THE year 2013 is pretty much a busy one for Dijaya Corp Bhd as it is planning some 12 launches spread over the Klang Valley, Penang and Johor. One of the more imminent ones include The W Hotel & The Residences, which deputy managing director of Dijaya Dickson Tan is personally spearheading.
Situated on 1.28 acres of freehold commercial land along Jalan Ampang, The W Hotels & The Residences will have 150 rooms while the residences will have 353 units.
In early 2011, Dijaya announced its partnership with Starwood Hotels & Resorts Worldwide, to develop a W Hotel in Kuala Lumpur.
Designed by Skidmore, Owings & Merrill LLP from New York, The W Hotel & Residences will be located within the Golden Triangle and is situated along Jalan Ampang, across the Petronas Twin Towers. It is about 500 metres from the Kuala Lumpur Convention Centre.
“The W Hotel will truly mark resort living in the city. You will forget that you are in the middle of a bustling city,” says Tan.
Another mixed development to be launched which is likely to garner interest in the 88 acre Tropicana Hills in Subang, which is a mixed development of condos, retail lots, offices and a shopping mall.
“I think what people want today is affordability. There is strong demand for properties below RM800,000. The trend is now moving away from landed properties because of the affordability factor,” says Tan.
Meanwhile, some of the properties being injected into Dijaya which are ready for development are in pretty prime spots. For example, in the Klang Valley, Dijaya will get its hands on pockets of land on Jalan Kia Peng and Jalan Bukit Bintang which are located in the city centre. In Penang, it has land along Jalan Macalister, while in Sabah it has land on Jalan Bundusan.
To be exact, the landbank with ready development orders include land in SS13, Subang Jaya (RM200mil), Jalan Kia Peng (RM330mil), Jalan Bukit Bintang (RM680mil), The Landmark (RM90mil), Jalan Segama, Lahad Datu (RM30mil) and Jalan Albert Kwok (RM60mil).
Key yielding assets include Dijaya Plaza, Jaya Square, Wisma TT and Casa Square in the Klang Valley, while in Sabah, there is Bangunan Blue 7.
As for the Johor property market, Tan says that the buoyancy of demand actually caught the company by surprise. For instance, Tower A of Tropez Residences which was launched last December, has recorded a take up rate of 90% (not taking into account the Bumiputera units), while Tower B and C which were launched this year have recorded take up rates of 87% and 22% respectively.
“Profile-wise, some 40% of the homebuyers are Johoreans, another 40% from the Klang Valley and the remainder Singaporeans,” says Tan.
Wanting to further capitalise on this growth, in June, Dijaya’s 80%-owned subsidiary, Aliran Peluang Sdn Bhd entered into a sales and purchase agreement to buy 11 parcels of land, measuring a total of 2.4 million sq ft, or 55.07 acres, in Mukim Pulai, Johor, for RM105.07mil.
Currently, Dijaya has four projects in Johor, namely Tropicana Danga Bay, Tropicana Danga Cove, Tropicana Senibong and now Mukim Pulai.
Dijaya has two joint ventures with Iskandar Waterfront Sdn Bhd for its projects in Danga Bay.
Tropicana Danga Bay is a 60:40 joint venture between Dijaya andIskandar Waterfront, with an expected GDV of RM3.8bil which will take an estimated eight to 10 years to complete.
Tropicana Danga Cove, with more than 220 acres, is earmarked to be developed into a new township with a GDV of RM2.9bil while the 37-acre Tropicana Danga Bay and the injected lands will be turned into a mixed development with a high GDV due to its proximity to city centre.
“It was just 5 years ago, that nobody believed the Johor story. However, maybe 5 to 10 years from today, once the infrastructure is complete and the MRT connecting Johor and Singapore is ready, think how prime and in-demand the Johor properties will be,” says Tan.
To date, Iskandar Malaysia has attracted investments of RM10.67bil in the first six months of 2012. Cumulative committed investments have reached RM95.45bil, represented mainly by Asia (42%) and Europe (40%).
Dickson says that the economic zone of Iskandar Malaysia will continue to be the driving factor in boosting the demand for properties in Johor Bahru.
For example, the completion of several major ongoing road and highway projects in Iskandar Malaysia such as the New Coastal Highway, Eastern Dispersal Link Expressway (EDL) and Senai-Pasir Gudang-Desaru Expressway and the widening of Permas Jaya bridge will improve connectivity within Johor Bahru.
“Upon completion and commencement of operations, such infrastructure developments will provide a boost to demand of properties in Johor Bahru due to better connectivity. This augurs well for our developments, which are located within the central business district of Iskandar Development Corridor,” says Tan.
As for Penang, Dijaya has a 55:45 joint venture with Ivory Properties Group Bhd to develop a 41.02ha development in Bayan Mutiara. The joint-venture company, Tropicana Ivory Sdn Bhd will undertake a mixed residential and commercial property project with a GDV of RM9.8bil over the next eight to 12 years. The land was sold for RM1.07bil, or RM240 per sq ft, to be paid over five years
Last November, Ivory announced that it was entering into a 49:51 joint venture with Dijaya to develop Bayan Mutiara.
