Andaman optimistic on earnings from Perak project

Tiew with a scale model of the company’s Upper East Tiger Lane high-end apartment project.

SUBANG: Andaman Property Management Sdn Bhd, which will be launching its Upper East @ Tiger Lane high-end apartment project in Ipoh, Perak, this month, expects the development to start contributing to earnings from 2016.

“Although construction of high-rise developments will usually take 36 months to complete, we’re looking to build and complete earlier,” said Andaman managing director Datuk Seri Dr Vincent Tiew at recent a press conference.

He said the project would be launched on Dec 14, with construction slated to begin in January.

With a gross development value (GDV) of RM330mil, Upper East @ Tiger Lane features a total of five blocks comprising 529 units. The company invested RM5mil on landscaping.

The units range from 1,162 to 1,787 sq ft and are priced from RM400 to RM500 per sq ft.

On the requirement that foreigners now need to pay a minimum RM1mil to acquire property in Malaysia, 

Tiew said foreigners with the Malaysia My Second Home (MM2H) status were allowed to buy property over RM250,000 in Perak.

“We expect 5% of our buyers to comprise foreigners,” he said, adding that he expected the project to be almost fully taken up within six months of its launch.

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IOI Prop eyes Taipei 101

NG BEI SHAN beishan@thestar.com.my

PETALING JAYA: Property heavyweight IOI Properties Group Bhd (IOI Prop) is making a bold move into the Taiwan real estate as it proposes to buy a stake in iconic skyscraper Taipei 101 for RM2.74bil (NT$25.14bil) at a time when the ringgit is weakening.

The company acknowledged risk factors like fluctuations in currency exchange rates and interest rates that accompanied the proposal on top of any potential political, economic and regulatory changes.

The Taiwanese dollar has strengthened against the ringgit by 3% in a year.

The hefty price tag of the 37.17% stake in Taipei Financial Center Corp that owns Taipei 101 is about one-third of IOI Prop’s market cap.

An analyst told StarBiz: “IOI Prop’s move to seize the rare opportunity in the global iconic building is justified by the estimated rental yield of more than 5%, which is decent.”

Knight Frank Research said in a report earlier this year that the average prime yield for Grade A offices in Taipei was 2.25%.

The opportunity to acquire the stake emerged as the seller, Taiwan’s food giant Ting Hsin International Group, was under pressure to divest its stake amidst food scandals in the island.

Ting Hsin is the second largest shareholder in Taipei Financial Center Corp after Taiwan’s government-linked entities that control some 44.35%.

Taiwanese media reported that financial firm CTBC Financial Holding Co, which already have a 7% stake in Taipei Financial Center Corp, was interested in the stake.

However, IOI Prop managed to reach an agreement with Ting Hsin, which refused to give up the prized possession a month back.

The acquisition required approval from the Investment Commission of Taiwan and was expected to be completed by the first quarter of 2015. Market talk was that IOI Prop was looking into establishing a real estate investment trust in the long-term and the proposed acquisition could be a way to position itself.

The analyst, however, was neutral on the deal as it would not have much impact on the stock in the near-term.

“The potential comes from the long-term prospects of Taipei 101 but the risk is that the group is entering a new market,” she said.

Most of IOI Prop’s investment properties worth RM2.46bil are in Malaysia except for IOI Palm City (RM303.45mil) in Xiamen, Fujian, China.

IOI Prop’s investment properties are worth RM2.84bil versus RM3.09bil for its land held for property development.

Another analyst was more cautious as she opined that acquisition might be earnings dilutive and that the group could have allocated the money for landbanking purposes.

The purchase consideration, which is expected to be funded via internally generated funds and/or bank borrowings, could raise IOI Prop’s net gearing from 0.16 times to 0.4 times.

The firm registered cash and cash equivalents of RM531.01mil and borrowings of RM2.06bil for the quarter.

For its first quarter ended Sept 30, property development accounted for 82% IOI Prop’s operating profit while property investment made up 11%.

