Friday, May 4, 2007

Keeping it real on real estate trends

Keeping it real on real estate trends
By Gaurav Ghose, Staff Writer

Am I surprised to see that institutional investors in the Gulf Cooperation Council have given a strong endorsement to the region's listed financial institutions, which have dislodged real estate as the most attractive sector, according to a survey conducted by HSBC?

Not really.

For me, the more interesting aspect of the findings was that real estate listed companies come second to the financial sector as the most attractive sector for investors in the region.

Real estate has had its day, rather years, and still is having a splendid run, with huge demand from foreign investors, many of whom happened to be European expats moving to enjoy the sunny climes and sandy beaches of the Gulf.

The demand for real estate moved into high gear with the freehold laws being brought into force and investors getting full entitlement for the properties they were buying.

And because of these factors, funds chased real estate projects, and real estate listed companies did (and are still doing) remarkably well.

It's not difficult to get into the minds of the institutional investors. With lots of supply coming on in 2008-09, real estate is expected to slow down.

By how much is another matter. Various research reports have played it safe on guessing that, but nobody is expecting a crash.

With this scenario in the offing, it's not surprising that institutional investors are going for the listed companies in the financial sector, comprising both commercial and investment banks.

"With real estate developing fast and banks maturing, interest in the latter is bound to develop," says Mohammad Ebeid, head of institutional sales at EFG-Hermes. "And of course, this increasing interest in the banking sector has come about because of growing demand for Islamic financing, especially sukuk. Generally the demand for sukuk is big."

The banking sector is picking up in regions like Qatar, Oman and Abu Dhabi. Most of the banks in Abu Dhabi have lagged behind those in Dubai in the last few years. That has to do with the fact that Abu Dhabi is not having the same scale of real estate developments as in Dubai. But now the banks in Abu Dhabi are picking up, growing their asset base and loan books.

Qatar, for example, says Ebeid, is expected to have the highest GDP per capita (of about $80,000) within the next three to four years. Lots of expats are going to move into the country, spiking the demand for retail projects. "More and more banks are needed to serve these people, and the expectation among analysts is that the banking sector will see a healthy growth."

Institutional investors normally greet such kind of signals positively before it really happens, and that's the trigger for such kind of demand for the banking sector.

Will 2007 be a banner year for equities?

Will 2007 be a banner year for equities?

London: Equities will end 2007 well above levels investors had been expecting if the fiery pace at which they rose in the first third of the year does not slacken.

So many investors, faced with the supposedly traditional May sell-off, will be trying to decide whether to lock in profits or bank on another year of outsized gains.

MSCI's main world equity index gained 6.4 by the end of April and its main emerging market index about the same. If uninterrupted, that puts them on a pace to gain around 19 per cent for the year.

The FTSEurofirst 300 was up 6.8 per cent by April 30 while the S&P 500 gained 4.5 per cent - a more than 20 per cent and 13 per cent annual pace, respectively.

Some markets, meanwhile, have had breathless gains. Germany's DAX, with a 12.3 per cent rise over four months, is on a pace to gain 37 per cent annually. China's Shanghai index would rise more than 130 per cent in 2007 at its current rate.

"Despite the slowdown in corporate earnings growth and rising interest rates... these markets are powering away," said Mike Lenhoff, chief strategist at wealth manager Brewin Dolphin.

It was not supposed to be this way. Entering the year, investors were expecting only modest gains for 2007.

Reuters polls in December, for example, showed analysts on average expected the S&P to be up 6.4 per cent for the year.

They saw the DAX gaining 7.4 per cent to 6,900. On Thursday it was trading above 7,430.

Not over

It is quite a leap, of course, to look at a four-month market performance and extrapolate gains for the full year. This time last year, for example, there was a similar situation before the batterings of May to August.

"The year is not over," said Ewen Cameron Watt, strategist at BlackRock. "The fat lady has not even cleared her throat."

This means that some investors are preparing to step back. ABN Amro Asset Management said in mid-April that it was a good time to reduce equities while Generali Asset Managers reduced its equity stance going in to May.

Stock investors, however, have shown a great deal of resilience recently.

First, they shook off an attempted global correction at the end of February and early March with seeming ease. Large institutional investors kept their nerve as markets fell and, if anything, went on a bargain hunt.

Many bourses are now back up at all-time highs.

Secondly, the kinds of things that traditionally send equities into a risk-aversion spin have had only limited impact.

Political turmoil in Turkey, for example, has not only failed to unnerve other emerging markets over the past week but Istanbul's main bourse index has regained a good portion of its recent losses.

"There is a lot of value there, we do not want to retreat," Mark Mobius, president of Templeton Emerging Markets, told Reuters on Thursday in a comment that might have come from many investors expressing a broad view of equities in general.

Other assets, meanwhile, have failed to woo investors away from equities, even if prospects might not be as good for stocks this year as they were last year. Bond returns, in general, have been minimal.

Mergers and acquisitions

Mostly, however, equities have thrived because there have been few signs of the global economy slowing and credit has remained cheap enough to trigger a seemingly relentless level of corporate deals.

Market researcher Dealogic calculates mergers and acquisitions year-to-date have been worth $1.9 trillion. "If [dealmakers] felt there was something fundamentally wrong, they would not be bidding so intensely," said Brewin's Lenhoff.

With nothing to suggest this is about to change and the global economy still barrelling along despite some US slowing, investors might be tempted this year to eschew the old market adage that they should "Go away in May".

Recent history suggests anyway that doing so brings mixed results.

In the four years since the current global equity rally began in 2003, the MSCI benchmark has gained throughout the summer twice and underperformed twice.

India's bread basket aims to be IT hotspot

India's bread basket aims to be IT hotspot

Chandigarh: Fed up with traffic snarls and scarred roads, a software engineer in India's flagship IT hub of Bangalore took to the streets in protest last year - doodling on his laptop while trotting along on a bullock-cart.

While Bangalore continues to host the bulk of India's IT business and is home to more than 1,500 top firms, poor roads and traffic woes are now pushing IT firms to look beyond Bangalore - to newer cities like Chandigarh, hundreds of miles north.

Chandigarh is joint capital of the Punjab and Haryana states - better known as India's bread baskets. The city is now taking tentative steps to become a new corporate destination.

"The IT industry is excited about Chandigarh's potential as an emerging IT destination," said Kiran Karnik, president of the National Association of Software and Service Companies (Nasscom), India's top trade body for the IT industry.

"Already, many IT companies have begun operations there or have plans of doing so, making it one of the new 'hot spots' for the IT industry," he told Reuters by email.

Infosys, India's second-largest software company, was among the first to move here and began full operations from its complex spread over 30 acres in the Rajiv Gandhi Chandigarh Technology Park (RGCTP).

The office currently employs about 1,500 people and plans for more than 5,000 staff to work in the glass-walled building.

At least 13 other companies operate from the 123 acres of the park, including Wipro Ltd, Bharti Airtel, Tech Mahindra and eSys.

"When fully functional in the next few years, the park is expected to have 25,000 IT professionals," said Chandigarh's IT director Manjit Brar. "It will be the IT hub of north India."

Current investment in the park, located on the outskirts of the city, is Rs7 billion ($165 million) and in two years it is expected to touch Rs30 billion ($711 million), Brar said.

The Bangalore way?

The city hopes to benefit from a booming market that India dominates.

India's software sector expects exports to rise 33 per cent to $31.3 billion in the fiscal year, which ended on March 31, according to Nasscom. In comparison, the Philippines earned $3.6 billion from outsourcing revenues in 2006.

Over 2001/06, India's share in global sourcing is estimated to have grown to 65 per cent for IT services and 45 per cent for back-office services like call centres.

While there is excitement about Chandigarh emerging as the new IT stop, there is concern it could go the Bangalore way if it is unable to sustain rapid growth which IT brings to a region.

"There is no doubt that a lot of people are trying hard to sell Chandigarh as the next Silicon Valley in India," said Simran Aujla, an IT professional.

"But I am not too sure if a city planned for 500,000 people will be able to sustain the rapid growth. Unless infrastructure keeps pace with growth, Chandigarh may become another Bangalore."

To begin with Chandigarh is a federally-administered territory with restricted geographical boundaries.

Millions of square feet of office space outside city limits are required for it to be a full-fledged IT destination - something dependent on permission from the federal government.

But despite obstacles, many lives have already been changed.

Before the IT park, local graduates had few options to get well-paid jobs near home. They would either go to IT centres like Gurgaon and Greater Noida on the outskirts of New Delhi, or travel hundreds of miles down south to Bangalore. "I was very tense in my college days because being the only daughter, I knew my parents would never let me go to Bangalore," said Amrita Singh, who works for a multinational company.

"I was afraid my degree in engineering would just go waste, but today I have no dearth of job offers with so many big IT firms flocking to Chandigarh," she added.

Real estate agents, too, are excited at rising property prices.

"The IT park has pushed up real estate prices like never before," said Amarjit Singh. "A small piece of land quoted for around Rs2.5 million a few years ago is today unavailable for Rs10 million ($237,100)."

Saudi-KM venture to encourage women

Saudi-KM venture to encourage women
Staff Report

Dubai: Prominent Saudi businessman Prince Khalid Bin Al Waleed Bin Talal Al Saud and KM Properties announced their newly completed joint venture under the name of KMPK Properties with offices in Riyadh, Dammam and Jeddah.

KM Properties, a subsidiary of Dubai based KM Holding is a full-fledged real estate developer. KM Properties owns number of projects in the UAE at a value of Dh4.3 billion, which covers modern offices and residential towers, retail areas, healthcare clinics and luxury hotels.

The chairman of the new development company, Prince Khalid highlighted the significance of the newly established KMPK Properties stating that he is strongly committed to take part in the implementation of King Abdullah's efforts to bring more Saudis, especially women, to the econ-omic forefront and to create more investment opportunities in Saudi Arabia.

Business model

"To bring more women to the economic forefront is not an easy exercise but we will showcase a good business model of how to encourage women in private sector companies like KMPK Properties where they play roles at all levels of the corporate ladder, this gesture will in turn encourage and guide other companies to utilise women talents in a wider context.

