Real News‎ > ‎2014‎ > ‎March 2014‎ > ‎

Weekly Malaysia News(15th March - 21st March 2014)

19th March 2014

Australia Among Top Destinations For Chinese Property Investors: Media

SYDNEY: Australia has become one of the most popular destinations for Chinese property investors, with nearly A$6 billion (RM17.8 billion) invested by Chinese buyers in the local real estate market in the last financial year, China's Xinhua news agency said, citing local media report on Monday.

Chinese nationals are estimated by some financial institutions to be buying around 12 per cent of the country's new homes, according to the Australian Broadcasting Corporation (ABC).

The Australian Federal Parliament's House Economics Committee is reviewing the foreign investment laws amid fears that the local property market prices are being pushed up by overseas investors.

Kelly O'Dwyer, who chairs the House Economics Committee, told the Radio National Breakfast on Monday that the inquiry into foreign investment rules would determine whether they are still achieving the purpose, which ensures that overseas money adds to Australia's housing stock and does not push up prices for locals.

Meanwhile a report by global financial services firm, Credit Suisse, predicted that by 2020, about 18 per cent new Sydney homes would be bought by Chinese buyers while in Melbourne new home market, Chinese buyer would grow to 14 per cent.

Up to A$44 billion (RM130.49 billion) of property investment is expected from Chinese investors in the seven years to 2020, the report says.


20th March 2014

RHB Research Maintains 'Overweight' Call On Construction Sector

KUALA LUMPUR: RHB Research has maintained its "overweight" call on the construction sector on strong prospects, largely backed by the RM73 billion Klang Valley Mass Rapid Transit (MRT) project, said RHB Research.

In a note, the research firm said the mammoth project would keep the industry players busy until 2021, with the RM23 billion Line 1 currently under construction, and Lines 2 and 3 worth RM25 billion each under planning.

RHB Research said its channel checks substantiated a news report by a local daily which stated that Line 2 of the Klang Valley MRT project has been approved by the government.

"Our source told us that the Cabinet has indeed approved Line 2 and the appointment of the MMC-Gamuda joint venture as the project delivery partner," it added.

However, neither the government or Mass Rapid Transit Corporation Sdn Bhd, have yet to issue any official statements on the Line 2 project.

While Cabinet approval for the Line 2 was earlier expected to come by the first quarter of 2014, RHB Research said the market will still react positively should it finally happen.


Local property stakeholders to be more cautious in 2014

KUCHING: Sarawak property industry players, buyers and investors are expected to be more cautious this year in light of the developments which had undermined the property market in 2013.

According to CH William Talhar Wong & Yeo Sdn Bhd (WTWY) in its Sarawak Property Bulletin, the proposal by the housing ministry to further increase the current real property gains tax (RPGT) by another five per cent in order to arrest rising property prices to cool the property market without affecting genuine homebuyers, could further dampen the industry’s efforts to boost sales.

The recently published report stated that the recent rise in fuel prices will have an inflationary effect on the whole economic spectrum.

“Reported rising costs in building materials, labour shortage and wages will make it difficult to keep houses down and the decrease in spending power against inflation and a weak Ringgit will make house purchase unlikely,” the report explained.

With the property market remaining jittery, the report noted that it is very much a buyer’s market with buyers adopting a more “wait-and-see” stance regarding property purchases.

“It is the general concensus amongst industry players that the situation would likely continue into the coming year or so,” it added.

However, there is still much construction activity going on as a result of the past years’ prolific growth in this sector.

The report highlighted that certain areas in Sarawak ear-marked under the regional development plans of the 10th Malaysia Plan, namely SCORE, would experience unprecedented growth due to the implementation of mega projects.

These include towns such as Bintulu and Mukah which would stand to benefit greatly and the impetus would drive up demand and have a positive impact on property developments in these areas.

“That said, the property market in Kuching is still young and vibrant and continue to hold great potential for future growth,” the report stated.

As an essential need, it noted that property demand will not be abated but rather, just delayed during certain periods after which the so-called pent-up demand will correct itself eventually.

The report also explained that properties fulfilling the criteria of being near developed infrastructures and facilities, having strong property conceptual differential and sweet in terms of pricing (less than RM500,000) and size of at least 1,000 square feet (sf) will have the competitive edge.