In the quarter, property development contributed RM311.3mil to the group’s topline and RM124.3mil to its operating profit compared to property investment which contributed RM28.5mil and RM17.1mil, respectively.

The property developer said the proposed acquisition provided an opportunity for stable rental income and potential rental accretion in a well-located and well-tenanted landmark building in the central business district of Taipei.

“Furthermore, there is potential capital appreciation due to the strategic location of the property,” the company added.

The building houses a number of well-known companies including Google Taiwan, Taiwan Stock Exchange Corp, KPMG and BNP Paribas and achieved an occupancy rate of 96%. It is also served by the MRT Xinyi Line since the fourth quarter of 2013, which had improved accessibility and accelerated the take-up rate of space, according to DTZ Research.

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Sekinchan’s first high-rise condominium

The One Residence@Sekinchan development that rises over this sleepy fishing village known for its paddy farming is poised to boost economic activities here.

By YVONNE YOONG
yvonneyoong@thestar.com.my

THE coastal town of Sekinchan which is known as a hub for eco-tourism heralded by emerald green paddy fields and rustic fishing villages woke up to its maiden high-rise development named One

Residence@Sekinchan in Sabak Bernam, Selangor that integrates high quality city living with serene countryside ambiance.

Located in the heart of Pekan Sekinchan and situated about 28km from Kuala Selangor, this development representing the first-ever condominium developed in a small coastal town in Malaysia was undertaken by

Bina Variamas Development Sdn Bhd, a subsidiary of KM Land Group.

One Residences@Sekinchan comprises 286 condominium units.  It is complemented by seven units of three-storey shop offices. Tower A, with its 15 storeys that has been named “Ally” was launched in 2011. To date, it has recorded sales of over 100 of its units ranging from 1,000sq ft to 1,200sq ft. With the key handover taking place in November 2013, Tower A is now sold out to owner occupiers in the form of local residents who also purchased the units as holiday homes while investors have also purchased the remaining units priced at around RM360 per sq ft or from RM350,000.

Known for its lively fishing village, abundant paddy fields and fresh seafood, the tourist destination of Sekinchan welcomed its first high-rise condominium named as One Residence@Sekinchan in this peaceful small coastal town.

 Having obtained the Certificate of Completion & Compliance (CCC) this August, the 178 units at Block A have vacant possession and ready for moving in.

Following the successful take-up rate of ‘Ally’, over 70% of the 102 units at the 18- storey Block B with built-up areas ranging between 1,200sq ft and 1,400sq ft named as ‘Bliss’ which will be completed by mid-2015 has already been sold.

“One Residence@Sekinchan has now become a sought-after residence as it integrates a high quality lifestyle within the development while enabling residents to enjoy the pleasant countryside environment,” said KM

Land Group founder and managing director Kee Lian Yong.
The leasehold development spread across 3.95 acres (1.59 ha) of land that comes with a GDV (gross development value) of approximately RM120mil is located in the picturesque countryside overlooking the

Straits of Malacca. He said that it will form a new eye-catching landmark and will spur economic activities for the community, given the potential of the low-built village famous for being a major rice producer in the central Peninsular of Malaysia and a pivotal supply point for seafood.

The One Residence@Sekinchan boasts panoramic views of paddy fields in the distance and that of the Straits of Malacca.

 This first of its kind development in Sekinchan will be boosted by 24-hour guarded security facility coupled by full condominium facilities which include a half-sized Olympic infinity swimming pool, jogging path, children’s playground, badminton/basketball multipurpose hall and a fitness gymnasium. There will be three-storeys allocated for car parks and each unit will come with a free car park. The maintenance fee will be priced at an estimated 15 sen per sq ft per month.

According to Kee, he undertook this development with PKNS (Perbadanan Kemajuan Negeri Selangor) and the Selangor State Development Corporation because of the value creation the project could generate for the community here while establishing high quality residences.

He added that this was a consolidated effort to kick-start the transition of a normal agriculture, fishing village towards the path of urban development using the instruments of value creation, sustainable development and quality enhancement.

Established in 2010, KM Land Group’s aims include bringing integrated commercial and residential developments to suburban areas in its attempt to improve social values and contribute to the economic progress of suburban areas.