"Such business model is of particular significance in a society where conservatism in the workforce and traditional inhibitions largely exists," Prince Khalid said in a statement.

Khulood Al Rostamani, co-founder & group director of KM Holding said: "KMPK Properties is expected to play a major role in attracting the investments and capital of Saudi businesswomen. Also, a whole section that is exclusive for women has been established for this purpose whereas we have trained a group of Saudi national women who are interested in joining the workforce. In addition, some of the concepts developed in the projects would cater to women as a target segment and will be built around businesswomen's needs."

Prince Khalid added "KMPK Properties is eager to give back to the community at large." An entry of this scale is expected to create a substantial number of jobs in the Saudi market, while adding to the economy.

Dr. Mohammad Haddad, Chairman of KM Holding and vice-chairman and CEO of the new company KMPK Properties listed the various real estate projects to be developed by KMPK Properties using their "Six Value Benefits" character which includes: hotel facilities services, prime locations, good accessibility, luxury design, quality and delivery aspects. "One of the investment products KMPK Properties offers is equity investments, in which investment banks and private funds will invest directly into our real estate projects," he added.

Singapore deal may boost Indian market

Singapore deal may boost Indian market
By Joe Leahy, Financial Times

Mumbai: An investment in a mid-cap Indian property company by a Singapore-led investor group could rejuvenate a sector struggling with rising interest rates and falling stock market valuations.

The investment by the Government Investment Corporation-led group into Anant Raj of about $180 million, including a greenshoe option, could lead to similar deals by foreign investors in other real estate stocks, bankers said.


"There's a lot of appetite. You'll see more of these one-on-one deals," said a banker familiar with the transaction.

Once barely present on equity markets, Indian real estate companies have held a spate of listings since last year, taking advantage of a huge spike in property prices and increased interest from foreign institutional investors.

But the attempt to establish the real estate sector on the market has stumbled after the proposed benchmark listing for the industry, the $2 billion-$2.5 billion initial public offering of DLF, one of India's largest developers, was delayed last year. It is still awaiting its IPO.

Up to now, only relatively small or mid-sized property stocks have listed, often at ambitious valuations. Prices fell, especially after the central bank started increasing interest rates in December to tame inflation and the market regulator tightened disclosure regulations for real estate companies.

Most stocks have since rebounded but are still well off their highs. A recent listing, Parsvnath Developers, at Rs326.30 a share, is barely above its IPO price of Rs300, in spite of record rises in the overall market.


Akruti Nirman, which specialises in slum redevelopment, is at Rs371.75 after listing at Rs540. Sobha Developers has recovered to Rs886.85, higher than an IPO price of Rs640, but still down on a high of Rs1,248.

Anant Raj has been listed for a longer period of time and has generally outperformed the index over the past six months, but it is also off its highs.

Under the GIC deal, Anant Raj will sell Rs6.84 billion ($167 million) in shares, of which the Singapore firm will buy Rs4.3 billion, Morgan Stanley Dean Witter Mauritius Rs1.7 billion and the Quantum (M) fund Rs836 million.

The deal will give GIC an 8.5 per cent stake in the company and a right of first refusal to invest in projects proposed by Ananta Raj.

"It's great for the sector that these mid-sized players get someone with deep pockets behind them," said the person familiar with the deal.

Large foreign investors such as the GIC or private equity firms could bring international practices to smaller Indian property firms, many of which have only recently introduced modern corporate structures.

UBS advised on the deal.

Malaysia: Will the Planned Iskandar Development Region complement the role of Singapore or mimic and compete with it?

Malaysia: Will the Planned Iskandar Development Region complement the role of Singapore or mimic and compete with it?
Friday, May 4th, 2007 Posted by Overseas Property Mall in Malaysian Property, South-East-Asia Property, New Development Alert

The plans for the Iskandar Development Region (IDR) were unveiled as part of Malaysia’s 2006-2010 development plan. Commentators (and investors) are still trying to gauge how much of the enormous scope of this development will come to fruition. Given its proximity to Singapore, the state of Johor at the southernmost tip of the Malay Peninsula is surprisingly undeveloped. The IDR is designed to address Johor’s under-development relative to Malaysia as a whole and to reverse the recent downward trend in Malaysia’s inward investment.

The development is really only at an early stage at present. However, it is hoped that in the course of the current 5-year plan it will attract RM 50bn of investment (approx. $15bn). The 5-year plan itself allows for an investment in infrastructure of RM 4.3bn with another RM 3.4bn being provided by development funds. Khazanah Nasional, Malaysia’s national development fund is the IDR’s sponsoring body and will be supplying a significant proportion of this element. Finally, it is hoped that the private sector will provide about RM 10bn’s worth of investment in the initial phase of the programme.

The level of interest from abroad is difficult to predict at present. Up until now overseas interest has focused on the port of Tanjung Pelepas (established in 1999 and owned by MMC Corp.) to which the Danish company Maersk and Evergreen Marine of Taiwan have relocated their operations from Singapore. The port facilities and the causeway link to Singapore are two of the IDR’s chief inherited advantages. Incidentally, Tanjung Pelepas was the 2006 winner of the Lloyd’s List Maritime Asia Container Terminal Of The Year Award on the basis of its costs, speed, facilities and volume of traffic. Interest in the region has also been expressed by companies such as OSI Systems of the US and JST Connectors, part of the Japanese steel company.

The vision of Malaysia’s Prime Minister, Abdullah Badawi, is for the IDR to mirror the economic success of Shenzhen in Hong Kong’s hinterland. Writing for the Financial Times in late March John Burton pointed up some of the difficult choices facing the government. Firstly, there is the question of whether the government will be able to follow through on limiting the current affirmative action rules that favour ethnic Malays. The IDR is supposed to focus heavily on service industries and administration (it will include a new administrative area for the State of Johor), two sectors where affirmative action has been strong in the past.

The IDR plans have triggered targeted changes to Malaysia’s exchange controls and taxes on property gains to encourage inward investment in Johor. However, plans to allow passport-free access to the region have been dropped for the time being.

Commentators are seeing potential contradictions in the emphasis being placed on service industries in that these would appear to put the IDR into competition with Singapore. Singaporean investors are likely to look to Johor as a location for industrial and logistical developments benefiting from cheaper property prices and cost of labour that will complement the island state’s own economy. However, looking at the scale of the IDR plans one can see that they encompass investment in all economic sectors, including health and education. Stephanie Phang of Bloombergs quotes Chris Eng of the consultancy OSK Research as saying the scale of the projects was staggering and it was attended by risks.

Although it is early days for individual investors to be making financial commitments to the IDR area the Star newspaper says that those areas closest to the links to Singapore will be the most favourable for investment. Under Malaysia’s land code foreigners and foreign-owned companies have only been able to buy industrial property but last November it became possible for non-nationals to purchase residential property. However, the relevant section of the IDR’s own website (see above) says that this is only for own-residence and not for rental or investment purposes. Clearly, more light needs to be shed on the legal framework before investing will be safe; can any readers comment on the legal situation?

Mortgage market set to blast?

Mortgage market set to blast?

Due to an increase in capital, the consolidation of banks and increases in foreign ownership and participation, the mortgage markets of several Asian countries are in much better shape and are poised for expansion says international research firm Global Property Guide.

The decline of state ownership of banks and the shift of government housing agencies to mortgage market “enabler” instead of direct providers of mortgage loans have paved the way for the expansion of the private sector. Most countries have also started to offer mortgage default insurance for lenders.

"Asia’s property markets are now growing and banks are more willing to extend mortgage loans around the region," says the firm. "The positive benefits could include stronger house-price growth - and more investment in housing."

According to Global Property Guide, While property prices in much of the developed world are currently at historic peaks, property prices in most Asian countries are well below peak levels. Asia’s housing markets have lagged for three main reasons:

1. The Asian Crisis caused a long period of high interest rates. Potential property purchasers did not want borrow at the interest rates being offered.

2. Post-crisis bank portfolios were full of defaulted property loans. Banks were, till recently, often reluctant to lend.

3. Poor credit information, weak legal systems, lack of transparency, high revenue extraction by governments (transfer taxes, registration fees) have raised the costs of housing investment in many Asian countries.

Mortgage markets in Asian countries are also relatively small, particularly Indonesia (2% of GDP), China (10%), Philippines (12%) and Thailand (16%). Only Singapore and Hong Kong have mortgage markets generally at par with most developed countries, with mortgage debt at 61% and 48% of GDP, respectively. Even OECD member countries Japan and South Korea have relatively small mortgage markets, given their level of economic development.

“The small size of Asia’s mortgage markets means there is huge potential for growth,” says Prince Cruz, senior economist of the Global Property Guide.

“For instance, if China’s mortgage market were to increase to 20% of GDP in 2010, the market will be worth more than US$700 billion. Given the strong growth of China’s mortgage market and economy, this scenario is not unlikely,” says Cruz.

Despite the recent interest rate hikes since, mortgage rates are still affordable in most of Asia, below 8%. This should turn the adjustable rate mortgage (ARM) structure typical of Asian loans into an advantage, making borrowing comparatively inexpensive.

In some Asian countries, the long period during which loans were effectively unavailable means that supply is low, and rents are relatively high, leading to good rental investment returns for investors - as in Indonesia, Thailand, and the Philippines.

The result could be a virtuous circle.

Low interest rates will foster an active mortgage market, aided by pent-up housing demand, which in turn will boost economic activity. A vibrant economy is good for the housing market.

Healthy mortgage markets are a critical factor in the growth of housing markets. With Asia’s mortgage markets now in better condition, the stage is set for further reforms which will provide the financial underpinning for better housing financing, more attractive pricing, more varied product offerings, and generally, the provision of more housing at lower cost to Asia’s citizens.