In March it received shareholder approval for its plan to purchase and develop this piece of land. Tan adds that the masterplan has yet to be submitted, as it is still in the planning stage. The project will be called Penang World City.
“It will include a mixed development, which includes high-rise residential as well as commercial components such as shopping mall, board walk al fresco dining area, hotel and an office tower,” said Dickson.
“Acquisitions of development lands in Penang Island by developers have been active in 2011. We are upbeat about the potential growth of the Penang property market, especially with government initiatives to improve the infrastructure and further attracting investments into Penang,” says Tan. - StarProperty
This is a very well written article on the state of the property market in Malaysia. Kudos to his analysis and would like to share with you folks as well. Here goes...I REFER to Mr P. Gunasegaram’s article (StarBizWeek Aug 25) and would like to thank him for his thoughts and comments regarding a stable and sensible Malaysian property market.
As you are aware, I am deeply entrenched in the real estate market and thus my interest in his article and I have taken the liberty of sharing my viewpoints.DBKL has the KL Structure Plan 2020 and this Structure Plan is the blueprint that will guide the development of Kuala Lumpur for the next 20 years. The plan, with its two-pronged approach, outlines the goals, strategies and policies towards achieving the vision as well as identifies ways to minimise or solve issues and problems faced by citizens.It is unfortunate that some parts of KL’s Structure Plan are not followed but overall, I have seen very good compliance by DBKL to its Structure Plan.Implementation is still an issue on certain sectors and I think this is what needs to be focused on.On purchase of property by foreigners, please note that in Malaysia, foreigners make up less than 3% of residential purchases (this figure is much higher in Singapore – 43% of purchasers of prime properties are by foreigners).The highest recorded is in KLCC with an average of circa 30%. The occupancy is about 60% in KLCC and many purchasers are fine to leave the units vacant if they can’t find a good tenant.These are serious investors who are cash rich and not speculators who invest without the capacity to hold.My opinion is that the impact by foreigners is not an issue in the rise of property prices in KL and Malaysia as a whole.With regards to his comment on loans, it is agreed that easy availability of loans does stimulate demand. But does it encourage speculation? Please note for a 5% easy payment scheme or what is commonly known as DIBS (Developer Interest Bearing Scheme), a purchaser still needs to qualify for the loan i.e. the capacity to service the full loan once it is drawn upon.If he does not qualify, the loan is not approved and he can’t purchase a property. This in my opinion is a good scheme as it allows a first house buyer who does not have capital (to make a full 10% or more deposit for the house) but do have recurring income (to service the loan) to purchase that elusive home.Another issue is the fact that Bank Negara’s new Responsible Lending Guidelines has kicked in. I don’t think the availability of easy loans creates a speculative market. Hong Kong and Singapore are speculative markets and you can observe this by the serious spikes and drops in their real estate prices.In Malaysia, the growth of prices is generally sensible and more stable, with certain locations, due to scarcity, having steeper price escalations. In Malaysia, I do not see speculation as a serious contributor towards price movements. In my inquiries with local developers on the profile of their recent purchasers, 65% are owner occupiers, 35% are investors and most estimate that so-called speculators or flippers consists of maybe 5% of the total.Price movements over recent years have generally been a function of the high employment rate in Malaysia, economic growth and the rise in construction cost of properties. Just a point of note, Rehda has mentioned that the regulatory cost in a development can come up to 20% of the total construction cost, which is passed to the consumer.Now if the federal and state governments can focus on reducing this, we can at least see a 10% to 15% drop in the price of properties and may assist in reducing property prices.Gunasegaram’s piece was also focused on providing affordable accommodation to the general rakyat. These are my thoughts for this:1. RRI Land in Sg Buloh should be very focused on this market. Providing accommodation in the RM350,000 to RM500,000 homes. With these prices, obviously the development will have to be vertical, and this can be complemented with the 3 new MRT stations that are on the RRI Land. The MRT stations and lines have to be leveraged upon. In fact, I think all the land along the MRT line that can be developed, should be heavily skewed towards this sector of the market instead of focusing on commercial and high-end developments. Hong Kong is a good example of this.2. Banks need to take some form of responsibility as well. If developers can provide low-cost homes, I think banks are also responsible to provide low-cost financing3. Efficiency of the federal, state and local governments has to be increased to reduce regulatory contributions.4. More effective use of government land, more so nearer to transportation nodes, to be used for affordable homes.On the long-term view of the market, there has been strong talk of RPGT (Real Property Gains Tax) and stamp duty to be revised in this budget. My opinion is that a country must continuously encourage investment and as such stamp duty should be maintained as it is, or maybe even reduced, for first-time house buyers.In the case of RPGT, I think to avoid speculation, the tax should be high for the first two years, and then back to 5% as it is now for third-year onwards (encouraged at entry and punished at early exit).On the comments on Tun Razak Exchange, I am of the opinion that the project will take time and it’s not going to happen all at once (like KLCC when it first started) and flood the market with a huge supply.The tax arrangement is quite normal worldwide (there are tax-free zones in India, China, Middle East and some parts of Europe and US) but I do agree with him that there could be market distortions. Authorities have to be vigilant here. Iskandar Malaysia also has tax breaks but one has to qualify for it.I fully agree that speculation and ill-considered developments will cause volatility, and am confident that the Malaysian real estate market is actually sensible and stable, with more action required by the authorities to improve their efficiency and implementation to make it a long-term viable pillar of Malaysia’s economy. - Star
KUCHING: Malaysia will be the fourth most liquid real estate investment trusts (REITs) market in Asia after Japan, Singapore and Hong Kong with market capitalisation reaching a new height of RM24 billion if IGB REIT makes its way to the Main Board.