These include developments such as One Kesas in Klang and SB Perdana, Sabak Bernam in Selangor and Sungkai Perdana in the old town of Sungkai.


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Majestic show village launched

Buyers taking a closer look at the proposed development plan for the township.

With a vision of “Creating Tomorrow & Beyond”, property developer EcoWorld Development Group Berhad (EcoWorld) unveiled its first Klang Valley show village.

The event, held recently, attracted more than 1,500 visitors, giving them a taste of how its future township development will look like.

Spanning over 12ha, the EcoMajestic Show Village is situated in EcoWorld’s 440ha, RM11bil strata-titled fully-gated and guarded EcoMajestic township in Semenyih.

The show village consists of the EcoWorld Gallery, a 2.1ha Swan Lake and a collection of 10 different showhouses spread across 0.5ha.

The 2,787sq meter EcoWorld Gallery consists of office space with eight-metre-high ceiling to create a feeling of grandeur. It also has function rooms, a lounge area, a coffee corner and a special theatre room.

Its green features include a rain water harvesting system, LED lighting and a design that maximises natural sunlight into the gallery. The township also has a 40ha of green zones and recreational area.

Despite the rain, guests, mainly buyers and their family members, thronged the showhouses to see what their future home might look like.

They were treated to a 3D holographic show that was projected over the Swan Lake.

 The video portrayed the essence of the EcoMajestic development and concluded with a message of appreciation from its management and staff.

EcoWorld president and chief executive officer Datuk Chang Khim Wah said the group had achieved another milestone with the opening of the show village.

“The team has been looking forward to this day for a long time since the project was first conceptualised more than a year ago,” he said.

Chang said they had incorporated new elements to reflect the group’s vision.
The group has approximately 2,000ha of land bank with a potential of RM47bil gross development value (GDV).

“We can finally showcase this masterpiece that we have been talking about,” he said.
Developments will be launched in phases. Cradelton Precinct, its first phase, which comprises terraced houses was launched in May.

Since then, bungalow lots, cluster homes and semi-dee homes have been introduced to the market.
The Merrydale Precinct is scheduled to be launched this month. The project comprises 586 terraced homes with built-ups from 201sq metre and prices from RM688,000 onwards.


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Axis REIT net profit at RM40mil

PETALING JAYA: Axis REIT Managers Bhd saw its net profit rise 9.4% to RM40.1mil in the third quarter 

ended Sept 30 from RM36.7mil a year earlier on revaluation gains. #newsbanner td { border:1px solid #ccc;font-size:0px;}

Consequently, the industrial and office-based trust’s earnings per share rose to 8.65 sen from eight sen previously, despite registering a decline in revenue of 6.2% to RM33.12mil from RM35.31mil.

In a filing with Bursa Malaysia, it said it had proposed the third interim income distribution of five sen per unit, which would include a non-taxable portion of approximately 0.84 sen per unit derived from the utilisation of gain on disposal of Axis Plaza, capital allowances and tax exempt profit income.

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Outcry over GST on property unnecessary

Association: Real estate prices depend on demand and supply

KUALA LUMPUR: The hullabaloo surrounding the impact of the goods and services tax (GST) on the property sector is unnecessary as it will be a one-off event and given time, the market will find its own level based on demand and supply, said four property consultants.

Association of Valuers, Property Managers, Estate Agents and Property Consultants (PEPS) president Datuk Siders Sittampalam said it was impossible for anyone to be specific about the quantum of increase in house prices as a result of GST.

“It is about 4% but it will be a one-off thing so house buyers should not be overly excited about it,” he said.

“By and large, there will be an immediate impact in the first couple of months but after that the market will find its level as a result of demand and supply,” said Siders during a press conference at the 24th National Real Estate Convention themed Real Estate in 2014: Issues, Perceptions and Review.

Siders is also property consultancy PPC International Sdn Bhd managing director.

Siders: ‘It is about 4% but it will be a one-off thing so house buyers should not be overly excited about it.’