Samui Villas & Homes opens Phuket office

Samui Villas & Homes opens Phuket office

Beach villa specialist Samui Villas & Homes (SVH), the 2006 Winner of Best Agent at the Thailand Property Awards, opens a new office in Phuket on the West coast of Thailand today. Situated near Cherng Talay, Phuket Villas & Homes (PVH) will focus on high-end estate management, villa management and villa lettings.

The office has already won its first contract for the highly prestigious Jivana Villas, located at Natai Beach, Phang Nga, a short 30 minutes from the airport. The four villas are designed and finished to the highest western standards and each sits on six rai of land with over 60m of beach frontage. Guests will enjoy the ultimate luxurious experience in the most exclusive and private tropical environment, with each villa providing a private pool and up to six resident staff, including a Thai gourmet chef. In particular, PVH prides itself on offering its guests a very high level of concierge service in keeping with the famed Thai hospitality.

PVH has appointed Australian Andrew Craig as General Manager; Mr Craig has lived on the island for 6 years and is familiar with high end profile products.

Mr Craig said: “I am delighted to be leading Phuket Villas and Homes’ launch of its high-end property service. The company is well known on Koh Samui for setting exemplary standards in the luxury villa market so I very much look forward to extending this reputation here on Phuket. Our focus will be on managing only the most luxurious of villas and estates and delivering the most exclusive levels of personalised service to our guests.”

Since inception in 2001, Samui Villas & Homes (SVH) has grown into one of Koh Samui’s leading businesses in the luxury property services sector with a particular reputation as the island’s beach villa specialist. Their portfolio boasts a glittering selection of the finest and most exclusive villas and land on the island, many of which are also employing the full range of property management and letting services.

Investors target Singapore real estate boom

Investors target Singapore real estate boom

Real estate markets have their ups and downs, and while a number of the mature markets in Europe and the US are seeing stagnant growth, Singapore continues in leaps and bounds.

According to a recent report in the Asia Wall Street Journal, private residential property values in Singapore rose 4.8% in Q1 2007 on the previous quarter, and gained 10% overall in 2006. Specific market segments such as the mid market are reportedly seeing higher growth in values.

Much of this upward trend in residential values is mirrored in the commercial market and associated rental rates.

So, why is Singapore going against the global trend and turning in regular growth in real estate values? Some believe it is due to the change in positioning of the city-state.

There are wholesale changes in the city-state’s prime focus of development with a shift away from the manufacturing sector into the tourism and financial services sectors, with marinas and casinos neighbouring office skyscrapers home to large multi-nationals.

Such a change is bringing high-end tourists and international residents, fuelling the growth in real estate prices and growth in the luxury end of the market – both residential and commercial.

Singapore-based property developers are benefiting from this boom and are positioning themselves for what is hoped to be a long growth cycle. And this in turns is attracting international investor interest in local developers. Most listed Singapore developers have seen considerable share price increases over recent times as the market recognises the potential ahead, but a number of the small developers, according to industry analysts, are considered to be targets ripe for international investment.

Noting the recent share price increases, Peter Wong, a fund manager at Phillip Capital Management in Singapore, was reported in the Asia Wall Street Journal recommending investors look at building material companies or media conglomerates such as Singapore Press Holding, which benefits from the real estate sector growth through increased advertising revenues.

Similarly, other financial analysts are recommending the bank sector which has three strong locally-born financial groups – DBS Group Holdings, United Overseas Bank and OCBC Group. All of which are well positioned to benefit from the property sector boom.

There are nearly two dozen Singapore REITs which are also proving attractive to investors as valuations are not as high as property developers, yet are expected to see strong growth in value as the overall property sector continues on the up.

Whichever way you look at it, the Singapore property market appears set to continue its growth and international investors are beginning to circle.

Banyan Tree launches new brand

Banyan Tree launches new brand

Banyan Tree’s resorts and spas have long been a name synonymous with luxury, featured in countless high-end magazines. Now, Singapore-listed Banyan Tree Holdings, a developer, designer and operator of resorts, hotels and spas, has launched a new luxury brand targeting top tier travellers and investors - Banyan Tree Residences.

The new Banyan Tree Residences are now available at Banyan Tree properties in Phuket and Bangkok, Thailand, The Seychelles, Lijiang, China and Bintan, Indonesia.

The concept of Banyan Tree Residences is to allow investors to buy their own signature villa, townhouse or apartment which becomes part of the inventory of these exclusive resorts, and receive an annual guaranteed return of 6% per annum for six years, with options to renew or share in revenues generated by the property.

“Banyan Tree Residences enable investors to diversify their portfolios whilst receiving guaranteed returns, without worrying about managing the property when they’re not there. Of course all of our owners enjoy the lifestyle benefits which have become synonymous with the Banyan Tree Hotels and Resorts brand,” stated Richard Skene, Assistant Vice President, Banyan Tree Residences.

New Banyan Tree Residences, encompassing the now traditional elements associated with a truly luxurious lifestyle, have been conceptualised and designed by Architrave Design and Planning, Banyan Tree’s in-house architectural arm, whose numerous award-winning properties often grace the pages of travel and design publications worldwide.

Owners are entitled to 60 days complimentary use of their Residence every year, membership at the exclusive Banyan Tree Residence Club and privileged access to the Banyan Tree Private Collection – Asia’s first Destination Club.

The strength of the Banyan Tree brand provides buyers with confidence in the quality of development, services, management and superior income for the property. Along with ownership of a Banyan Tree luxury property comes peace of mind as well as hassle-free maintenance, cleaning, landscaping, security, plus access to hotel amenities and services.

An open exhibition of Banyan Tree Residences will be held in Hong Kong on Saturday 16 and Sunday 17 June 2007 from 11am to 7pm at The Landmark Mandarin Oriental Hotel.

Prior to Hong Kong, an open exhibition of Banyan Tree Residences will also be held in London on Friday 1 and Saturday 2 June 2007 from 11am to 7pm at China Tang at The Dorchester hotel.

Executives from the property arm of the Banyan Tree Group will be on hand and available to meet with interested parties looking to invest.

Banyan Tree currently manages and operates 21 premium hotels and resorts as well as 58 spas, 68 galleries and 2 golf courses. Approximately 30 new Banyan Tree Group hotels and resorts are slated to open by 2010 in destinations that will include Mexico, Barbados, India, China and Greece.

Thailand gives neighbours a lift

Thailand gives neighbours a lift
By Daniel Ten Kate


A few months ago, Larry Cunningham of Phuket One Realestate had a Hong Kong-based client looking to invest US$50 million in Thailand.

“We showed them several large sites, and they were making all the right moves,” he says.
But then Thailand’s military-installed government shocked investors on December 18 by introducing a 30% reserve requirement on all foreign funds. For Cunningham’s client, $15 million would need to sit in an interest-free account for one year.

The proposition killed the deal with Phuket One. But the property fund still wanted to invest the money in the region, and chose Cambodia instead.

The experience typifies a trend property developers have seen of late: Thailand’s loss is very much the gain of other countries in the region.

Vietnam, Cambodia and Malaysia are all benefiting from the government’s poorly implemented capital controls and proposed changes to foreign ownership laws. Investors who would’ve never given those countries a look are now making inquiries, and, in some cases, closing deals.

“Absolutely Thailand’s problems have benefited neighboring countries,” says Robert Collins, managing director of Agency and Investment Services for Savills (Thailand) Limited. “Malaysia in particular has benefited, and to some extent the residential side in Vietnam.”

But though Thailand’s regional competitiveness is lagging for the moment, the news isn’t all bad by any means. Most property developers agree that once the government gets its act together and sets clear economic policies that restore certainty to the market, Thailand will again be the top choice for property funds and investors.

“Thailand doesn’t have a natural competitor in the region,” Collins says. “If ownership structures become clear or sentiment reverses, we’ll see a huge outpouring of pent-up demand. It might not happen until next week or for another year. But the exciting mix and interest in Thailand is not going away.”

Until the military ousted elected premier Thaksin Shinawatra in a coup last September, Thailand’s property market was looking up. High economic growth, well-developed infrastructure and plenty of exotic tourist destinations made Thailand an attractive play for major property funds.

“Institutional investors have always had a stronger interest in Asia’s bigger property markets like Japan, Korea, China, Hong Kong and Singapore,” says Aliwassa Pathnadabutr, managing director of CB Richard Ellis (Thailand) Co., Ltd. “Interest has been growing in Thailand in recent years as part of the globalization of the property industry and the availability of investment properties in Thailand.”

That upward climb was knocked off kilter by the interim government’s unclear policy measures at the end of last year. The nationalist rhetoric of several key ministers, including former finance minister Pridiyathorn Devakula and Commerce Minister Krik-Krai Jirapaet, troubled investors whose holdings were based on a nominee legal structure that was suddenly deemed illegal after decades of widespread acceptance.

Although Pridiyathorn has seen been removed and his replacement, Chalongphob Sussangkarn, has toned down the patriotic bluster, it remains unclear what the new policy will look like. The capital controls remain, albeit watered down, while several drafts of the Foreign Business Act are floating around (see story).

The confused regulatory climate has led property funds to take another glance at Vietnam, Cambodia and Malaysia. But though these countries are perceived to be more business-friendly at the moment, the lack of infrastructure in some areas is still limiting sales.

“Thailand’s problems have increased the level of interest in Vietnam, but we are very underdeveloped in terms of development in both the retail/residential condo and office markets as well as the tourist/resort and hospitality sectors,” says Marc Townsend, managing director of CB Richard Ellis (Vietnam) Co., Ltd.

Vietnam’s economy is humming along at seven to eight percent per year, however, and the country just entered the World Trade Organization. Although WTO entry provides mostly a symbolic boost, many investors see a good opportunity to jump in early in what looks to be a promising growth story.

“Vietnam is suddenly the flavour of the month,” said Alastair Orr Ewing, chairman of Chesterton Petty Vietnam Ltd, the longest running real estate agent in the country with a staff of 230. “WTO entry has focused attention and the vital statistics look excellent. It is a ground floor opportunity in a market with great potential.”

