Scottish Widows Investment Partnership (Swip) has now divided its property investment team into UK and international divisions.
The UK arm will be led by Peter Lillington and Gerry Ferguson. Lillington will be in charge of the UK property investment with responsibility for all investment transactions and development, while Ferguson is in charge of the UK property fund management with responsibility for all UK property funds. He is also in charge of the Scottish Widows Investment Partnership Trust, Airport Industrial Property unit trust and the Covent Garden Market Partnership.
Swip has more than £7.8 billion in assets. The restructuring of the department is necessary as its property heads, Tom Laidlaw, and his deputy, Mike Channing, will be leaving at the end of the year to set up their own business after 15 years at the firm. (UBR).
11/23/2006
Restructuring of SWIP
Interest Rate Rise in UK
The latest rise of interest rates will add more problems to the current soft market in UK. It will greatly affect the buy-to-let investors.
Due to the recent boom in the UK property market, the property values have increased. This is good news for existing property investors. However, it is not good news for first-time land owners. The boom has caused these green land owners to pay significantly higher purchase prices for suitable investment properties. First-time land owners have to choose carefully the buy-to-let mortgage with the lowest possible interest rate for their investment.
When interest rates increase, it creates a double squeeze on potential investors. The first being a reduced offer and the second, is that once an investor owns a buy-to-let property, higher monthly mortgage payments eat away at the potential financial returns.
Besides, higher interest rate also causes less money to become available to be borrowed. The amount that can be borrowed when buying a property to let out depends, amongst other factors, on how much rent the property generates, as well as the interest rate used by the lender to calculate the funds they are willing to offer. Higher interest rates mean lower mortgage offers and therefore higher deposits are required.” Some experts also reveal: “Investors should also be aware that there may be further UK base rate rises in the months ahead. Existing buy-to-let borrowers, whose mortgages are currently on discounted or variable rates, could also benefit hugely by having their current mortgage deals reviewed against the current investment mortgages available”
11/18/2006
To get a Good Investment Property
Nowadays many investors are looking for properties with good rental income for investment. To venture into this investment, you need to prepare a concrete plan or strategy on how you are going to develop your real estate into a money-spinning endeavor. Otherwise, you will end up losing all of your investment.
To find a good investment property, you need to do some data research and keep good relationship with estate agents. Estate agents are your good friends to help you find a profitable rental property. Besides, they are also your friends to help you to dispose off your property when you want to cash out.
To get started in your rental real estate business, the following tips might help:
·Prepare an investment plan to determine the holding period of your ownership of the particular rental property. Holding period will affect your cash flow. The longer you hold the property, most probably the more you need to spend on maintenance, repairs and improvements. The repair costs incurred might eat into your investment profits. If you are not sure of your holding period, then you’d better adopt a more conservative approach and don’t spend too much. Nevertheless, owning the rental estate property for less time would also create more investment risks especially when buying in an overheated market. To compensate for that risk, you need a bigger potential annual return. For many small investors, however, long-term ownership is smart because it allows them plenty of time to outlast any fluctuations in the market -- and also since the rental income can be a nice supplementary income in the meantime. Being a landlord is also a rewarding day job for some.
·Hunt properties that are going to be foreclosed or already foreclosed. Get to know some bankers or auctioneers, then you will be able to get some additional information of properties that are about to be foreclosed or are already foreclosed. Meanwhile, contact your real estate agent friends to help you to source for possible buyers. Besides, you can also join some property owner’s association in order for you to make contact with the landowners. You can ask the landowners directly to see if they are willing to sell; you may also try looking in newspapers for rental ads or you may drive around neighborhoods in order to search for “for rent” signs.
·Get your finances in shape. If you really want to engage in a rental estate property business you need to have a good credit standing -- meaning less credit card debt and other consumer debts. Generally, lenders usually require bigger down payments, charge higher interest rates and want your finances to be in better shape when you are buying rental properties. Besides, keep some money for maintenance and also holding costs if you cannot get tenants in due course.
·Avoid overspending. The reason why you invest on a rental estate property is for you to gain profit and not to lose every saving you’ve got. Make sure that you have saved enough for your retirement before investing in rental real estate since investment is like any business wherein you tend to lose some and then win some. But just to minimize your risks, try to save as much as you can. Better be prepared than be sorry later on.
11/17/2006
US: Homebuilder sentiment rebounds in November
The housing market index compiled by the National Association of Home Builders (NAHB) improved for a second consecutive month to 33 in November (October: 31) as sales incentives improved affordability for consumers. The index of sales expectations in the next six months also jumped 4 points to 46. reading below 50 mean the overall confidence among homebuilders remain poor.
