the UK.

An artist’s impression of the interior of Kasara Niseko Village Townhouse.

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Details of Ho Hup’s Bukit Jalil development to be out soon

KUALA LUMPUR: Details of the 50-acre (20.23ha) development in Bukit Jalil, dubbed “Pavilion 2”, to be co-developed by Ho Hup Construction Co Bhd and Malton Bhd will be out by the third quarter of this year, according to Ho Hup’s management. “The driver for our growth will be this joint venture (JV) project with Malton,” said Ho Hup’s chief executive officer (CEO) Derek Wong, adding that Malton would be making an announcement on the development over the next few months. The Bukit Jalil development that comprises a huge shopping mall and several blocks of apartments is estimated to have a total gross development value (GDV) of RM4.2 billion. Under a JV arrangement, Malton will take the lead and fund the cost of development, whereas Ho Hup will provide the said piece of land in return for an 18% share of the GDV. While the 50-acre piece is for the JV with Malton, Ho Hup has actually started developing an adjacent 10-acre on its own, with a GDV of RM1.2 billion. Ho Hup was uplifted from being a PN17 firm in May this year, after it completed its financial regularisation exercise. Wong, speaking after the firm’s annual general meeting (AGM) yesterday, said that the construction and property firm is doing much better now and that it is on target to achieve double-digit growth. The group posted a net profit of RM22.5 million for the financial year ended Dec 31, 2013, on revenue of RM149.4 million. A bulk of the earnings was from the development of the 10-acre tract in Bukit Jalil, while the remaining was from its construction projects, both locally and overseas. “We have started building the basement on our 10-acre tract in Bukit Jalil. Our shops have been 100% taken up and our small offices versatile offices (SoVos) are about 70% taken up. To date, we have achieved total sales of close to RM400 million from the development,” said Wong. On its construction segment, the CEO said the group’s order book stood at RM400 million with projects tendered worth RM2 billion. “We will be happy with 20% of success rate from the projects tendered,” he added. While its Bukit Jalil development is gathering momentum, Ho Hup is looking to replenish its land bank mainly in the Klang Valley, the outer area of Klang Valley and Johor, said Wong, who also pointed out that the firm would be looking at areas such as Semenyih and Rawang. The group has also recently ventured into property and construction projects in Myanmar. Its subsidiary, Ho Hup Construction Company (Labuan) Ltd has inked a JV agreement with Myanmar’s construction firm Zaykabar E&C Co Ltd on June 5 to incorporate a new firm called Ho Hup (Myanmar) E&C Co Ltd. Wong said, “We should be doing our maiden launch for a residential project in Myanmar this October. The GDV of the project is estimated at about US$150 million (RM485.06 million) on a 50-acre tract of land.” This article first appeared in The Edge Financial Daily, on June 19, 2014. For more information on Building and Construction seminars, please visit www.asiapacificevents.com

Landmarks to launch phase one of Treasure Bay Bintan in 4Q

SINGAPORE: Landmarks Bhd will launch the first phase of its Treasure Bay Bintan in Bintan, Indonesia in the fourth quarter (4Q) of this year.

The development, which consists of several themed resorts and other components, sits on 338ha of leasehold land and has an estimated gross development value (GDV) of US$3.5 billion (RM11.27 billion). The entire development will be built with strategic partners and investors.

“We’re proud of this flagship project in Bintan as it will be the preferred island destination in Asia. We believe the wellness and health concept the resort carries, with two internationally known wellness resorts such as Canyon Ranch and Chiva-Som being part of our health resort, people will enjoy their time in Treasure Bay Bintan,” said Treasure Bay Bintan Pte Ltd chief operating officer Paul Leong in a signing ceremony between Landmarks Bhd and the two internationally-renowned wellness resorts in Singapore recently.

The group is expecting 1,500 rooms to be added to Bintan’s current 1,375 rooms upon the completion of Treasure Bay Bintan’s first phase.