Andrew Brown, country head of Jones Lang LaSalle Vietnam Ltd, said “the attractiveness of the Vietnamese market is driven by the strong work ethics, social and political stability, lower labour costs, attractive tax incentives and overall government support in the country. Another key factor in Vietnam´s favour has been the MNC´s drive for the so-called China plus one scenario, wherein they seek to reduce their excessive dependence on China and to more evenly spread their business risk in Asia.”

The legal structure in Vietnam is different than Thailand primarily in that it offers leases up to 50 years that are often renewable. Thailand offers 30-year renewable leases, but it remains unclear if they are binding if the freehold owner dies. This has led some property developers here to offer money-back guarantees to lure investors, but nearly all agree the government should offer a 90-year lease.

“The biggest problem facing the property market in Thailand is not necessarily the actions, but the perceptions of what the government is doing,” says Phuket One’s Cunningham. “I have clients who bought condominiums or leasehold sending urgent emails asking if their purchase is safe and secure even though they are not affected by the foreign business law changes. What the government must do is create something positive, and the easiest way to do that is increasing the percentage of condos that foreigners can buy from 45 percent to 75 percent or 90 percent, and offer 90-year leases.”

In Cambodia, laws are very much still being developed, and property values are difficult to ascertain. Still, the government has taken early steps to make the property market more attractive, in part by cracking down on land grabbing by corrupt soldiers and bureaucrats.

After years of isolation, Cambodia is finally seeing some high economic growth rates and an emerging middle class in Phnom Penh. The prospect of an oil discovery in Khmer waters of the Gulf of Thailand has increased optimism about Cambodia’s economic prospects. Beachfront property in Cambodia from Sihanoukville to Kep is becoming very attractive to investors who want to purchase virgin territory.

Coincidentally, foreigners can own land in Cambodia through a nominee structure in the same way foreigners did so in Thailand for decades. But after Thailand’s recent crackdown on nominees, investors may want to think twice.

Foreigners can’t own land in Vietnam, but Malaysia offers freehold ownership on properties costing more than $70,000. In addition, foreigners can get 60-year leases, 10-year renewable visas and take out loans from local banks, benefits not awarded to foreign investors in Thailand.

“Malaysia offers extremely sensible limited freehold property rights,” said Collins from Savills. “Of 1,500 foreigners that bought freehold in Malaysia, I’d say about 1,000 of them would´ve bought in Thailand if a similar package was available here.”

Malaysia certainly has plenty of upsides. Laws are clear and buying property is much easier than in other countries in the region. Moreover, the government is openly welcoming foreigners to invest through campaigns like “Malaysia My Second Home.”

The Malaysian economy is growing steadily at about six percent per year, higher than Thailand, which will grow between four and five percent this year. The Malaysian government is also close to completing a trade deal with the US that will likely give a further boost to trade and investment.
For property developers, however, beachfront property in Malaysia is very difficult to own, as most is reserved for Malays only. In addition, the nightlife and entertainment generally pales in comparison to that of Thailand.

When it comes to luxury housing in resort areas, Thailand is in a league of its own. Destinations like Phuket, Koh Samui, Pattaya, Krabi and Hua Hin all have unique personalities and easy access. Resort areas in Vietnam or Cambodia are much more difficult to get to.

“Nice resort locations in Vietnam are not easy to access,” Collins said. “A buyer based in Hong Kong who has a resort for weekend use can fly direct to Phuket and take a 15-minute car drive or fly to Vietnam and take a taxi drive and then a one-hour boat ride. There’s quite a bit difference in terms of convenience.”

Thailand is also a much more mature market than others in the region. The value represented in Cambodia and Vietnam now could quickly evaporate if a flood of foreign money enters and creates a bubble.

In that regard, many developers were not opposed to restrictions on foreign ownership in the Thai market. But many said those restrictions should be carefully thought out so as not to dampen the overall investment climate and hinder economic growth.

“The leading economies such as Japan are much more open to foreign institutional property investors,” said CBRE Thailand’s Aliwassa. “As the other countries are liberalizing their country´s economies and property policies, Thailand has become more restrictive, which will weaken its position in the competition to attract property funds and investors.”

All in all, property developers here are eager to hear some good news and see the Thai market catch up with Singapore, Hong Kong, Japan, Korea and China. The new finance minister may have stopped the free fall into economic nationalism, but actions speak louder than words.

“I’m sick of turning on CNN and the BBC and seeing international news programs telling people not to purchase in Thailand,” says Cunningham from Phuket One. “The government must make changes now to send out a positive vibe that Thailand does welcome foreigners.”

Shanghai, City on the Make

Shanghai, City on the Make

Like Nelson Algren’s Chicago or Dashell Hammett’s Los Angeles, Shanghai is a city of hustlers, players, pimps, scammers, dreamers, climbers, and wannabes. 17 million people live in the metropolitan area, so it’s roughly the size of New York or Calcutta, bigger than London or Rio. Thanks to the People’s Republic of China’s experimentation with free markets, Shanghai’s growth is explosive. The skyline is expanding by the minute – everywhere you look, cranes are straining away to create new buildings of 40, 60, even 100 stories. Architects top these creations with whimsical turrets, pagodas, fountains, ziggurats – seemingly with whatever springs to mind. They’re like designer hats, or children’s toys, Lego blocks for the egos of Shanghai’s Gatsbys. The man (or the woman) in the street is aching to get a taste of the action too.

As a big tall white guy, I walked the streets with a flashing neon sign that read, “Scam me.” In my five-day visit I was approached with scores of offers of various stripes: salesmen wanted to sell me everything from fake watches to designer bags to “antiques” to real estate to tours to kites. Pimps wanted to take me to hotels for “special lady massage.” When I showed one my wedding ring, he said, “your wife never know.” Students eager to “practice their English” (a particularly tempting approach for me) turned out to be trying to hustle me to a tea ceremony where I’d end up paying hundreds of bucks US for a few sips of oolong, to their “surprise.” (I didn’t – but google “tea ceremony scam” if you want to read dozens of stories from people who did.) Taxi drivers with a poor sense of direction and pedicab hucksters were common. Restaurants often have two sets of prices. Some people come up to you on the street and claim to just want to “make friends” or “have coffee.” And I haven’t even gotten to the beggars …

Beneath it all is a striving energy that I couldn’t help but admire. The old city lies slowly crumbling under the weight of its gaudy new dreams, coming through in brief flashes at the Yuyuan Gardens or on the art deco edges of the Old French Concession. For decades the people of Shanghai lived with work collectives and the guaranteed jobs of the “iron rice bowl” system; now they’re scrambling to negotiate their way through the glorious jungles of capitalism. The results are decidedly mixed. On an extraordinarily lame “cruise” along the Huangpu River to the Yangtze, Allison and I saw industrial sludge pouring from numerous drainpipes into the drinking water of the city’s masses, as barges filled with garbage floated amidst barges filled with coal, all of it on its way to be burned and choke the sky, obscuring the view of those fabulous new skyscrapers. Meanwhile thousands of people arrive every day from the countryside to add to the population of the “most prosperous” city in the most populous nation on the Earth.

Companies looking for more affordable office rental may just see their wish come true.

Companies looking for more affordable office rental may just see their wish come true.

The Singapore Land Authority (SLA) has released three more state properties into the market for dedicated office use.

These include a former Government building, a former tertiary institution and a community centre.

All three properties will come with a tenancy for an initial term of three years and are renewable for another three years up to 2016.

“In the last couple of months we have received more enquiries from smaller tenants exploring other options, as their landlords decided to increase their rentals,” said Mr Colin Tan, head of research and consultancy at Chesterton International.

He said good market sentiments have led landlords to push their luck when upping rents, knowing that tenants do not have much choice but to pay up.

“The property put up by the government, I’m not sure how popular they will be due to their not so central location, but will definitely release some of the pressure from the lower-end market, giving small tenants real options to call the bluff of landlords,” said Mr Tan.

He added that the soaring office rentals in the Central Business District (CBD) have also led small companies to consider cheaper alternatives such as business parks and factory premises to relocate.

SLA had earlier put up three other properties for tender. The former River Valley Primary School saw four bids submitted by businesses such as property management and hostel operation, which are currently being evaluated.

Source: Today, 03 May 2007

Listed construction and property group group Chip Eng Seng said yesterday that its freehold Ventuno Balmoral is fully sold

Listed construction and property group group Chip Eng Seng said yesterday that its freehold Ventuno Balmoral is fully sold and it plans to launch three more condominium projects in the next few months.

The 35-unit Ventuno Balmoral, in Balmoral Road, was launched in March this year and sold at an average of $1,300 per sq ft. Chip Eng Seng now plans to launch one project each in Peck Hay and Grange roads and the West Coast. All three sites, secured through collective sales, are being jointly developed with other parties. The Peck Hay and Grange road projects will be luxury condominiums.

At Peck Hay Road, Chip Eng Seng and partner Lehman Brothers Real Estate II plan to build 70 units on what is now Venus Mansion. At Grange Road, Chip Eng Seng’s partner is the Citadel Equity Fund, part of the Chicago-based Citadel Investment group. The partners paid $180 million or $1,207 per square foot of potential gross floor area for Grange Tower, which is being redeveloped into a 68-unit luxury development.

The third proposed development is a 668-unit freehold condominium at West Coast Walk/Road, on the site of the present Westpeak Condominium. Chip Eng Seng is teaming up with a Lehman Brothers unit for this project.

Chip Eng Seng said yesterday that Ventuno Balmoral and the three future projects should contribute positively for the current financial year ending Dec 31, 2007.

Source: The Business Times, 03 May 2007

The Singapore Land Authority (SLA) has released another three state properties strictly for use as office space, bringing the total to six this year.

The Singapore Land Authority (SLA) has released another three state properties strictly for use as office space, bringing the total to six this year. So far, one site, a former school at River Valley Road, has received four bids with the highest tendered monthly rent at $75,555 a month.

Based on the the gross floor area of 47,253 sq ft for the River Valley site, the monthly rent works out to be about $1.60 psf.

SLA said the bids are still being evaluated. Nevertheless, ERC Holdings - an investment holdings company - which put in the highest bid said it was keen enough to pump in another $3 million to $5 million to upgrade the building.

