De Centrum Unipark enjoys take-up rate of more than 50%

KAJANG: De Centrum Unipark Condominium, a freehold residential development in Kajang by Protasco Bhd, achieved a take-up rate of more than 50% in pre-sales since it started selling on June 28, according to group managing director Datuk Seri Chong Ket Pen at the unveiling of the condominium on Monday.


“Most of the buyers were first and second home-buyers,” he said. “We are contemplating to keep one block for ourselves to rent out just to students, but the demand for it is incredibly high and buyers are pressuring us to release it for sale.”  

The RM225 million De Centrum Unipark Condominium will comprise two 20-storey towers with a total of 240 single, 4-bedroom units and 80 duplex, 8-bedroom units. The built-ups are 1,297 sq ft and 2, 594 sq ft respectively.

The price of the single units starts from RM575,400 while that of the duplex units begins at RM1,064,950. “We geared it more towards students and families who wish to stay in this area, which explains our competitive pricing,” said Chong.

De Centrum Unipark will be located a short distance from the Infrastructure University of Kuala Lumpur (IUKL), where more than 4,000 students are enrolled, and is surrounded by three universities within the area with over 15,000 students.

“If you were to rent out to students, you could easily get about RM700 per room. The rooms are large enough to fit two beds so you could opt to charge RM500 per person, making it a total of RM1,000 per room,” said Luis Pazos, project communication consultant of the property development division.

Located at the intersection of the North-South Highway, South Klang Valley Expressway and Silk Highway, it allows for easy accessibility through an upcoming MRT station approximately 500 metres from De Centrum, as well as proposed walkways within the master plan itself.

Every bedroom in the condominium will be ensuite and each unit will be equipped with one designated parking bay. Duplex units have two car park bays, but residents will have the option to purchase an additional one at a cost of RM15,000. There will be a total of 500 parking bays.

Safety measures have been thoroughly taken into consideration with a new three-tier security system. Facilities will include a gym, swimming pool, and tennis and badminton courts.

The condominium will be a five-minute walk to De Centrum City Mall, a three-storey retail mall with a net lettable area of 150,000 sq ft.

The De Centrum Unipark Condominium is part of Phase 2 of Protasco’s 100-acre (40.5ha) De Centrum City in Kajang, which also includes a hotel, sports complex and stadium, and offices. The condominium is expected to be completed in December 2016.

“In 2013, our profit growth was about 23%,” said Chong. “So we hope that contribution from property to the overall group profit growth will grow from our 5% last year to 10% this year. By the time De Centrum City is completed, we hope property would’ve contributed to at least 25% of the overall profit, as we consider property and construction to be the main drivers of the profit growth.”

Chong (left), with his son Kenny, has the condo units priced competitively to interest their target market of students and families who wish to stay in Kajang

 
This article first appeared in The Edge Financial Daily, on July 4, 2014.

Landmarks ready for the limelight

KUALA LUMPUR: Having kept a low profile since the acquisition of 338ha of resort development land on Bintan Island, Indonesia for RM769.12 million in 2008, Landmarks Bhd is now ready to step back into the limelight with the unveiling of Phase 1 of the integrated resort development known as Treasure Bay Bintan, which has a gross development value of US$650 million (RM2.08 billion).

Landmarks chief operating officer (COO) Fong Chee Khuen told The Edge Financial Daily that the initial facilities within Phase 1 of the development called Chill Cove include a RM65 million clearwater lagoon and a hotel featuring 40 chalet-like tents. These two facilities will be open for operations in the last quarter of this year.

By 2016, Landmarks will have fully developed the 90ha piece of land that has been allocated for Phase 1 which will include a wellness resort operated by well-known US spa operator Canyon Ranch, entertainment areas, bars, restaurants, aquatic sports facilities, retail areas, and at least eight hotels.

It has taken years for the Treasure Bay Bintan development to take shape.

Asked why, Fong said: “We do not want to be (just) another developer who builds the hardware. We actually spent a lot of time to study the market.”