Its first phase, spanning 90ha, will comprise 6.3ha of crystal clear water lagoon, aquatic sports facilities, bars and restaurants, retail areas, and eight hotels and a wellness resort managed by Canyon Ranch. The first phase also will have a 20ha organic farm producing fruit and vegetables.

According to Landmarks, 60% of the hotels will be operated by well-known international and boutique operators.

“It is intended that Treasure Bay Bintan’s food and beverage outlets will also benefit from the cultivation of free-range poultry and freshwater farming,” said Leong.

The entire development of Treasure Bay Bintan has three phases and the resort will be fully developed in 20 years.

Landmarks is expected to launch the second phase of Treasure Bay Bintan in the next three years. The second phase is currently in the design stage, and construction is scheduled to commence in 2016 ahead of its launch.

The second phase will comprise an iconic building known as the Ring Resort, water villas, a second wellness resort known as Chiva-Som, and commercial and residential spaces.

The group expects tourist arrivals into Bintan to double by 2017.

“With other developments across Bintan, it is the intention of stakeholders to offer not less than 5,000 rooms by 2017, competing with Langkawi that has 7,000 rooms currently.

“Bintan International Airport, which is scheduled to be operational by 2016 will add to and improve connectivity of Bintan to Singapore, Malaysia and the rest of Indonesia,” he said.


This article first appeared in The Edge Financial Daily, on June 20, 2014.


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Hap Seng unit sells 2 land parcels in Sabah for RM278m

KUALA LUMPUR: Hap Seng Consolidated Bhd’s unit, Hap Seng Properties Development Sdn Bhd, has entered into two separate sale and purchase agreements to dispose of two parcels of leasehold land in Sabah for RM278 million. “The proposed disposals are in the ordinary course of business of the vendor which is a company principally involved in property development. “They are in line with the group’s policy to divest non-strategic properties in Sabah and Sarawak to enable it to position itself in prime locations within Peninsular Malaysia,” it said in a filing with Bursa Malaysia yesterday. The proposed disposals are expected to be completed in the second quarter of 2014. — Bernama This article first appeared in The Edge Financial Daily, on June 20, 2014. For more information on Building and Construction seminars, please visit www.asiapacificevents.com

Bina Puri unit looks to revive more abandoned projects

PETALING JAYA: Sumbangan Lagenda Sdn Bhd, a 55% subsidiary of Bina Puri Holdings Bhd, has successfully revived an abandoned mixed development in USJ Subang after investing almost RM200mil over the past five years.

Managing director Jason Yam said the project, called Main Place@USJ 21, cost RM80mil to redevelop but the company had also added investments to upgrade facilities and design.

The gross development value is RM291mil, with a total sellable area of 880,000 sq ft.

The 4.3-acre project was no mean feat and Yam believes Main Place offered a more fulfilling business strategy than the conventional build-from-the-ground.

“We took this on because we saw money to be made,” he said in an interview.

Among the plus points, he noted that there were ready buyers who were now finally getting their investments’ worth as well as a good location.

“The four blocks of serviced apartments were already 90% sold out when we took over the project. We now only have two units left,” he said of the 1,211-unit apartment blocks.

“Fifteen years ago, the buyers bought their units at RM148 per sq ft but now the going rate in the USJ area is about RM600 per sq ft,” Yam said.

The original concept for the development was a time-sharing hotel and the units do not come with car park bays. Sumbangan Lagenda, therefore, has 1,500 carpark bays to earn rental from.

Below the serviced apartments is a retail podium which the company will keep for recurring income. The mall has 130 retail lots, 85% of which are already rented out when it was opened in March this year. The developer expects full occupancy by September this year.

The total leasable area is 240,000 sq ft across the 3.5-floor mall. The rental rates are going at RM5.80 per sf.

“We are open to taking on other similar abandoned projects, using this experience as a stepping stone. The cashflow is better,” he said.

The developer is currently considering several high-rise residential or mixed development projects that have been abandoned in the Klang Valley and Penang.