Like many businesses today, ERC is facing a space crunch and needs the space urgently. Its CEO Andy Ong said that the company already occupies about 20,000 sq ft in the Central Business District (CBD) but needs 10,000-15,000 sq ft more.

Rising rents are also putting increasing pressure on business here. ‘Our current leases will expire and we are now looking at rental increases of about 300 per cent,’ he added.

Of the three new sites being offered for office use, SLA said one has already received expressions-of-interest from businesses such as financial institutions, real estate and software development companies. The site is the former CPIB Building on Cantonment Road, on the fringe of the CBD.

The popularity of these old state buildings will depend on the severity of the office space crunch. CB Richard Ellis executive director (office services) Moray Armstrong said: ‘The sites would apply to tenants who are not tied to prime locations and prime office buildings to the extent that companies are prepared to move out to these temporary sites. The space that these companies free up might then go some way to alleviate the tight office supply situation.’

The other two sites that SLA has made available for office space are the former ITE Pasir Panjang building and the former Moulmein Community Centre, the first community centre that could be converted into an office. SLA also revealed that it is evaluating the possibility of including another four community centres for this purpose.

Source: The Business Times, 03 May 2007

Singapore Land has acquired Himiko Court at Ridgewood Close in the Mount Sinai area for $336 million, or $821 psf of potential gross floor area

Singapore Land has acquired Himiko Court at Ridgewood Close in the Mount Sinai area for $336 million, or $821 psf of potential gross floor area, inclusive of an estimated $1.07 million development charge.

DTZ Debenham Tie Leung brokered the collective sale, which sets a new benchmark for the Mount Sinai area and which will be closely watched by owners of nearby properties, including Ridgewood Condo next door.

Himiko Court’s unit land price is 143 per cent higher than the $338 psf per plot ratio that Ho Bee paid in April 2004 for the former Yang’s Garden Village site next door, which it is deve loping into the Montville condo.

Prior to yesterday’s deal, the record for land price in the Mount Sinai area is said to have been the $533 psf ppr that Pidemco Land (now CapitaLand) paid for the Grenville condo site in January 2000.

Vito Koh, the group general manager of SingLand and its parent United Industrial Corporation, estimates the break-even cost for a new condo project on the 195,400 sq ft freehold Himiko site to be about $1,150 to $1,200 psf.

‘We plan to develop a condo with over 300 units and hope to market it next year,’ he said.

Himiko Court is zoned for residential use with a 2.1 plot ratio (ratio of maximum potential gross floor area to land area) and a maximum height of 24 storeys.

The collective sale to SingLand is subject to approval from the Strata Titles Board.

Owners of Himiko Court’s 177 units will receive sums ranging from $1.6 million to $3.9 million, depending on the size of their units, which vary from 1,076 sq ft to 3,692 sq ft, says DTZ director Tang Wei Leng. The $363 million price for Himiko Court works out to an average of $1,293 psf based on the existing development’s strata area.

DTZ has brokered over $2 billion worth of collective sale deals since the start of the year. Last week, it handled the $835 million or $1,062 psf ppr sale of Leedon Heights to GuocoLand.

‘Based on these latest prices achieved, it looks like developers are looking at selling prices for new projects of around $1,800 to $2,000 psf in the Leedon/Holland location and of about $1,500 to $1,600 psf in the Mount Sinai area,’ according to Savills Singapore managing director Michael Ng.

His firm is the marketing agent for the 672,000 sq ft Ridgewood Condo site next door and is in the midst of securing the requisite minimum 80 per cent consent level from owners.

Assuming a price of $800 to $821 psf ppr, the Ridgewood site could be worth over $1.1 billion.

The UIC group has been stepping up its property acquisitions.

Last month, UIC bought its namesake Shenton Way office building for $600 million, and is expected to redevelop it into a residential project.

This weekend, UIC is previewing Northwood, a 140-unit freehold condo off Sembawang Road.

It is expected to release a 203-unit freehold condo in the Jalan Jurong Kechil location towards the end of the year.

Source: The Business Times, 03 May 2007

$700m worth of contracts for MBFC awarded

Construction contracts worth more than $700 million for the upcoming Marina Bay Financial Centre (MBFC) have been awarded and the principal contractor for the two commercial towers is a consortium of Kajima Overseas Asia and Tiong Seng Contractors.

Woh Hup was named the main contractor for the residential tower.

Together, these buildings make up the 244,000 sq metre Phase 1 of the MBFC.

In February, the owners of MBFC - a consortium of Keppel Land, Cheung Kong Holdings/Hutchison Whampoa, and Hongkong Land - acquired a further 194,000 sq metres of land next to Phase 1 for $907.67 million.

In a statement yesterday, David Martin, general manager of BFC Development, the company in charge of MBFC, said: ‘The tenders for both the commercial and residential towers attracted strong interest and competitive bids from several quality contractors. We believe we have assembled from this bidding process a very strong construction team with the experience and expertise to execute large-scale projects.’

The appointment of the main contractors puts Phase 1 of MBFC on track for completion in 2010, he said.

Tiong Seng Contractors was earlier awarded the piling contract for Phase 1 of the development.

Director Pek Lian Guan said: ‘With Tiong Seng’s recent experience on the site with the piling process, we are off to a head start in ensuring a smooth process for construction through our deep understanding of the project and existing knowledge of the particular dynamics of this site.’

The contracts announced were only for Phase 1. Mr Martin said that design and construction planning is still in progress on Phase 2.

Also still in the planning stage is CapitaMall Trust’s plan to expand Funan DigitaLife Mall. In a statement yesterday, CMT said it is appealing to the Urban Redevelopment Authority (URA) for an ‘alternative waiver scheme so as to achieve a more efficient floor plate for the proposed development of an office block and to minimise disruptions to the retail tenants’.

BT reported on April 28 that CMT had received provisional permission from the URA to erect a nine-storey commercial building and for additions and alterations to the existing mall.

It is understood that the URA waiver CMT is seeking involves the height restriction of nine storeys for the new extension.

CMT said further information will be provided when details are agreed with the URA.

Source: The Business Times, 04 May 2007

$700 million for the upcoming Marina Bay Financial Centre (MBFC)

Construction contracts worth more than $700 million for the upcoming Marina Bay Financial Centre (MBFC) have been awarded and the principal contractor for the two commercial towers is a consortium of Kajima Overseas Asia and Tiong Seng Contractors.

Woh Hup was named the main contractor for the residential tower.

Together, these buildings make up the 244,000 sq metre Phase 1 of the MBFC.

In February, the owners of MBFC - a consortium of Keppel Land, Cheung Kong Holdings/Hutchison Whampoa, and Hongkong Land - acquired a further 194,000 sq metres of land next to Phase 1 for $907.67 million.

In a statement yesterday, David Martin, general manager of BFC Development, the company in charge of MBFC, said: ‘The tenders for both the commercial and residential towers attracted strong interest and competitive bids from several quality contractors. We believe we have assembled from this bidding process a very strong construction team with the experience and expertise to execute large-scale projects.’

The appointment of the main contractors puts Phase 1 of MBFC on track for completion in 2010, he said.

Tiong Seng Contractors was earlier awarded the piling contract for Phase 1 of the development.

Director Pek Lian Guan said: ‘With Tiong Seng’s recent experience on the site with the piling process, we are off to a head start in ensuring a smooth process for construction through our deep understanding of the project and existing knowledge of the particular dynamics of this site.’

The contracts announced were only for Phase 1. Mr Martin said that design and construction planning is still in progress on Phase 2.

Also still in the planning stage is CapitaMall Trust’s plan to expand Funan DigitaLife Mall. In a statement yesterday, CMT said it is appealing to the Urban Redevelopment Authority (URA) for an ‘alternative waiver scheme so as to achieve a more efficient floor plate for the proposed development of an office block and to minimise disruptions to the retail tenants’.

BT reported on April 28 that CMT had received provisional permission from the URA to erect a nine-storey commercial building and for additions and alterations to the existing mall.

It is understood that the URA waiver CMT is seeking involves the height restriction of nine storeys for the new extension.

CMT said further information will be provided when details are agreed with the URA.

Thursday, May 3, 2007

Sluggish sales put a shiver into Soul

Sluggish sales put a shiver into Soul

* Anthony Klan
* April 26, 2007

THE developers behind the proposed 77-level Soul apartment tower on the Gold Coast have been forced to renegotiate contracts with buyers as sluggish sales cause construction delays.
Juniper director Graeme Juniper said the group had renegotiated "sunset clauses" with an unspecified number of purchasers in the tower, which is just under half sold.

Juniper was to begin building Soul early last year but is yet to commence on the site.

Another delayed skyscraper, Austcorp's Vision tower - which would be Brisbane's tallest building on completion - is also expected to be forced to renew sales contracts.

Austcorp began marketing the tower in 2004, with an expected completion date of 2008.

But construction has not started and Austcorp executive chairman Trevor Chappell said the tower was now expected to be completed by late 2011.

In late 2005 the group extended Vision's sunset clauses by one year to 5 1/2 years, but the tower's 2011 expected completion date means many clauses may need to be renegotiated.

Mr Juniper said renegotiating the Soul contracts had not been an issue, as purchasers were offered new contracts at the same price as original contracts.

"There are a number of different sunset clauses that have been issued depending on the stage of the development," he said. "But sunset clauses are not an issue. We've had a very good response from everyone, so that's not even on the radar screen."

Mr Juniper said "almost $400 million" of apartments in the ocean-front $850 million skyscraper had been sold and the tower had an expected completion date of "about 2010". Juniper is chasing the top end of the market, offering about 300 apartments with asking prices starting at $1.6 million.

In March it said it had engaged Melbourne contractor Grocon to build the tower. Mr Juniper said Grocon was expected to begin work on the site next week.

Austcorp's Mr Chappell said Grocon had also contracted to build Vision. He said Grocon was expected to appoint a sub-contractor to begin earthworks on the site "imminently".