Overall, WTWY reaffirmed in its report that Kuching will remain the star performer of Sarawak’s property market.

- The Borneo Post

Peter Lim enters new Johor security venture

Singapore billionaire investor Peter Lim is stepping up his aggressive push into Iskandar Malaysia with a new agreement to set up a security business.

A security company owned by Mr Lim is joining hands with a Johor prince to offer security services in the rapidly emerging growth corridor.

Mr Lim is one of the largest investors in the Iskandar region over the past two years. He and the Johor royal family are substantial shareholders in Rowsley, which is working on a RM10 billion (S$3.9 billion) development in the Johor Baru city centre.

The Soverus Group, which is 95 per cent owned by Mr Lim, signed a memorandum of understanding with Tunku Abdul Rahman, son of the Sultan of Johor, last friday. Its chief executive officer, Mr Paul Lim, said: "The security business in all countries is highly regulated.

This MOU signifies and cements our belief in the growing market in Iskandar and the rest of Malaysia."

Working with the prince will be hugely beneficial, he added, given his detailed knowledge of the area.

Tunku Abdul Rahman said: "I am very impressed with how Soverus has grown so rapidly within the last four years, from a start-up to a major provider of security services with over 600 staff.

"I look forward to working with Soverus and its manage-ment team to build a credible and imitable full-service security firm in Johor."

One key reason for the MOU is the rising demand for premium security services in Iskandar, owing to the growing affluence of Johor residents, said Mr Paul Lim.

Although the company has yet to execute any plans for its expansion in Iskandar, he said potential clients are already seeking its security services.

Soverus previously focused on providing only guarding services, but has expanded into a wider range of solutions, including private investigations, cyber security and IT forensics.

Three-quarters of its operations in Iskandar will be guarding services, while the remaining 25 per cent will be focused on mostly security technology and security consultancy.

Mr Paul Lim said: "Our mid-term plan is to set up a sizeable infrastructure with proper armoury and full-fledged training facilities."

Officers from Singapore and Malaysia will be able to train with their counterparts in both countries, in order to provide quality guards, he added.

- The Straits Times

M'sia industrial land prices seen rising by 10%

Amid a supply shortage, prices of industrial land in Malaysia are expected to rise by double digits this year on the back of an expansion in manufacturing activity.

In major towns and cities, rents are forecast to rise by a 10th.

Foo Gee Jen, managing director of C H Williams Talhar & Wong, yesterday projected prices for industrial land to rise by 10-15 per cent this year, and other property segments, by just below 10 per cent.

Underscoring the strong demand for industrial premises but slow pipeline of supply, occupancy in the Klang Valley is at nearly 100 per cent.C H Williams' Property Outlook 2014 report noted a drastic decline in industrial unit overhang last year, which pushed it to the lowest level in six years and points to supply constraints ahead.

Indeed, in some places, industrial rents have caught up with office rates.

Mr Foo, speaking at a briefing in Kuala Lumpur, said that this is the case in Puchong, a sprawling township in the Klang Valley; tenants in both segments are forking out around RM2.50 (S$0.96) per square foot.

In general, rents for Klang Valley industrial premises rose marginally last year, although in in-demand areas such as Shah Alam, Selangor's capital city, the rise was more significant, climbing from RM1.30 to RM2.75 psf.

Manufacturing investments in the populated Klang Valley last year amounted to a robust RM2.3 billion in 102 projects, and this is expected to lead to a further tightening in industrial land supply this year.

C H Williams said this is likely to push up rents this year, especially in industrial parks with infrastructure, facilities and services capable of supporting high technology and capital-intensive manufacturing outfits.

Spiralling land prices in the Klang Valley, particularly in areas closer to the city centre, have led manufacturers to seek land further afield.

Industrial land in Nilai, in Negri Sembilan, at RM25 psf, costs less than a quarter of the RM110 psf which vendors are asking for in Bukit Raja near the port town of Klang; some areas in the Klang Valley have scaled to RM300 psf.

Not surprisingly, more industrial premises are coming up in Negri Sembilan.

Among the RM1.5 billion in deals concluded by C H Williams last year was one for Techpark@enstek in Seremban worth RM30 million.
Mr Foo said the shortage of industrial premises is also evident in Penang and Iskandar Malaysia.