He added that greenfield projects were not its focus now as new land is usually more expensive or may be located in less attractive areas.

Yam revealed that three other developers, among which two are listed companies, had approached him to buy over Main Place when Sumbangan Lagenda had first taken over the project from the previous owner.

“We are the second white knight actually, the first one was a smaller developer and did not have the resources for it,” Yam said.

Main Place is easily accessed from Lebuhraya Damansara-Puchong, and the future MRT will be a 250m walk away.

Sumbangan Lagenda is a sponsor for The Star Business Awards (SOBA) 2014.

“SMEs need to strive for excellence and not underestimate what they are capable of,” he said.

In conjunction with the awards, The Star will also hold the Learning Series workshops focused on the GST implementation in Penang (June 24), Petaling Jaya (June 26), Ipoh (August 7) and Malacca (August 14) conducted by BDO.

Participation for the awards is open to all local enterprises that are not part of a multinational group or listed group incorporated in Malaysia with foreign equity not exceeding 50%. For more information on the awards, call The Star Events Dept at 03-7967 1388 ext 1240 (Melissa)/1475 (Pei Wen) or visit www.soba.com.my.

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OSK Property plans to launch RM3bil properties in Sungai Petani

Tan: 'We are also planning to launch high and medium-end condominium properties in the future.

GEORGE TOWN: OSK Property Holdings Bhd plans to launch some RM3bil worth of properties in Sungai Petani over the next 10 to 15 years via subsidiary OSK Properties Sdn Bhd.

OSK Properties head Paul Tan told StarBiz that there would be some 5,000 units of landed, high-rise and commercial properties with a gross development value (GDV) of around RM3bil developed on a 405ha site, which is part of the Bandar Puteri Jaya project.

Some 5% of the RM3bil project would comprise commercial properties, Tan said.

“The RM3bil GDV includes a RM300mil shopping mall and 400 units of landed properties with a RM240mil GDV that we plan to launch next year.

“The shopping mall, scheduled for completion in 2016, will have one million sq ft of gross built-up area.

“We are also planning to launch high and medium-end condominium properties in the future.

“The plan is now awaiting approval from the local authorities,” Tan said.

Tan said the company had recently launched the RM100mil RoseVille gated and guarded project in Bandar Puteri Jaya.

It comprises 220 semi-detached and bungalow units priced between RM372,000 and RM525,000. The residents will have access to a recreational clubhouse with comprehensive facilities.

Tan said a special planned feature of RoseVille was the 1km one-km long wide walkway that winds the outer road, providing all residences easy access to the private clubhouse via secondary paths. It is also surrounded by landscaped parks and lakes.

“The response has been very good, as we have already secured registration for 30% of the properties,” Tan said.

The advantage of the RoseVille project is that it is located about 15 minutes from the Sungai Petani town and is an half hour’s drive to Penang, according to Tan.

“It is also 30 minutes to Kulim,” he said.

On the Bandar Puteri Jaya project, Tan said OSK had developed some 7,000 units of residential and commercial properties with an approximate GDV of RM1.2bil since 1999.

The group is now developing some RM2.5bil worth of projects in Selangor, which include luxurious high-rise, villas and commercial schemes such as the Pangaea, Mirage by the Lake, Mirage Residence and Sutera Damansara projects.

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Home prices under pressure

Bank Negara says there are signs of prices moderating

PETALING JAYA: Malaysia is seeing signs of a possible moderation in overall house prices, data from the central bank show.

The growth in the Malaysian House Price Index (MHPI) declined to 9.6% in the fourth quarter of 2013, compared with 12.2% a year earlier, according to Bank Negara.

This was the first time since the third quarter of 2011 that the MHPI was below 10%, and the improvements were recorded across most states and most types of dwelling.

It said sales and new launches slowed in the last quarter of 2013, possibly due to the various measures imposed to cool down the housing sector since 2010.