Mr Chappell said the 72-level Vision development had been delayed by slow sales and financing difficulties.

"Because of the size, complexity and duration of the project it's just taken a lot longer than we all expected," he said.

"The major issue is just negotiating the contract with the builder and satisfying the requirements and conditions with the bank consortium which is assisting us with the funding."

Mr Chappell said about a third of the project's apartments had been sold.

"We've got firm contracts at $180 million and there are currently another $27 million (in progress)," he said.

He said the group was not concerned about sunset clauses.

"From our experience in the past and with other projects, typically people will resign because it's an extension of time (to settlement)," he said.

The end value of the project was $930 million with about $600 million derived from the residential component and $300 million from a proposed commercial component.

Listed property group Investa is in due diligence to buy the 28,000sqm office component of the tower for $200 million.

The tower also includes a retail component.

Funds launch Chinese foray

Funds launch Chinese foray

* Florence Chong
* April 26, 2007

CHINA has become a key focus for both the giant industrial property fund Macquarie Goodman and the part Macquarie Bank-owned MMP REIT, which this week made its first foray into that country.
Macquarie Goodman is poised to launch a China fund, in addition to its fast-growing Asian wholesale fund, based in Hong Kong.

"We are looking at a China fund," Macquarie Goodman chief executive officer Greg Goodman said yesterday.

Mr Goodman said its competitors Prologis and AMB, both based in the US, were already active in China.

Mr Goodman told The Australian that the group would focus on China over the next 12 to 18 months.

Macquarie Goodman has Chinese assets under development and is in due diligence worth $US400 million ($480 million) to $US500 million.

Last year the industrial trust launched its Asian wholesale fund, which owns Hong Kong properties, and the fund has grown to around $1billion.

Mr Goodman said Macquarie Goodman, one of the largest owners of industrial property in Hong Kong, was doing due diligence on a number of buildings in Hong Kong.

"We plan to grow the trust to around $2 billion in the next 12 to 18 months," he said.

This week Hong Kong newspapers reported that Macquarie Goodman was looking at three buildings for $HK1.6 billion ($246 million).

The reports said Macquarie Goodman was looking at the Pakpolee Commercial Centre at Mongkok, Silver Fortune Plaza in Hong Kong's Central and Tins Plaza at Tuen Mun.

The Standard said that in late 2005 Macquarie Goodman unsuccessfully offered to buy Tins Plaza for $HK400 million.

Mr Goodman declined to confirm whether the trust was negotiating on these buildings, except to say that it had "different buildings under different stages of due diligence" in Hong Kong. He said the buildings under due diligence were all industrial properties and not retail.

Macquarie Bank no longer owns a stake in Macquarie Goodman, though the two remain joint-venture partners.

In a separate deal, the Singapore listed MMP REIT acquired a 50 per cent stake in a shopping centre in Chengdu in the Sichuan Province for 150 million renminbi ($23 million).

MMP REIT, previously known as Prime REIT, listed in 2005 and now has assets of about $S1.75 billion ($1.4 billion).

The deal would give the trust the first right of refusal to buy a pipeline of shopping centres in China.

Macquarie Pacific Star chief executive Franklin Heng said the transaction marked the beginning of an important and strategic relationship with the Renhe Spring Group. He said he would be looking for assets in Shanghai, Beijing and the top second-tier cities.

But he expected to work with different partners and strategies in each Chinese city because each had to be treated as a separate market.

The trust targets retail assets, but could look at developments and offices.

The Chinese deal was the second cross-border purchase for MMP REIT, which recently paid $S185 million for seven shopping centres in Tokyo.

The portfolio included six shopping centres in prime retail suburbs from Fusion Creation, and the seventh property, still under development, from FLEG International.

Mr Heng said his immediate focus in the next six months was to establish in Singapore, China, Japan and Malaysia.

Fidelity's Chinese back-office a foreign first

Fidelity's Chinese back-office a foreign first

* Florian Gimbel, Hong Kong and Mure Dickie, Beijing
* May 01, 2007

FIDELITY International has become the first foreign fund management group to launch a back-office operation in China, reflecting the country's rise in pulling power as a financial outsourcing centre.
Fidelity's Asia head Brett Goodin said the planned venture in the northeastern port of Dalian could rival the group's outsourcing operations in India, where it employs about 9000 staff.

Fidelity, which manages $US1.5 billion ($1.81 billion) of assets, is hoping to use the Dalian facility to service its mutual funds and pension business in Japan, where it ranks among the biggest foreign money managers.

"I don't know that this venture will be able to provide all of Fidelity's back-office support for this region, but I do feel that it may be able to provide a high level of support due to the strong systems, operational and linguistic skills that are not all available in India or elsewhere," Mr Goodin said.

Fidelity is following Citigroup, which has recently launched a Dalian-based software and technology centre designed to provide outsourcing services.

Chinese economic planners have for some years been trying to encourage the development of offshoring and outsourcing sectors along the model developed by India. But progress has been slow, with executives saying it can still be difficult to attract and retain qualified staff.

Fidelity's move, which is likely to prompt other fund houses to follow suit, highlights its growing focus on the $US1.2 billion Asian mutual fund market, which accounts for only 6 per cent of global mutual fund assets.

It also signals a growing commitment to China.

The US group is now pinning its hopes on a liberalisation of the tightly regulated market for overseas Chinese investments.

Analysts believe the Chinese regulator will soon allow mainland banking clients to invest overseas in foreign equity funds authorised by Hong Kong's Securities and Futures Commission, the territory's watchdog.

The new rules, which could be implemented in the second half of this year, would allow foreign groups to tap China's $US2 billion in bank deposits without forming local fund joint ventures.

As well as enjoying good logistics from its coastal location, Dalian is widely considered one of China's most business-friendly and well-managed cities.

Japanese is widely spoken in Dalian, since the city was ruled from Tokyo for four decades.

India is in for a liquidity crunch

India is in for a liquidity crunch

* Joe Leahy, Mumbai
* January 30, 2007

INDIA'S real estate and stock markets are heading for a correction, with a liquidity crunch in the banking sector likely to accelerate the trend, according to one of the country's most influential bankers.
Indian stock valuations are inflated and property prices in many areas are beginning to exceed what people can afford to pay, said Deepak Parekh, chairman of the Housing Development Finance Corp, which controls India's second largest private sector bank.

"I'm concerned about overheating real estate prices. I'm concerned about overheating of stock markets, that some of the valuations are not justifiable," Mr Parekh said.

"The kind of returns people got in the last two to three years, they would be foolish to expect this year. The Indian story is fully priced."

Foreign investors eager to tap into India's rapid economic growth of above 8 per cent have been pouring funds into stocks and specialist private equity funds investing in property and other sectors.

India commanded nearly half of foreign fund flows into emerging markets tracked by Morgan Stanley last year, with the average market capitalisation last year nearly 50 per cent higher than a year earlier.

In cities such as Mumbai, housing prices have risen threefold since 2004, with residents reporting increases in rent of up to 2.5 times in two years.

"Real estate has to do with affordability. There is no point building houses of Rs10 million ($293,000) and Rs20 million when people don't have the resources to pay for them," said Mr Parekh, whose bank specialises in loans for first home buyers.

Banks such as HDFC and its rival ICICI, the country's largest private sector bank, have been reporting credit growth of more than 30 per cent, as Indians borrow to buy homes, cars and appliances.

But Mr Parekh warned that across the banking sector there was an emerging credit crunch, with loan growth outpacing deposit growth by about 10 percentage points.

"This is a cause of concern because this creates higher interest rates and this creates a slowdown of the economy," he said. "The Government keeps talking of a benign interest rate policy, but with demand for funds in excess of the liquidity available, something has to break somewhere."

He said he expected a correction rather than a crash, with the stock market likely to settle 10-20 per cent below its current levels and real estate price rises to stall rather than collapse.

Chetan Ahya, an economist at Morgan Stanley in Mumbai, said indicators such as inflation and property prices showed the current economic growth rate was unsustainable in the short term.

I'm not bullish on real estate: HDFC chairman Deepak Parekh

I'm not bullish on real estate: HDFC chairman Deepak Parekh

Deepak_parekh_hdfc Foreign investors may make a beeline to invest in the realty sector, the stock may go up and up in both India and other secondary markets, IPO offers may come at every second week, but for Deepak Parekh, the HDFC chairman, all reasons may sound too small and can not really excite him to the core. He is simply not bullish. In an interview he says real estate in India has to do with affordability, be it for residential or business purposes.

In the commercial space the boom is largely due to the IT and ITES sector and these companies don’t buy any property instead 90% of them are actually rented. And on top of this, ever increasing renting rates (Rs. 30-35 per square foot) can actually take away the cost advantage, where businesses may eye China or Vietnam as better alternative.

Contrary to perceived bubble, the chairman feels property prices will go down in the future. He cited example of Bangalore where growing suburbs like Whitefield experienced a dip in commercial and residential property rate between 10-30%.

Gamuda to showcase Horizon Hills in Singapore

Gamuda to showcase Horizon Hills in Singapore

May 2 2007

SINGAPORE: Gamuda Land, a leading property developer in Malaysia, will showcase in Singapore its "best-of-the-best" property development located in Nusajaya, a key area in Johor's Iskandar Development Region (IDR).

The development, called "Horizon Hills", will be showcased to Singaporeans at a public forum on "Real Estate Investment Forum on Malaysia's New Southern Region Growth Corridor: Introducing Horizon Hills @ Nusajaya, IDR" at the Suntec Singapore International Convention and Exhibition Centre on May 12.

The forum will be a platform to share and discuss Malaysia's property investments, in particular residential development, with specific reference to Horizon Hills, the residential core and one of the seven signature developments of Nusajaya, Gamuda said in a statement.

"Horizon Hills is the-first-of- its-kind residential homes crafted to serve the residential needs of Nusajaya within the IDR as well as complementing Singapore's growth strategy, providing an 'alternative quality of life' not readily found on the Island State."

Horizon Hills, launched on March 11, is a 485ha freehold development, comprising about 6,000 units of residential properties with an estimated gross development value of RM2.6 billion, to be completed over the next eight to 10 years.