Paul JH Leong, COO of the Treasure Bay Bintan, concurred.

“It has taken us a bit of time to analyse and then to react to make sure that Bintan has the right offering in terms of new products, features, games, food and beverage, and retail,” he said.

For one, instead of rolling out another typical property development and anchoring itself on property sales, Landmarks had opted to differentiate itself by offering health and wellness themed resorts to travellers by establishing joint ventures with international brands to drive visitor arrivals.

However, Leong said the group will now be more forthcoming about its Treasure Bay Bintan venture now that the development plans are “a bit more firm” and investors can expect future announcements on “who the hotel operators” and “joint venture (JV) partners” are.

To drive this development, Leong said there is no need for Landmarks, which is in net cash position, to raise additional funds as the group’s balance sheet has been managed carefully.  As at Dec 31, 2013, the group’s cash stood at RM115.4 million, while its borrowings stood at RM88.5 million.

Fong said Landmarks has to date secured hotel management contracts with international hotel brands such as Ibis Budget and Mercure and is now in advanced discussion with several five-star international hotel brands for management contracts.

Fong says completion of Phase 1 will add an additional 1,500 rooms to Bintan island

Fong said the completion of Phase 1 of Treasure Bay Bintan will add an additional 1,500 rooms to Bintan island’s existing 1,375 which will help solve the current shortage in hotel room supply. This bodes well for Landmarks as Bintan island now commands room rates from as low as S$160 (RM410) to S$1,000 a night and enjoys a healthy average occupancy rate of 65%. “We need to compete with the likes of Bali, Phuket and to a certain extent Langkawi. For us to compete, Bintan has to offer enough rooms and enough scale for it to hold a major convention … We reckon that 5,000 rooms are at least a (good) starting number for the island to have to become a premier tourist destination,” Fong added. Meanwhile, in a filing with Bursa Malaysia yesterday, Landmarks announced that its unit PT Treasure Development Services (PT TDS) has teamed up with Indonesia’s PT Ekasurya Mandiri (PT EM) to set up a concrete batching plant on Bintan island to supply concrete for the development of Treasure Bay Bintan, or to such other places in Indonesia as may be efficacious. Under the deal, a joint venture entity named PT Pesona Lagoi Mandiri (PT PLM) will be formed to undertake the business of producing and supplying ready mix and dry mix concrete and mortar for use in construction works. PT TDS will have a 51% stake in the JV firm, while PT EM will hold the remaining 49%. “The intended paid-up capital of PT PLM is 10 billion rupiah (RM2.68 million),” said Landmarks. “The construction of the resort destination will require large amounts of concrete and the JV will ensure that the group will have adequate, timely and cost effective access to the construction material, tapping on the experience and expertise of a proven supplier,” it added. Shares in Landmarks closed two sen or 1.82% at RM1.12 yesterday, giving it a market capitalisation of RM538.5 million. This article first appeared in The Edge Financial Daily, on July 4, 2014. For more information on Building and Construction seminars, please visit www.asiapacificevents.com

Sime Darby unlocking asset value through land sale

Sime Darby Bhd
(July 7, RM9.66)
Upgrade to outperform with target price of RM10.50: Sime Darby has announced that it is selling its freehold land in Sungai Buloh, Selangor for RM239.8 million to Eastern & Oriental Bhd (E&O). The 135-acre (54.6ha) tract will be carved out from the current 843 acres land owned by Sime Darby Elmina Development Sdn Bhd.

Currently, the land is meant for plantation purposes but Sime Darby will procure the relevant approval to convert its status to residential and commercial.

We gather that the land price of RM239.8 million includes RM192.8 million as cost of the land and RM47 million as cost of the major infrastructure.

Note that Sime Darby needs to construct the infrastructure (drains, main roads, incoming water and sewerage reticulation pipes, electricity and telecommunications cables) within 36 months.