“It’s possibly due to the wait-and-see attitude of some developers and buyers following the prohibition on developer interest-bearing schemes in November last year, further increases in real property gains tax in January this year, higher minimum purchase price for houses by foreigners, and uncertainties regarding the potential impact of the goods and services tax,” Bank Negara said.

The central bank pointed out that there was no conclusive evidence of a housing bubble in the country. It added that analysts, rating agencies and international organisations, such as the International Monetary Fund, had lauded the pre-emptive and concerted measures taken by the Government and Bank Negara since November 2010 to curb excessive speculative activities in the domestic property market and promote a sustainable housing market. (See table)

It also said that the bulk of home purchases continued to be for own occupation or medium to long-term investment.

“This was corroborated by data that showed 84% of home loan borrowers only had one outstanding housing loan account,” it said in an email response to StarBiz.

The central bank said borrowers were less inclined to dispose of their properties in response to a downward movement in property prices as their loan repayment capacities were not depend on the home equity value or expected capital gains. This was considering the medium to long-term nature of their ownership and investment horizon.

This scenario could limit the potential for a sharp increase in default incidences and credit losses to banks in the event of a price correction in the property market.

Based on a single factor sensitivity analysis on the housing loan portfolio of banks with a stressed probability of default (PD) of up to 10% (about four times the current PD) and adverse correction in house prices of 40%, banks’ excess capital buffers stood at more than five times the estimated expected losses.

Bank Negara said although the MHPI had expanded annually by between 10% and 12% since 2011, outpacing income and rental growth, the rate of growth in house prices remained significantly below those observed in some neighbouring economies.

It pointed out that while elements and pockets of speculative activities were present, the upward pressure on house prices was largely explained by structural factors.

“Demand continues to outpace new supply of houses by a large margin, particularly in the low to medium-priced segments and in major employment centres,” it said.

Demographic factors, given Malaysia’s relatively young population and labour force, increasing urbanisation, and general inclination to own a house, are expected to sustain strong demand for affordable residential properties in major urban centres, likely outstripping supply over the near and medium-term.

“Part of the mismatch in the market was due to rising land prices and construction costs that increased the incentive for developers to build high-end properties where the margins are higher,” the central bank said.

On the part of the Government, a number of schemes have been introduced to increase the supply of and access to financing for the purchase of affordable housing via PR1MA, MyHome and My First Home schemes.

In addition, the National Housing Council was set up in 2014 to develop strategies and action plans in a holistic manner, coordinate legal aspects and property price mechanism, and ensure provision of homes in a more efficient and expeditious manner.

Bank Negara said the earlier Government measures had also resulted in reduced credit-fuelled speculative purchases of residential properties where the annual growth in the number of borrowers with three or more outstanding housing loans has declined substantially to about 4%, from a peak of 15.8% prior to the
implementation of the measures, to account for only 3% of housing loan borrowers.

There are also improvements in banks’ housing loan portfolio quality and underwriting standards with impaired housing loans remaining low and stable at 1.4% of total bank loans to households (2013: 1.5%; 2012: 1.9%; 2011: 2.3%).

A similar trend was observed in the gross amount of impaired housing loans, which declined further to RM4.7bil from RM5bil at end-2013 (2012: RM5.4bil; 2011: RM6bil).

It said the proportion of outstanding housing loans with loan-to-value (LTV) ratio above 70% tapered to 46.6% (2012: 50.1%), providing a comfortable buffer for banks against a decline in the value of the underlying collateral relative to the outstanding amount of a housing loan in the event of defaults.

Banks have also demonstrated an increased rigour in the assessment of factors which support property valuations, such as the level of development in a specific location, population density, status of overhang, existing and potential demand, and the number and value of turnover of properties within the surrounding areas.

It was also observed that the lower margin of financing was applied by banks on new housing loans for properties in locations where price increases have been stronger. In the more recent period, valuations used for this purpose have excluded values inflated by incentives offered by developers to house purchasers, which can increase house prices by between 10% and 30% above the intrinsic values.