At a market capitalisation of RM4.6 billion, IGB REIT will be the largest REIT in market capitalisation on Bursa Malaysia, but both Sunway and Pavillion REITs are not far behind at RM4 billion each, source concured.
The market is even more abuzz with talks of Kuala Lumpur Convetion Centre (KLCC) listing its assets which would create an even larger vehicle of RM6 billion.
“I believe M-REITs have found a sweet spot with the investors going forward. What we see here is an unprecedented listing of the ‘Crown Jewels’ of properties – Pavillion, Sunway Pyramid, Mega Mall and perhaps the KLCC as well,” Malaysian REITs Managers Association chairman Stewart LaBrooy told The Borneo Post in an interview.
He said many owners of yielding property assets were now seriously considering securitising their assets through REITs as the continuously volatile equity markets had driven investor to seek yield and stability in REIT stocks creating rich valuations for their assets.
All REITs need a growth strategy, but the availability of assets locally “are a problem especially for Retail REITs as there is limited stock of high-end shopping malls which take many years to stabilise and show strong returns,” he added.
This might drive REITs managers to look at offshore assets to inject into their REIT vehicles to get the growth and increasing shareholder return, he pointed out.
In terms of foreign property acquisitions for the trust, REITs players would focus on the countries with strong rule of law, property ownership and a transparent taxation system.
Apart from that, currency exchange rates also played an important role in acquiring foreign properties – if it depreciates to the ringgit then there would be write downs in property values (in ringgit terms) and reduced return to the unitholders, Labrooy said.
Top picks included Singapore, Hong Kong, Japan, Australia and the UK. “Buying in the Euro currently can be considered risky given the eurozone problems at the moment,” he said.
LaBrooy expressed his ‘wishlist’ for the upcoming Budget 2013, which would be zero taxes for individual shareholders on their dividends, allowing EPF withdrawals to be invested in REITs as well as Mutual Funds and similar inventives for the Islamic REIT Managers as the current Islamic Fund managers were enjoying.
“Finding assets to buy in such a low interest rate regime is the hardest task for any REIT today. Asset prices are at an all-time high and yields are very low thus REITs find it difficult to acquire as it would dilute shareholder returns.
“The REIT managers in Malaysia have displayed a strong sense of commitment to their shareholders in providing growing dividends and increasing values to their shareholders. Such transparent behaviour will set a good example to other REIT markets,” he concluded. - Borneo Post
High-Speed Rail (HSR) project linking Kuala Lumpur to Singapore is expected to commence soon
The chief development officer of SPAD added that the HSR project was targeted to start next year with tenders to be called by end-2013.
News that the HSR project may be feasible and tenders to be called by end-2013 are positive for the construction sector.
In addition to the main project manager(s) and/or concession holder(s), other construction companies are expected to benefit from sub-contract works.
Construction and building materials suppliers would also gain from stronger orders and firm prices. Depending on the final alignment and location of stations, selected landowners, especially plantation companies, would also see appreciation in land value.
A potential contract win is a key re-rating catalyst for both group of companies.
The civil engineering work itself (excluding rolling stocks) may be worth an estimated RM8bil-RM10bil, a substantial boost to orderbook for any construction player in Malaysia.
There will be more work when tenders for the My Rapid Transit 2 (MRT2) and (MRT3) are called and awarded, as well as for other Economic Transformation projects, such as the Kuala Lumpur International Financial District and Langat 2. - Star Online
BB Plaza, along Jalan Bukit Bintang in Kuala Lumpur, decorated and lit up for Chinese New Year last year.
KUALA LUMPUR: UDA Holdings Bhd will need to vacate BB Plaza by year end to make way for the construction of a mass rapid transit (MRT) station.Its group managing director Ahmad Abu Bakar said on Tuesday that UDA, which owns BB Plaza, would vacate the premises together with the tenants.
BB Plaza, along Jalan Bukit Bintang in Kuala Lumpur, decorated and lit up for Chinese New Year last year.
He said Tradewinds Corp Bhd had approached the board with an offer which had been sent to the Ministry of Finance.
Tradewinds Corp had offered to build a shopping complex.Source: The Star Online