Belgium: Blackrock International Land’s first property investment in Continental Europe
Blackrock Land Continental Limited (a subsidiary of Blackrock) has acquired 90% of a company owning a substantial warehouse and office portfolio in Brussels, Belgium. The other 10% will be held by EuroCapital Property Group, a locally based property investment company.
The properties are located in the Zaventem South business and semi-industrial zone, on the E40 Brussels to Germany motorway, close to Brussels airport. The integrated buildings consists of 23,000 sq.m built up of which 15,600 m sq (168,000 sq ft) are warehouse distribution facilities and 7,400 m sq (80,000 sq ft) are offices.
The properties will be jointly managed by Blackrock Land and EuroCapital Property to maximize the rental income and enhance capital value. The total outlay on the transaction, including costs, is approximately €19.5m. Generating annual income in excess of €1.7 million (inclusive of the rental guarantee), the portfolio will provide a net initial yield of more than 8.7%.
£500M from Morgan Stanley JV Kandahar
Kandahar Real Estate Ltd, a subsidiary of a London-based private property investment and asset management firm, The Kandahar Group, has joined with Morgan Stanley Real Estate's MSREF V International in a 50:50 joint venture project with the intention of investing £500 million (US$944 million) into retail and leisure properties throughout the United Kingdom.
The venture's initial portfolio will include the 560,000-square-foot Drake Circus shopping center in Plymouth, U.K., which was developed for Morgan Stanley by P&O Estates Ltd., and opened on Oct. 5, 2006. Also in the initial portfolio will be Kandahar's 1 million-square-foot UK High Street property portfolio, with a total value of £243 million (US$458.7 million).
In a statement, Morgan Stanley executive director Toby Phelps said that the firm looked forward to taking advantage of the knowledge of U.K. retail investment brought by Kandahar, which holds a portfolio of 13 U.K. retail assets, dating back to the firm's original investment in 2003.
Owned by David Ross' Kandahar Trust, The Kandahar Group is led by the management team of Martin McGann, formerly finance director at Pillar Property Plc; Amanda Hill, former head of property at The Carphone Warehouse, where she led the growth of the store portfolio from 20 to 600 stores; and Mike Tyler, who was responsible for asset management within the Hercules portfolio.
11/16/2006
CEO Opinion Survey on 2007 Property Market
What are the CEOs' opinion on 2007 Malaysia Property Market?
These are the findings of an annual survey conducted by a property Consultant firm WTW. Let's see what they said....
Click here to download the report.
Australia: Women 'waiting out' property slowdown
A research done by Panorama Nielsen Media Research found out that Woman tends to be more faithful than man in property investments.
"Men have responded by selling their investment properties in large numbers while women are waiting out the market slowdown," said by Wizard Home Loans who commissioned the research.
From the research shown that the number of Australian men with an investment property dropped by almost 19 per cent from 568,000 in June 2004 to 462,000 in June 2006, showing one in five male property investors quit residential property altogether. However, in the same period, the number of women dipped by less than one per cent from 405,000 to 401,000. In other word, it mean women are selling their investment properties at a rate of only one in one hundred women.
Wizard Home Loans chairman Mark Bouris said the research dispelled the myth that men have more of a foothold in the property market. The research is also further proof that women are closing the gap on male property investors and reaffirms Wizards conviction that women are the new driving force of the Australian property market.
11/15/2006
Saujana Zero-Lot – Luxurious hilltop villas
Johor-based Focal Aims Holdings Berhad is embarking on its maiden property development in the
Saujana Zero-Lot is located within the most preferred and established up-market neighborhoods such as Saujana Resort. It is easily accessible from
The Saujana Zero-lot homes come with a 4ft-high perimeter fencing for the garden area, with an open porch. Sited on elevated land, the units will have skyline views of Subang Jaya, Kelab Golf Negara Subang and Glenmarie. The show unit for the project is yet to be ready for viewing.
For the first phase, the 2-1/2 storey semidee villas come with land areas of 4,000 to 5,600 sq.ft. The built-ups of the 4-1 bedroom, 6 bathroom units start from 3,572 sq.ft. and are priced from RM1.6 million. There are discounts on the selling price for early birds.
Petaling Garden Bhd has another upcoming high-end project nearby the Saujana Zero-Lot.
Malaysia Daily Media Highlight
TELCO Sector: WIMAX to be delayed to 2007
The arrival of high-speed wireless broadband, or WiMAX, has been delayed to next year as regulators said they need time to seek new clarification from those who are bidding to become service providers. The result of the tender had been expected to be announced this year. Energy, Water and Communications Minister Datuk Seri Dr Lim Keng Yaik said companies that have submitted applications to include a national rollout plan. The minister said the Government is not in a rush to roll out WiMAX services as WiMAX licenses, what the possibility of launching 2 licenses during the initial stage before releasing the remaining ones. 17 companies bid for the licenses, including Maxis Communications, DiGi, REDtone, MiTV and Nasion Com.