C H Williams' bigger transactions last year included two in Johor, although these were for mixed-property or township development.

The larger deal, worth RM518 million, involved the sale of Lee Pineapple Co Pte Ltd land in Pulai to listed developer Tropicana; the other transaction was a RM105 million land sale in Kluang.

21st March 2014

The phoenix to rise on 28 April 2014

Petaling Jaya: Jaya Shopping Centre’s re-opening often referred to as the rise of the phoenix is scheduled for 28 April 2014. The iconic neighbourhood shopping centre dubbed as the “Heart and Soul of PJ” located in section 14, Petaling Jaya, received its the Certificate of Completion and Compliance (CCC) in early March and is busy getting the mall ready for its  big reveal.

“We all know how much Jaya Shopping Centre, means to PJ citizens. How it was a source of comfort, inspiration and pride. As we approach our opening, we are conscious that the standard has been raised by a more sophisticated and affluent market that expects retail magic to happen. Taking centre stage are the retailers of Jaya Shopping Centre who are determined to offer products and services that would enhance their lifestyle, fulfil their desires, influence their dreams and help shape their own self-image,” said Ismail Ani Arope, the Director for Jaya Section Fourteen Sdn Bhd, developer of Jaya Shopping Mall.

Ismail added that as a test run, Jaya Shopping Centre has also opened its car park to the public at special flat daily rate of RM5.  “Section 14 is the centre of everything and we want to ensure that when we open the doors to the public in the run up to the Labour Day weekend, our well planned ingress and egress lanes built parallel to Jalan 14/17 and Jalan Dato Jamil Rais 15, will ease the traffic congestion.”

With a ­net lettable area of 270,000 sq.ft, the new Jaya Shopping Centre has a total of 7 levels with more than 180 retail lots in different zones such as Supermarket, F&B, Mums & Kids, Youth, Professionals, Health & Beauty, Lifestyle, Entertainment, and Cinema. The mall has achieved more than 80% occupancy so far with 30% former Jaya tenants and 70% new tenants. Tenants include Cold Storage, TGV Cinema, Adidas, Best Denki, Brewball Pool & Karaoke, The Body Shop, CIMB Bank, Chilli's Bar & Grill, Cobay, Hing’s Watch, Original Classics and Toys 'R Us. Also sharing the shopping centre are established local retailers and “nouveau entrepreneurs” offering fashion and apparel, accessories, home curious and sporting equipment.

“Jaya Shopping Centre turns forty this year and what better way than to celebrate this milestone and create new memories for the neighbourhood with the opening of PJ’s favourite shopping centre. And we all know that life begins at forty, “  concluded Ismail.

Eco World to launch RM8b Klang project

KUALA LUMPUR: Eco World Development Group Bhd, a company set up by former SP Setia Bhd's directors and executives, will launch EcoSanctuary, a new project in south Klang worth RM8 billion.

The project is part of Tropicana Corp Bhd's 468.8ha Tropicana Aman development, which was previously known as Canal City.

 Eco World is acquiring 123.5ha from Tropicana for RM470.67 million, or RM35 per square feet.

Trading of Eco World and Tropicana shares was suspended yesterday from 2.30pm to 5pm.

 Prior to the suspension, Eco World rose two sen, or 0.4 per cent, to RM4.69, while Tropicana was up five sen, or 3.6 per cent, to RM1.43.

Both parties expect to conclude  the land deal in the second half of this year.

Tropicana said in a statement that it will gain RM170 million from the land sale, which will translate into incremental net earnings per share of 12 sen for fiscal year 2014.

Its group executive vice-chairman Tan Sri Danny Tan Chee Sing said the sale is to unlock the value of the sizeable landbank and monetise assets to boost its balance sheet.

Meanwhile, Eco World president and chief executive officer Datuk Chang Khim Wah said the deal is in line with its strategy to replenish its landbank in major growth corridors to expand its operations.

He said Eco World would be able to launch the project after completion of the deal as the land comes with an approved development order.

Chang said the eight-year project, which will feature eco-themed mixed residential and commercial properties, is expected to start by year-end.

EcoSanctuary will be the company's maiden township launch in the lang Valley under the Eco World brand.

Eco World has been busy buying land since last year and now has 1,214ha in Greater Kuala Lumpur, Johor and Penang with estimated gross development value of   RM30 billion.