Mitrajaya on track to achieve RM1.5b order book

KUALA LUMPUR: Mitrajaya Holdings Bhd said it remains on track to meet its RM1.5 billion order book target for its construction division in its financial year ending Dec 31, 2014 (FY14).

Its outstanding order book currently stands at RM1.1 billion.

“Achieving the RM1.5 billion target will not be an issue as we are bidding for some RM3 billion worth of jobs, out of which we are optimistic of securing at least RM400 million,” Mitrajaya managing director Tan Eng Piow told The Edge Financial Daily after the group’s annual general meeting yesterday.

Projects the group is bidding for include RM600 million worth of jobs at Petroliam Nasional Bhd’s refinery and petrochemical integrated development in Johor and building works at Bandar Nusajaya, also in Johor, worth RM620 million.

Currently, the group’s two biggest projects are the Malaysian Anti-Corruption Commission building in Putrajaya worth RM427.9 million and a condominium project for UEM Sunrise Bhd at Symphony Hill, Cyberjaya worth RM277.4 million.

The group is also targeting to achieve revenue of RM500 million to RM600 million in FY14.

“We should be on target to achieve this, as we have our RM1.1 billion outstanding order book, and we should be raking in RM30 million to RM40 million in revenue per month just from our construction division,” said Tan.

The group reported revenue of RM104 million for its first quarter ended March 31, 2014.

As for its property division, Tan said the group plans to launch its luxury condominium development in Wangsa Maju, Kuala Lumpur before the end of next month. This project has a gross development value (GDV) of RM650 million.

“We are looking possibly at a soft launch before the end of next month, with an official launch most probably in September or October,” he said.

In terms of the targeted take-up rate for Phase 1 of the project, Tan expects the group to achieve 70% to 80% within three months of the launch based on the feedback and enquiries it has received from potential buyers.

Mitrajaya also plans to develop 15 acres (6.07ha) of land in Puchong Prima, Selangor into a mixed development next year, with a GDV of RM1.5 billion.

“The authorities have given us their approval in principle, so currently we are finalising the design for it,” said Tan.

The development features a five-storey shopping mall, three blocks of serviced apartments and a boutique hotel.

Tan believes that concerns over the impending goods and services tax as well as the property cooling measures introduced in Budget 2014 can be overcome.

“Property is very much dependent on location, so when a property has good locality and [an appropriate] price range, people will find ways [and the necessary means] to acquire it,” he said.

On the group’s healthcare division, which comes under its 51%-owned Optimax Eye Specialist Centre Sdn Bhd, Tan said there are no plans to increase the number of Optimax centres.

“Currently, the number of centres is sufficient. We invest a capital expenditure of some RM3 million per year to upgrade the equipment at our centres,” he said, adding that the group’s construction and property divisions are the main contributors to the group’s revenue and he expects this composition to remain.

Tan says Mitrajaya plans to develop 15 acres of land in Puchong Prima into a mixed development next year.

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Golsta may enter property market

KUALA LUMPUR: Businessman Tan Sri Clement Hii, who in February emerged as a major shareholder of Golsta Synergy Bhd with a 27.27% stake, has plans for the company to enter the property market in the near future.

Today, Hii owns 52.21% of Golsta, whose principal business is in heavy machine manufacturing.

“These are only plans at the moment and are all subject to shareholder approval, but one possible area to go into is property development,” he told theedgemalaysia.com after SEGi University Group’s annual general meeting yesterday.

Hii did not, however, specify a timeline on this plan but said it might happen in “the near future” depending on the “suitability and viability” of the available projects.

Earlier news reports had speculated that Hii was looking at injecting his privately-held property business into a listed company.

Hii’s HCK Capital Group has a property development arm with several major projects in the Klang Valley and Perak.