The agreement between Sime Darby and E&O also states that the baseline gross development value (GDV) for the project is RM1.54 billion. If the actual GDV exceeds RM1.54 billion, Sime Darby is still entitled to 20% profit sharing on any GDV above the baseline GDV.

The deal is only expected to be completed in the first quarter of calendar year 2019 as it will take time for Sime Darby to get the land title converted and construct the infrastructure.

The deal is justified because it will enhance the combined branding and value of Sime Darby’s City of Elmina project, also located in Sungai Buloh.

Separately, The Wall Street Journal reported, quoting “people familiar with the process”, that Sime Darby had invited banks to pitch for a mandate to advise it on an initial public offering (IPO) of its automobile business, which is likely to raise about US$500 million (RM1.6 billion).

The Sungai Buloh land valuation works out to RM33 per sq ft (psf). We think this pricing fair as it is close to the current asking price of RM35 psf for nearby tracts of land. We are positive on this sale as it enables Sime Darby to unlock the value of its land bank while keeping the option to enjoy the upside of the project should the GDV exceed RM1.54 billion. Additionally, Sime Darby can still benefit through its 22% associate stake in E&O.

We believe that the sale of the land is targeted at realising the value of its property assets. In the mid term, we expect more corporate exercises involving Sime Darby’s property division and this could include a reverse takeover, merger and acquisition or even acquiring a real estate investment trust (REIT). There was speculation by the media that Sime Darby is looking to acquire a REIT into which it injects its commercial properties. Regardless of the eventual method Sime Darby chooses to realise the hidden value in its property division, we believe the group is now in the stage of unlocking the hidden value of most of its non-plantation divisions which we believe has caused its valuation to stay low against its peers.

In the past three months, Sime Darby has proposed four deals, all of which were related to the sale or reduction of its stake in its non-plantation divisions. If market talk of the motor division’s IPO materialises, it may be the fifth such deal.

We are positive about this direction as it should allow Sime Darby to emerge from the current value trap of being a conglomerate which usually commands lower price-earnings valuation (against pure plantation companies). — Kenanga Research, July 7


This article first appeared in The Edge Financial Daily, on July 8, 2014.

For more information on Building and Construction seminars, please visit www.asiapacificevents.com

Ascott REIT to acquire three accretive assets in Malaysia, China for S$173.9m

SINGAPORE: Ascott Residence Trust (Ascott REIT) has entered into conditional agreements to acquire its first serviced residence in Kuala Lumpur as well as Wuhan and Xi’an in China. The total property value of the acquisition is S$173.9 million (RM445 million).

Ascott REIT will acquire the 207-unit Somerset Ampang Kuala Lumpur from The Ascott Ltd (Ascott) for RM175 million.

It will also acquire the 249-unit Citadines Zhuankou Wuhan and the 251-unit Citadines Gaoxin Xi’an for 252 million yuan (RM129 million) and 270 million yuan, respectively, from Ascott Serviced Residence (China) Fund.

The three serviced residences will continue to be managed by Ascott.

Commenting on the acquisition, Ascott Residence Trust Management Ltd (ARTML) chairman Lim Jit Poh said it was their first acquisition of a serviced residence in Malaysia, which has a stable and growing economy.

“The acquisition of the two properties in Wuhan and Xi’an will further expand our presence in China. Many multinational corporations have established offices in Malaysia, increasing foreign direct investment by 25%, year-on-year, to a record RM38.8 billion in 2013.

“This trend is expected to gain momentum given the government’s pro-business policies to make Malaysia a business and investment-friendly destination.

“Demand for serviced residences in China remains strong due to the continual influx of multinational companies and increasing domestic and international business travel,” Lim said in a statement.

ARTML chief executive officer Ronald Tay said Kuala Lumpur is a key commercial centre and a gateway to Malaysia for international travellers.

“The government is positioning the city as a leading destination in Asia for meetings, conferences and exhibitions having secured many international events.