Business Times reported recently that Eco World is participating in a request for proposal by Penang Development Corp to buy 190ha on a hillock close to the landing point of the new bridge crossing between Batu Kawan and Batu Maung on Penang island.


Base Rate to replace BLR next year

MORE TRANSPARENT: New rate will be determined by financial institutions' benchmark cost of funds and Statutory Reserve Requirement

BANK Negara Malaysia said the Base Rate, the  reference rate for new retail floating rate loans from 2015,  will take on a more transparent structure compared  with the previous Base Lending Rate (BLR).

Its governor Tan Sri Dr Zeti Akhtar Aziz said  under this cost-plus structure, spreads will always be positive as it  will not be possible for financial institutions to offer lending rates below the reference rate.

The Base Rate will be determined by the financial institutions' benchmark cost of funds and the Statutory Reserve Requirement (SRR).

Other components of loan pricing, such as borrower credit risk, liquidity risk premium, operating costs and profit margin, will be reflected in a spread above the Base Rate.

"This increases the visibility of the factors underlying changes to the Base Rate," she said at a media briefing, here, held in conjunction with the release of  Bank Negara's  Annual  Report yesterday.

Financial institutions will be given the flexibility to determine their respective benchmark rates.The greater transparency in turn,  Zeti added, will enable more informed decision-making by consumers on the loan products offered.

The new reference rate will also better reflect changes in cost arising from monetary policy and market funding conditions, while encouraging greater discipline and efficiency among financial institutions in the pricing of retail financing products.

"The shift to the new framework does not affect  the effective lending rates charged to retail borrowers  and does not represent a change in the monetary policy stance," she added.

The expected strong link between the Base Rate, market interest rates and the Overnight Policy Rate (OPR) will facilitate more complete adjustments to retail loan repayments when market interest rates adjust to  a rise or drop in the OPR.

Renzo Viegas, CIMB Bank chief executive officer for consumer banking, lauded  Bank Negara's move to introduce the new reference rate framework.

"This is a positive step forward by Bank Negara to allow banks to align loan pricing based on funding structure, cost efficiency and credit risk management. Further refinements are required and being worked on, but we see this as a positive progress."

Meanwhile, Bank Negara has also given a seven month extension for businesses and government agencies until January 2 2015 to ensure  they have the required devices  to enable electronic payments (e-payments).

To allow these entities to put in place the necessary devices, the imposition of the 50 sen cheque processing fee will now be effective beginning  January 2 2015.

Under  the new pricing strategy, the fee for Interbank GIRO (IBG) transaction conducted via Internet and mobile banking was capped at 10 sen effective May 2 2013, compared  with about RM2 previously.

"Since the commencement of the new pricing strategy, there has been encouraging progress made in IBG transactions," remarked Zeti.

The monthly growth rate tripled to  six per cent, or 10 million transactions, from May to December 2013 compared  with two per cent,  or six million transactions, in the preceding eight months.

Cheque issuance had also  dropped to a faster pace of -3.3 per cent, or 6.7 million cheques, in 2013.

The banking institutions, she said, will also intensify their efforts to provide adequate guidance and incentives to their customers to accelerate the use of e-payments.  


Highlights Of Bank Negara Malaysia's 2013 Annual Report

Following are the highlights of Bank Negara Malaysia's 2013 Annual Report

* Malaysia's economy to expand 4.5-5.5 pct in 2014 (2013: 4.7);

* Construction to lead 2014 GDP growth by 10 pct (10.9); followed by services 6.2 pct (2013:5.9);

* Agriculture, forestry and fishery to expand by 3.8 pct (2.1) manufacturing 3.5 pct (3.4), mining and quarrying 1.6 pct (0.5);

* Inflation to average 3-4 pct in 2014 (2.1);

* Bank Negara's international reserves totalled US$134.9 bln in 2013 (US$139.7 bln/RM447 bln)

* Base Rate, a new reference rate for the pricing of floating-rate bank loans, to be introduced in 2015 replacing Base Lending Rate;

* Unemployment rate to be unchanged in 2014 at 3.1 pct;

* Exports in 2014 forecast to grow to RM714.6 bln (RM690.9 bln);

* Imports in 2014 forecast to grow to RM620.9 bln in 2014 (RM588.2 bln);