It is developed by Arapesona Development Sdn Bhd, a joint-venture development between Gamuda Land, the lead shareholder and UEM Land, the master developer of the 9,700ha Nusajaya.

Discussion topics will include an update on Malaysia's property market, in particular the outlook of residential properties in southern Johor and its investment opportunities given the recent relaxation of regulations and incentives for foreign purchase of properties in Malaysia, as well as the benefits of the "Malaysia, My Second Home" programme.

Nusajaya, where Horizon Hills is located, is a key flagship zone in the 2,200sq km IDR, a proposed growth region with key industrial, logistics and commercial centres in the new Southern Region Growth Corridor of Malaysia.

Admission to the forum is free. Reservation and registration can be obtained at telephone numbers 68208000 or 97390810 (Stuart Tan) in Singapore or 07-5112282 or 012-7183865 (Alex Leon) in Johor.

Also, there will be a preview of Horizon Hills at the same venue on May 13. - Bernama

WCT Land to launch RM1.2b Kelana Jaya project in June

WCT Land to launch RM1.2b Kelana Jaya project in June
By Kang Siew Li

May 2 2007

PROPERTY developer WCT Land Bhd, which has gained a strong foothold in Klang, will in June this year embark on a RM1.2 billion commercial development project in Kelana Jaya, Petaling Jaya.

The development, which covers 5.02ha of prime leasehold land, will be WCT Land's second development outside its home base of Klang after Kota Kinabalu.

Dubbed "The Paradigm", the development will consist of a shopping centre with 500,000 sq ft of lettable retail space, four grade A office buildings of 31 to 33 storeys in height and two blocks of 27- and 30-storey small-office-home-office (soho).

WCT Land Group general manager Yong Kiang Keen said it is looking for strategic partners to jointly develop the project that may take between five and six years.

"We are talking to several parties (to form a joint venture to develop the project) and are looking for partners that can create value to the project," he told Business Times.

He declined to name them, but said that the partnership can be either with government agencies, financial institutions or private sector.

WCT Land will hold the majority stake in the venture.

"Nevertheless, a joint venture is only an option. Either way, we will definitely be going to the market by the middle of this year," he said.

The Paradigm project will be built on land owned by WCT Land, which is located directly opposite the existing Giant hypermarket in Kelana Jaya.

Yong said the group will first launch the office buildings and retail portions of the project.

Like all its previous commercial developments, WCT Land will keep some units of its office buildings for future rental purposes in line with the group's plans to increase its recurring income.

The development will also see an upmarket neighbourhood shopping centre, much like Bangsar Village and Bangsar Shopping Centre in Kuala Lumpur size-wise.

WCT Land executive director and chief operating officer Lai Yeng Fock said The Paradigm will offer high-quality office space and add value to the entire Kelana Jaya and surrounding areas.

"There is a shortage of good quality office space in Petaling Jaya. Most of the existing office buildings are old, and not top-tier grade A type," he said.

Lai is confident that the project will get good response due to the fact that more companies are moving towards the fringe of the city and Kelana Jaya will fit nicely in their plans.

The Paradigm is one of WCT Land's major projects for 2007. It recently opened sales for BBT-One, a RM145 million commercial complex in Klang's Bandar Bukit Tinggi 1.

Lai said the group will make its first foray outside Malaysia in Vietnam with its first mixed-use property development scheduled in Ho Chi Minh City at year-end.

It plans to build an integrated development of retail, commercial and residential properties on a piece of state-owned land ranging in size from 4.05ha up to 12.2ha in Ho Chi Minh City.

Lai said the group has already submitted its proposal to the relevant authorities and is now awaiting their approval.

It expects to be issued with a certificate of ownership and land use right and begin construction by year-end.

"Once the approval is granted, we will proceed to form a joint venture in which we will take a majority stake. We have already identified a local partner there," said Lai.

Meanwhile, Lai said the group expects its performance this year to be "positive", driven by the sale of its residential properties in Kota Kinabalu and commercial properties in Bandar Bukit Tinggi 1.

It posted a smaller net profit of RM46.9 million on revenue of RM231.7 million last year.

So far, it has some 162-182ha of undeveloped land in Klang, which will keep it busy for another six to seven years.

Still, the group is on the lookout to expand its landbank in the country.

"However, we want to go to areas that have immediate development potential rather than to buy some land and hang on to it until it is able to get a good price. We are looking for both commercial and residential developments," said Lai.

God will not underwrite this deal

God will not underwrite this deal

Interest may be banned in Muslim countries, but self-interest is still very much alive, in a thriving consulting industry to ensure that financial transactions are structured in an Allah-friendly way. Sheikh Nizam Yaquby is one of the world’s most prominent “scholars” of Islamic bonds, deciding, with a bit of semantic and theological wrangling, if deals are kosher can happen. Sukuk, or Islamic bonds, must be fully collateralized with income generating assets that provide an equivalent to interest on conventional debt. Sanctioned Islamic assets are expected to triple by 2015 to $2.8 trillion worldwide, far outpacing the international bond market and US junk debt market.

Yaquby sits on advisory committees of 40 financial institutions, and with annual retainer fees averaging up to $100k a year (and considering Yaquby probably makes well above the market rate), the guy is raking it in. May his no interest savings account be praised.

Trying to adhere to Shariah creates a rather tenuous market dynamic (aside from the fact that “Shariah compliance” takes about 2-3 weeks), where different “interpretations” of Shariah can void deals. Many disagreements over the validity of Islamic deals occur every year. Here’s one example, from Bloomberg:

Some Shariah rulings don't work around the world. Suria Capital Holdings Bhd., a Malaysian state-run property developer, last month sold 80 million ringgit ($23 million) of sukuk that wouldn't be accepted in the Persian Gulf. Suria sold port concession rights to two Malaysian banks arranging the bond sale. The banks sold the concessions back to Suria at a higher price and the money will be passed on to bondholders over 10 years. The sukuk, approved by advisers including Mohammed Bakar, uses a contract called Bai Bithaman Ajil which scholars in the Gulf say doesn't comply with Shariah because the sale includes a profit margin that is akin to an interest payment.

Imagine if Steve Schwarzman could just point to deals (TXU) and void them, just through metaphysical obfuscation. Then imagine, like most Blackstone underlings (and several members of the press) that what Steve Schwarzman said was the word of GOD. Despite Bonderman’s reaction (it would set him off more than a question about global warming), creating superfluous arbitration mechanisms and more ways for financial transactions to become intertwined with religion and politics doesn't exactly seem like a positive trend in the market.

Malaysia Beach Property is a Bargain

Malaysia Beach Property is a Bargain
posted by Nubricks on April 19, 2007 | More articles about: Malaysia Property, Vacation Property

Beach property in Malaysia is HOT and I’m not just talking about the weather! Buying beachfront property in Malaysia offers sun-worshippers searching for a more permanent sunspot the chance to invest in five star luxury real estate at two star prices. It may sound like a dream to most people but Malaysia offers overseas buyers wanting property in a beach resort setting a low-cost option but also entry into the rapidly growing South East Asia real estate market and also happens to have some of the best beaches in the world (something I can vouch for personally!).

beach property malaysia
Malaysia, a Luxury Beach Resort Alternative

Malaysia may not be the obvious choice when you think of dreamy tropical beachfront resorts but accounts for 40% of the country’s land mass the Malaysian penisular’s extensive coastline and sprinkling of off-shore islands offers sun-seekers 4,675km of pure white sandy shorelines with views over the South China Sea and the straits of Malacca across to Sumatra on the western coast of its peninsula. Blessed by a year round warm climate Malaysia is well on its way to becoming home to the next generation of deluxe beach resorts. With a reputation for impeccable service, friendly locals and a standard of living to rival some of Europe’s major cities, beach resorts in Malaysia are fast developing into significant tourism destinations.

beach property malaysia

Set at the heart of South East Asia, Malaysia is Truly Asia at its best with a diverse, rich fusion of cultures, here you can experience fast-paced, modern city living or retreat to the picture-perfect sunsets of boutique island resorts. As this newest of travel hotspots hit Europe’s tourist radar and you add in the rapid economic Asia is currently experiencing the stars are aligning to create a developers heaven. Malaysia’s future investment potential lies in its wealth of tourism attractions from the bright lights, sights, sounds and smells of the city to the outstanding natural beauty of centuries old rainforests, majestic mountains, the wonder of Borneo’s dung caves to idyllic beaches and unspoilt dive sites to rival the Barrier Reef.
Bargain Beachfront Real Estate in Malaysia

dream malaysia property Savvy city expats on contract in Hong Kong, Singapore and Malaysian capital Kuala Lumpur have been making the most of this region’s prime beachfront real estate, holidaying in Thailand, Malaysia and Vietnam for years. The rise of Thailand and Malaysia in particular has been notable as cut-price flights to Asia make it a great stopover on route to Australia. Malaysia’s location outside the “ring of fire”, spares it from the massive devastation from earthquakes, volcanic eruptions and tsunami’s which destroyed some of Thailand’s most valuable beachfront property in 2005 and despite making great strides re-developing coastal tourist resorts remains at constant risk in the future from natural disaster. Investing in property on the beach in Malaysia holds less risk and now greater reward as the country seeks to actively encourage foreign investment with buyer friendly property laws, tax incentives and fast-track licence approval to entice international developers and measures to foster an environment to fuel a booming real estate market.

island property malaysia

From luxury island retreats off the tip of Malaysia’s west coast, the ultimate dive destinations close to Malaysia’s East Coast and the eco-friendly appeal of the Bornean states of Sarawak and Sabah the options for buying beach front property in Malaysa are plentiful. The piece de rĂ©sistance however is the weekend getaway resort of Sepang, the newly coined Malaysian ‘Gold Coast’ and destined to become the tropical showcase of choice. Home to Malaysia’s F1 grand prix circuit, Sepang is highly accessible from capital Kuala Lumpur and with 22km of beach frontage facing the sheltered waters of the Straits of Malacca is the development site for a master planned global village. Nearby holiday favourite, Port Dickson, where many Singaporeans have invested in holiday homes is now also on the up with high profile projects also making the news.