“Kuala Lumpur’s modern infrastructure, quality facilities and competitive business costs will continue to attract multinational companies to set up businesses in the city and drive demand from expatriates and travellers for serviced residences,” he said.

Ascott REIT will have close to 10,000 apartment units after the acquisition of the three high-quality assets which will expand Ascott REIT’s asset size to S$4 billion.  — Bernama

- For more information on Building and Construction seminars, please visit www.asiapacificevents.com

Fajarbaru buys three tracts in Australia

KUALA LUMPUR: Fajarbaru Builder Group Bhd (FBG) has acquired three pieces of land in Australia for A$6.9 million (RM20.6 million) cash through its indirect unit, Fajarbaru-Beulah Melbourne Pty Ltd. FBG said the acquisition was to add land bank to its property development division. “The property development to be undertaken on the said land is expected to provide FBG with a new source of income,” said the construction outfit in a filing with Bursa Malaysia yesterday. It said the acquisition is expected to be completed by the third quarter of 2014. It added that the acquisition would not have any material impact on the earnings and earnings per share or net assets of the group. This article first appeared in The Edge Financial Daily, on July 8, 2014. For more information on Building and Construction seminars, please visit www.asiapacificevents.com

Rehda concerned over impact of tax on housing affordability

KUALA LUMPUR: The Real Estate and Housing Developers’ Association (Rehda) is concerned over the impact that the implementation of the goods and services tax (GST) will have on the affordability of housing here.

Hence, it has submitted a list of proposals to the finance ministry on possible ways to minimise the impact of the GST so as not to put “property developers and ultimately housebuyers at a major disadvantage”, said its immediate past president and patron, Datuk Ng Seing Liong.

He revealed this during a session titled “Impact of GST on Property-related Industries” at the National GST Conference 2014, yesterday.

While Rehda remains supportive of the government’s initiative, he said there are a number of issues that the industry is facing, especially on keeping affordable housing “affordably priced”.

Affordable housing refers to residential properties with a selling price of not more than RM400,000.

Some of the proposals Rehda has submitted are: the provision of a fixed allocation for residential input tax credits for mixed developments, a GST zero-rating to major cost components, the rationalisation of stamp duty on the transfer of real properties, and a GST relief order for affordable housing.

Ng said if the relief order was applied, developers can then claim full tax input credits. Presently, it is not allowed as residential property is considered tax-exempt.

“This will mitigate the increased cost for affordable housing and provide status quo opportunities to target groups to buy properties which are comparable [to those] in the pre-GST regime.

“It is better to make it zero-rated so that we, developers, don’t have to pass back the cost burden to consumers,” he added.

Currently, 55% property development costs are classified as construction costs which include construction components such as concrete and bricks.


This article first appeared in The Edge Financial Daily, on July 11, 2014.



For more information on Building and Construction seminars, please visit www.asiapacificevents.com

Eco World, a property mover and shaker

Eco World Development Group Bhd
(July 10, RM5.18)
Maintain add with target price of RM8.15: We cut our financial year 2014 ending Sept 30 (FY14) earnings per share forecast by 55% to factor in the absence of launches from existing projects but we retain our FY15 and FY16 numbers. Our implied target price (still based on parity with revised net asset value [RNAV]) rises after revising its RNAV for the surplus value from its new land bank in Semenyih. Eco World remains an “add” and one of our top sector picks, with its asset injection exercise and land banking being the key catalysts.

We estimate that Eco World’s four projects will boost group gross development value by around RM20 billion to nearly RM63 billion. This will put Eco World behind only UEM Sunrise Bhd and S P Setia Bhd.

Since our initiation of coverage on Eco World, we have had to explain to investors that Eco World is neither a low price-earnings ratio nor high yield play. Instead, the company is an RNAV and newsflow play. We expect Eco World to replicate S P Setia’s sterling 20-year track record, but within a much shorter period as it is in a hurry to build scale and size. — CIMB Research, July 9

For more information on Building and Construction seminars, please visit www.asiapacificevents.com