* Current account balance forecast at RM30.8 bln (RM37.3 bln);

* Concept paper on new liquidity standards to be published by mid-2014;

* Broader range of products & services to be developed for underserved;

* Bank Negara to adopt three-pronged approach to raise e-payment usage from 2014 to 2015;

* Bank Negara to keep tabs on lending to curb property speculation;

* RM13 million refunded to banking customers after central bank took action on financial institutions that failed to observe guiding principles on fees and charges;

* Bank Negara acted against unfair tied-selling practices, especially where general insurers required policyholders to buy personal accident insurance as a condition for, or together with, motor insurance;

* Malaysia's population to increase to 30.4 mln in 2014 (29.9 mln)


Tropicana Unlocks Land Value to Bolster Earnings and Strengthen Balance Sheet

           ·         Sells 308.72 acres of land in Tropicana Aman, Selangor for RM470.67 million cash

           ·         Expect to realise net gain of approximately RM170m from sale; incremental net earnings per share of 12 sen in financial year 2014

           ·         Transaction in line with transformation strategy to unlock its land value and strengthen balance sheet

Petaling Jaya: Tropicana Corporation Berhad (“Tropicana” or “Group”) announced the sale approximately 308.72 acres of land to Eco World Development Group Berhad for a total cash consideration of approximately RM470.67 million or RM35 per square feet. The land is part of the 1,172 acre Tropicana Aman (previously known as Canal City land) which the Group acquired in April 2013.

The sale and purchase agreement is targeted for completion by the second half of 2014, and is expected to generate a net gain of approximately RM170 million for the Group. This is expected to translate into incremental net earnings per share of 12 sen for the current financial year ending 31 December 2014.

YBhg Tan Sri Dato’ Danny Tan Chee Sing, Group Executive Vice Chairman of Tropicana said, “As Master Developer of Tropicana Aman, this transaction is significant in enabling us to bring in a developer who can complement our development approach in creating vibrant and unique self-contained communities. This sale is also in line with our transformation strategy to unlock the value of our sizeable landbank, and monetise our assets to strengthen our balance sheet. On top of enhancing earnings, the cash proceeds from this disposal will further strengthen our delivery platform and better position us for sustainable growth over the medium to long term.”

Tropicana Aman is strategically located within the vibrant South Klang corridor, and fringes established townships of Putra Heights, Kota Kemuning and also the upcoming Bandar Rimbayu, which caters to the middle and upper class income earners. It has excellent connectivity as it is serviced by four major expressways namely Lebuhraya Shah Alam (KESAS), Lebuhraya Kemuning Shah Alam (LKSA), South Klang Valley Expressway (SKVE) and Expressway Lingkaran Tengah (ELITE). The land is located about 40 km from the Kuala Lumpur city centre, 30 km from the Petaling Jaya city centre and about 20 km and 10 km from Shah Alam and Klang town respectively. Tropicana Aman is slated to be launched in the second half of 2014. The scheduled launches of Tropicana Aman for 2014 will comprise landed properties with an estimated gross development value (“GDV”) of RM770 million.

“As in all our development projects, Tropicana Aman will showcase Tropicana’s development DNA where we will create an integrated township with strong emphasis on healthy lifestyle, green and sustainable architecture and community living in a safe environment. Tropicana will persevere in its transformation journey, leveraging on our prime landbanks across key growth regions in Malaysia to sustain growth, and achieve our goal to be a premier property group in the country,” YBhg Tan Sri Dato’ Danny Tan added.

The Group currently possesses 1,960 acres of strategic landbank across Greater KL, Iskandar Malaysia and Penang Island, with a total estimated future GDV of RM75 billion. For the financial year ended 31 December 2013, Tropicana reported 134% increase in Group revenue to RM1,475.5 million. Group profit before tax rose 123.9% to RM503.6 million, whilst net profit attributable to shareholders gained 112% to RM362.3 million.

Signed and sealed (signing on behalf of respective company):

YBhg Tan Sri Dato’ Danny Tan, Group Executive Vice Chairman of Tropicana (third from right), Dato’ Yau Kok Seng, Group CEO of Tropicana (second from right) together with Liew Tian Xiong, Director of Eco World Development Group Berhad (far left) and Dato’ Chang Khim Wah (second from left), Director of Eco World Development Group Berhad