According to Hii’s personal blog, HCK Capital Group has secured property projects worth RM3.8 billion in gross development value (GDV) within three years of establishing its property division. G Residences and Jazz Residences in Ara Damansara are among those listed in HCK’s portfolio.

Hii has already begun injecting part of HCK Capital Group’s business into Golsta by incorporating its hospitality and hotel management arm, HCK Hospitality Sdn Bhd.

“The incorporation is expected to enhance the group’s long-term future earnings and net assets,” said Golsta in an announcement to Bursa Malaysia yesterday.

For the first quarter ended March 31, 2014, Golsta’s net profit rose 44% to RM1.1 million from RM783,000, while revenue rose 18% to RM15.2 million from RM12.9 million a year ago.

On his plans for SEGi University Group, Hii said the focus will include improving the university’s academic quality, infrastructure and overall branding.

“Our focus currently is on conventional programmes and online programmes for students. What we really want to do is to ensure that any future growth to SEGi is sustainable,” Hii said.

He said the market for education remains huge as less than 28% of working adults have diploma qualification or higher.

Hii said the “blended learning” programmes are suitable for busy working adults as they can do their courses and interact with their lecturers online.

Hii: These are only plans at the moment and are all subject to shareholder approval, but one possible area to go into is property development.

This article first appeared in The Edge Financial Daily, on June 19, 2014.

Citigroup pays record US$697m for Hong Kong tower

HONG KONG: Citigroup Inc paid a record HK$5.4 billion (US$697 million or RM2.25 billion) to a unit of Wheelock & Co for a Hong Kong office tower that will bring most of its 5,000 employees in the city under one roof.

The price for the 512,000 sq ft property in the Kowloon East district is the largest ever office transaction in Hong Kong, the New York-based bank said in a statement on Tuesday. The tower, scheduled for completion by the end of 2015, will be used to house staff currently spread out across offices in the city, said Weber Lo, the bank’s chief executive officer for Hong Kong and Macau.

Citigroup’s purchase may mark a return of investment demand in Hong Kong’s office market as falling vacancies and high rents pose a challenge for companies seeking large office spaces. Banks and insurers, including Agricultural Bank of China Ltd and Manulife Financial Corp, have bought buildings in the city, which is home to the highest office rents in the world after London, according to property broker Cushman & Wakefield Inc.

“The lack of supply in Hong Kong has been a challenge for many large occupiers, such as Citi, who are in Hong Kong for the long term,” said Sigrid Zialcita, managing director of research for Asia-Pacific at Cushman & Wakefield in Singapore. “Hong Kong has not lost its lustre as a regional financial hub, even with competition from Singapore and Shanghai.”

The overall vacancy rate in Hong Kong fell for a second consecutive quarter in the first three months this year, to 3.6%, according to CBRE Group Inc, which advised on the transaction. Office rents in Central may drop as much as 5% this year on increased demand from mainland Chinese firms and an improved economic outlook, the realtor said.

Citigroup is paying about 20% more for the Kowloon tower than Manulife, which paid HK$4.5 billion last year to Wheelock for a similar-sized block at the same development, called One Bay East. The waterfront district where the two towers are located, formerly an industrial zone, is earmarked by the Hong Kong government as an alternative financial hub.

“There aren’t many banks historically that have bought their real estate,” said Ben Dickinson, head of Hong Kong markets at broker Jones Lang LaSalle Inc. “Most banks in Hong Kong prefer to retain the flexibility leasehold occupation offers them. It’s going to be interesting to see if it changes the perception for occupiers in Hong Kong whether more people will look at purchase.”

Hong Kong is one of the eight markets in Asia where the bank generates more than US$1 billion of revenue annually and has close to 5,000 employees, Citigroup spokesman James Griffiths said.

The purchase “underlines our belief and confidence in Hong Kong’s continued growth as a leading global financial centre and hub for some of our core regional businesses,” Stephen Bird, Citigroup’s Asia-Pacific chief executive officer, said in Tuesday’s statement. — Bloomberg


This article first appeared in The Edge Financial Daily, on June 19, 2014.