IIB acquires $98 million real estate in Munich

IIB acquires $98 million real estate in Munich

MANAMA: Bahrain-based Inter- national Investment Bank (IIB) announced its acquisition of a high-quality portfolio of commercial real estate properties in Munich, Germany, valued at $98 million.

IIB is taking a 95 per cent stake in the portfolio, which is comprised of three commercial properties, which are rented to a blue-chip German company.

They are strategically located three kilometres from Munich city centre, where the bank and its co-investors can effectively leverage continued growth and strong demand for office space in the German commercial property sector - particularly in this key commercial and production hub.

In making the acquisition, IIB has again partnered with a renowned asset manager with extensive experience in the structuring and management of Sharia-compliant real-estate investments in Europe, and who holds the remaining 5pc share ownership in the portfolio, the bank said.

The investment, which marks IIB's fourth European investment in total and its third real estate acquisition in Europe, is aimed at providing the bank's GCC-based investors with access to the buoyant German commercial property market.

IIB said that the property market continues to expand at a rapid rate and is expected to deliver opportunities for both healthy returns as well as diversification.

"We are pleased to offer yet another compelling opportunity to our clients through our investment in the European property market," said IIB chief executive officer Aabed Al Zeera.

"We have already developed a strong track record for investing in highly profitable real estate transactions both in Europe and in the GCC and we believe the commercial real estate sector in Germany offers attractive growth potential.

"Working together again with our partners, an established name in European asset management, we are confident that we are well-positioned to benefit from strong market dynamics that exist today in Germany and which are expected to continue for some time to come.

"Munich is one of the largest cities in Germany and a manufacturing capital in Europe, and studies have found it to be the city with the best economic prospects in Germany as it witnessed the all-time highest transaction volume last year with a growth of 128pc over 2005.

"The letting market in 2006 has grown by a substantial 13pc over the previous year. This clearly reflects strong demand from tenants and we believe that those properties included in our portfolio will allow us to realise maximum gains from these positive trends.

"IIB, through our strong global network of contacts, continues to gain access to high-quality investments, which are capable of providing superior risk adjusted returns to our investors.

"Selecting the right deals and working with the right partners to maximise value is critical to the ongoing success of IIB and to the enhanced value we continue to provide to our GCC-based investors and shareholders on an ongoing basis.

"Real estate continues to be an attractive asset class and we are well placed to offer a broad and well balanced portfolio of properties - both from within this region and other strong performing markets."

The projected Internal Rate of Return (IRR) on the investment is in excess of 10.12pc p.a. over an investment horizon of five years, with a cash yield of 7pc p.a.

IIB's executive director Mohamed Hadi Mejai said that the bank continues to seek out new and innovative ways to deliver real value for its clients through the sourcing and development of high quality Shari'ah-compliant products.

"We have had much success to date in offering numerous opportunities in diverse asset classes, industry sectors and countries, and we believe that our latest investment in the German property sector reflects the quality, strength and diversity of the investment avenues which we open up to our investors," he said.

"Investments in real estate in a variety of countries and sectors meet our clients' demands for investing in tangible assets with strong growth potential and opportunities for appreciation.

"The success of our previous entry into the French commercial property market last year has so far proved to have been very good, and we are confident that we are also investing in the German market at the right stage of the property cycle."

Universal comes to Dubai

Universal comes to Dubai

DUBAI: Hollywood-based Universal Studios will develop a theme park in the Gulf emirate as part of a $2.2 billion project, offering adventures based on films such as King Kong, a state-owned Dubai firm said.

Universal Parks & Resorts, which operates similar theme parks in Hollywood, Florida and Japan, will develop the park and desert area outside Dubai, Tatweer, a company owned by the ruler of Dubai said.

The park will be one of the largest in the world, covering 6.5 million square feet.

Shaikh Mohammed bin Rashid Al Maktoum owns Tatweer through his Dubai Holding.

"The investor-support environment and the convenient geographical location ... all contribute to making Dubai our location of choice for our first branded theme park in the region," Universal Parks & Resorts chairman Thomas Williams said.

MMC completes RM9.3b Malakoff buy

MMC completes RM9.3b Malakoff buy

May 3 2007

MMC Corp Bhd says it has completed the RM9.3 billion purchase of Malakoff Bhd's businesses, with Malakoff shareholders getting a windfall under a capital repayment scheme.
"Following the completion of this deal, Malakoff will be a cash-only company and will distribute to its shareholders RM10.35 per share through a capital repayment exercise," MMC said in a statement.

Malakoff will soon be delisted from the stock exchange, the group added.

The deal was the largest leveraged buyout ever undertaken in Malaysian corporate history, and was also the largest completed merger and acquisition exercise to date, MMC claimed.

"We are very pleased to have reached this distinctive point of the exercise. We believe MMC is well on its way to becoming a major utilities and infrastructure group with a global reach," group chief executive Feizal Ali said in the statement.

MMC bought Malakoff's businesses through its 51 per cent-owned Malakoff Corp Bhd, which is the new name for Nucleus Avenue (M) Bhd.

The remaining 49 per cent Malakoff Corp stake is held by key local and foreign financial institutions.

Malakoff Corp is the largest independent power producer in the country, with a potential effective generation capacity of over 5,000 megawatts (MW). This represents 24 per cent market share of the generation capacity in Peninsular Malaysia.

MMC said the debt portion of the acquisition was funded entirely through the issuance of Islamic bonds, in line with the call to promote Malaysia as a hub for Islamic debt securities.

In total, RM7.9 billion of Senior and Junior Sukuk (Islamic bonds) were raised by Malakoff Corp, which were fully taken up by local and foreign financial institutions and investors.

"Upon completion, the group's debt will be higher at the consolidated level.

"However, group debt servicing capacity remains comfortable as the majority of the borrowings are project finance-based at the level of the operating subsidiaries, which generate a steady stream of cash flows and are self-sustaining," Feizal said.

Malakoff is on a global expansion drive, particularly in countries that are making significant investments in infrastructure development.

Feizal said Malakoff's expansion overseas, which began in a significant way in 2003, has achieved considerable success.

In 2005, Malakoff secured equity interest in a RM9 billion Shuaibah independent water and power project in Saudi Arabia, together with other consortium partners.

Building on that footprint, the company secured an RM880 million award to develop, construct and operate a seawater desalination plant in Algeria in partnership with a subsidiary of Hyflux of Singapore.

Last November, Malakoff and other consortium members acquired an interest in the Dhofar Power Co in Oman, which holds a 20-year concession for the privatisation of the Salalah Power System.

Feizal said these international projects provide Malakoff Corp with an excellent platform for future expansion in the Middle East and beyond.

More Aussies seen holidaying in Malaysia

More Aussies seen holidaying in Malaysia

May 3 2007

MELBOURNE: Tourism Malaysia expects a big boost in the number of Australians who will holiday in Malaysia because of a “significant effort” in its marketing campaigns and roadshows Down Under.

A total of 277,125 Australians visited Malaysia last year, a 4.4 per cent increase over the previous year, Tourism Malaysia’s deputy director general Razali Mohd Daud said yesterday.

“The indications from Australia are positive and we hope this upward trend will continue,” he was addressing a corporate luncheon attended by about 60 Australian travel trade industry leaders and media representatives.

Australia is an important tourist generating market and a huge effort is being made to sell Malaysia as a tourist destination to Australians, he said.

“Our research indicates 80 per cent of holidaying Australians are looking for good accommodation and facilities within an unspoilt natural setting.  “Malaysia has just what it takes to satisfy their needs,” he said.

Razali said Malaysia’s attractions are not restricted to nature-based products.

“Our cultural heritage, delectable cuisine, colourful festivals, international-class hospitality services and shopping places are enough to make Malaysia a one-stop holiday destination,” he said. — Bernama

TA Ent plans RM1b real estate project in KL

TA Ent plans RM1b real estate project in KL
By Chong Jin Hun

May 3 2007

TA Enterprise Bhd (TAE) will draw from its hotel management experience abroad to establish and maintain an estimated RM1 billion real estate project comprising mainly serviced apartments in Kuala Lumpur.

On the drawing board are three towers - A,B, and C - to be collectively called "Idaman Bintang". It will sit on a company-owned 1.2ha freehold site fronting Jalan Imbi near the Dorsett Regency Hotel.

Blocks A and B, says TAE executive chairman Datin Alicia Tiah, have been earmarked for recurring income-generating serviced apartments.

The developer plans to retain tower A, which will be run like a hotel. Block B, meanwhile, is for sale at a minimum RM800 a sq ft, but TA will earn management fees for the property's maintenance.

The strategy may be replicated in other countries like Vietnam.

The established stockbroker, which owns the Radisson Hotel in Sydney, Australia, will develop block C of Idaman Bintang at a later stage to allow surrounding properties to appreciate in value.

"Idaman Bintang should be able to reach RM1 billion. Tower A will be kept for recurring income, but we want to manage block B so that we can earn the fees.

"The two blocks will only have food and beverage facilities but not retail. I don't want to build block C now," Tiah told Business Times in Kuala Lumpur.

Tiah did not specify other details like the built-up and timing of the project, which will be solely undertaken by TA. However, she said tower B will be the first to be launched among the three entities.

Going forward, TA's potential initiative in Vietnam may be pursued via joint ventures. "It is not so soon. I am open to ideas and partnerships," she said.

Other real estate jobs by TA include the RM294 million "Idaman Residence" luxury condominiums opposite the prestigious Petronas Twin Towers, and the approximately RM800 million "Seri Suria" mixed project in Bandar Sri Damansara, Kuala Lumpur.

TA's emphasis on real estate since 2002 allows the company to reduce dependence on income from its stockbroking and financial services.

Property development and investment constituted 40 per cent or RM140.3 million of TA's RM354.5 million revenue in the fiscal year to January 2007, according to its filings to Bursa Malaysia.