 There seems to be “a bit of confusion” with regards the GST with differing opinions with regards the quantum of increase on the different property segments, said PEPS vice president Foo Gee Jen.

He said the GST would play a part in raising prices but in the long run, it was the consumer who would decide whether he wanted to buy or not.

“If the consumer is not going to pay, the developer will have to absorb not only the GST but others costs as well. However, in the immediate three months or so after April 1, when the GST is imposed, there will be an immediate impact.”

Foo, who is also C H Williams, Talhar & Wong Sdn Bhd managing director, said he expected prices of the residential segment to increase by 4% and commercial developments by more than 6%.

A greater concern, said Foo, would be the commercial sub-segment.

A couple of weeks ago, it was reported that the Customs Department expected a 0.5% to 2% increase in house prices while the Real Estate and Housing Developers’ Association Malaysia maintained a 2.6% increase.

Organising chairman of the event Datuk Seri Mani Usilappan suggested property buyers to consider the secondary market if they want to avoid the GST element.

“About 80% of residential transactions are in the secondary market so if they do not want to pay GST, they should consider the secondary market,” Mani said.

On the overall high property prices, Mani said prices would dip if the economy did not perform, as there was strong correlation between the property market and the gross domestic product.

“Besides, the high prices are confined to the Klang Valley.

“The property markets in Ipoh and Johor Baru have been sleeping for a long time. It is only of late that prices are increasing.

“The thing is 90% of the attention is on the Klang Valley while 90% of the population are outside the Klang Valley,” said Mani.


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Rehda: GST will push up home prices by 2.6%

But it says still too early to determine exact increase

BY ISABELLE LAI
isabellelai@thestar.com.my

PETALING JAYA: Home prices will rise by about 2.6% once the goods and services tax (GST) comes into play, said the Real Estate and Housing Developers’ Association Malaysia (Rehda).

The chairman of the association’s task force on accounting and taxation, Datuk Ng Seing Liong, said that the calculation was based on its consultations with industry experts and member developers.

Rehda’s 2.6% estimate differs from that of the Customs Department, which expects the GST to have an impact of between 0.5% and 2% on house prices, assuming there’s no change in supply and demand conditions.

Ng said the association was in full support of the GST and concurred with Customs GST director Datuk Subromaniam Tholasy, who had said that land did not incur the 6% GST rate.

However, he said land was by no means the largest cost component in property development.

“As our calculation clearly spells out, the construction cost, which constitutes 46% of the total development, is not only the largest component but also the component which will attract the GST of 6%,” he said in a letter to StarBiz.

He said the GST on this component would inevitably lead to an increase in house prices.

Appending calculations for a housing unit originally priced at RM400,000, Ng said the price post-GST would be around RM410,560.

Under the 46% construction component, costs were broken down into non-service taxable and service taxable segments, representing 44%, or RM176,000, and 2%, or RM8,000, respectively.

Under the non-service taxable segment comes items such as cement/concrete, steel, bricks and sand, while the service taxable segment includes tiles and fittings/sanitary. Under the existing sales and service tax, no tax is imposed on the non-service taxable category, while the service taxable category has a tax of up to 10% imposed on it.

Post-GST, Rehda’s calculations showed that the non-service taxable cost had gone up to RM186,560, while the service taxable cost remained at RM8,000.

It maintained the same cost estimates for other items, including land (15% or RM60,000), infrastructure and pre-development works (10% or RM40,000), professional fees and marketing costs (6% or RM24,000), finance costs (6% or RM24,000) and profit (17% or RM68,000).

Ng said Rehda also disagreed with Subromaniam, who had said that developers could easily absorb cost increases as their margins were around 30%.

He said it was currently impossible for developers to earn up to a 30% profit, as most development costs were on the rise, along with various capital contributions and charges imposed on developers.

“On average, as tabulated in the calculation, developers, most of which are public-listed companies, are only making around 17% at best,” he said.

However, Ng said it was still too early to determine the actual house price increases post-GST, as Rehda was still in discussions with the Government and there appeared to be many more issues to be ironed out.

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