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PJD to acquire Melbourne land for A$145m

KUALA LUMPUR: PJ Development Holdings Bhd (PJD), through its 75%-owned subsidiary Yarra Park City Pte Ltd, has entered into a put and call option deed with an Australian developer for the purchase of a piece of freehold land measuring 2.026ha in Southbank, Melbourne for A$145 million (RM439.8 million) cash.

The proposed transaction works out to RM2,013 per sq ft.

In a filing with Bursa Malaysia, PJD said the land, to be purchased from developer Dynasty Falls Pte Ltd, is located in the inner urban central business district (CBD), which houses many offices of major corporations, high-rise developments and landmark buildings such as the Melbourne Convention and Exhibition Centre, and Melbourne’s tallest building — Eureka Tower.

PJD said in a statement that it deems the acquisition to be ideal for long-term development with strong growth potential, given that it is one of the last pieces of sizeable prime land available for development in the Melbourne CBD.

The basis of deriving the purchase price, said PJD, is on a willing buyer, willing seller basis, premised on the strategic location of the property, best estimate of the indicative market value and comparison of recently transacted prices of properties located within the vicinity.

“A formal valuation is currently being carried out, details of which will be disclosed upon signing of the contract of sale of real estate,” it said, adding that the estimated time frame for completion is expected to take effect in July 2014.

However, PJD didn’t say how it would fund the acquisition that seems to be a major exercise for the group. PJD had net total borrowings of RM328 million as at March 31, 2014, against shareholders’ fund of almost RM1 billion. The group reported a net profit of RM75.9 million for the nine-month period ended March 31, on revenue of RM705.5 million.

Nevertheless, there has been speculation that PJD may embark on a corporate exercise to raise funds or to be merged with OSK Property Holdings Bhd to form a bigger entity. Both property development outfits are controlled by veteran investment banker Tan Sri Ong Leong Huat who holds 26.8% and 70% stakes in the companies respectively.


This article first appeared in The Edge Financial Daily, on June 20, 2014.


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S P Setia’s bid for Bangsar land turns unconditional

KUALA LUMPUR: S P Setia Bhd said the privatisation agreement between its 50%-owned unit Setia Federal Hill Sdn Bhd (formerly Sentosa Jitra Sdn Bhd), the government and Syarikat Tanah dan Harta Sdn Bhd has become unconditional. This brings the property developer closer to acquiring the 51.568 acres (20.86ha) of land in Jalan Bangsar here, in exchange for the development of a RM845 million integrated health and research institute, 1NIH Complex, on a 41.115-acre piece of land located in S P Setia’s Setia Alam township in Shah Alam, Selangor. In a filing with Bursa Malaysia yesterday, S P Setia said the Health Ministry was satisfied that the conditions set out in the privatisation agreement had been fulfilled and that the effective date of the privatisation agreement had been determined to be June 17. The agreement dates back to a 2011 proposal in which the Public Private Partnership Unit (PPPU) in the Prime Minister’s Department had granted Setia Federal Hill approval-in-principle to enter into negotiations with the PPPU and the ministry over the development of the health complex. The government’s approval-in-principle to the proposal submitted by Setia Federal Hill was subject to the transfer of the Setia Alam land to the government and the submission to the government of a letter of offer evidencing that Setia Federal Hill has secured the project financing in respect of the 1NIH Complex. Setia Federal Hill plans to redevelop the Bangsar land into an integrated mixed residential and commercial project and provide the government with a 20% share of the net profit from the redevelopment. Currently, five agencies of the National Institute of Health, which the Health Ministry is responsible for, are situated on the land. They are the NIH Secretariat, the Institute of Health Management, the Institute of Public Health, the Institute of Health System Research and the Institute for Health Behavioural Research. This article first appeared in The Edge Financial Daily, on June 20, 2014. For more information on Building and Construction seminars, please visit www.asiapacificevents.com