DRB-Hicom/Proton: Confirms interest in the latter’s stake
DRB-Hicom has recently submitted a proposal to the government indication its preliminary interest in the possibility and prospects of acquiring a portion of shares in Proton Holdings. Prime Minister Datuk Seri Abdullah Ahmad Badawi had said on that the government was considering giving approval for German carmaker Volkswagen AG to take up a 51% controlling stake in Proton’s manufacturing operations. (theedgedaily.com)
SCOMI: To be taken private?
Speculation is rife that major shareholders Scomi Group may take the integrated oil services firm private in a bid worth as much as RM1bn. Sources said the main shareholders, who include the son of Prime Minister Datuk Seri Abdullah Ahama Badawi, are considering this as an option as SCOMI’s market price does not reflect its true value. Citing swirling market speculation, bankers said the major shareholders could bid for the rest of SCOMI at a price range of RM1.20 to RM1.50 a share. At RM1.50, SCOMI would be valued at some RM1.5bn. The major shareholders of Scomi are Kamaludin and Shah Hakim. Both hold 34.66% of the company through Kaspadu Sdn Bhd as at May 11, 2006. Frence insurance group AXA is the second biggest shareholder with 6.3%, followed by the Employees Provident Fund with 5.73%. this means that if the main shareholders were to make a bid for the rest of the shares, they might have to fork out some RM976.6m based on an offer of RM1.50 a share. (BT)
PETRA: 67m new shares to list on Nov 15
Petra Perdana’s 67.65m new 50 sen shares arising from its bonus issue will be granted listing and quotation on Nov 15. A Bursa Securities circular said the new shares arose from the bonus issue of 1 new share for every 3 existing shares held. The new bonus shares will increase the paid-up capital by 270.6m to 338.25million shares. (theedgedaily.com)
Boon Koon Group: To fund growth with RM100m Islamic debt
Boon Koon Group is looking to use part of its RM100m Islamic debt securities for its Indonesian operations, acquisitions and the setting up of a Dubai plant, which will allow it to expand its used commercial vehicle business including sales and services centres into other cities in Indonesia, aside from Jakarta, Semarang, Surabaya and Medan to consolidate its position there. It is also looking to set up a reconditioning hub in dubai to tap into the India and, possibly Pakistan market over the next 1-2 years. A company has been engaged to explore the market there. It is also in the process of shifting its factory in Tawau to Kota Kinabalu, involving a capex of RM5m and is expected to be completed by 2Q07. The acquisition of GKY Machinery, which is involved in the rebuilding and distribution of heavy machinery and equipment, is expected to be completed by 1Q07. About 10% of the proceeds from the Islamic debt securities will be used to fund the GKY buy and another 5% - 10% for its fleet expansion. (theedgedaily.com)
MAS: Signs agreement with Russia’s Transaero Airlines
Malaysia Airlines System has signed an agreement with Russia’s Transaero Airlines to operate direct air services between Kuala Lumpur and Moscow from January 2007 through a code share arrangement. The partnership would initially offer 8 scheduled flights from Jan 02, 2007 to March 17, 2007 between Moscow Domodedovo Airport and KLIA using a Boeing 767-300 aircraft, with plans to increase the number of flights. MAS would have direct access to the seat inventory of all Transaero flights between KLIA and Moscow, which would be marketed using MAS flight numbers MH9055 and MH9056. (theedgedaily.com)
MINETEC: Clinches quarry jobs in Indonesia
Minetech Resources’ via its unit KS Chin Minerals Sdn Bhd (KSC) has expanded its operations into Indonesia after it was appointed as the operator and contractor of a quarry in Karimum Island, Indonesia. It has entered into several agreements with Batu Ayer Granite Pte Ltd (BAG) and PT Mirasindo Perdana (PTM) appointing KSC as the operator and contractor with management rights to manage, supervise and/or undertake all quarry operations. Under the deal, KSC would also acquire all quarry products as well as acquire a crusher plant and other quarry equipment from BAG/PTM for RM10.5m. (Bursa)
AIRASIA: Teams up with Fly Asian Xpress
AirAsia has formed a strategic partnership with rural air services (RAS) operator Fly Asian Xpress (FAX) in an effort to provide seamless air travel nationwide. The partnership will see AIRASIA include air routes served by FAX in its list of destinations, thus allowing both airlines to interline operations as well as automatically expand their respective air service network. The move will also allow FAX to leverage on AIRASIA’s massive sales distribution network, including its website. AIRASIA will introduce its Kuala Lumpur – Mulu and Kuala Lumpur – Lahad Datu Flights, which will begin operations on December 01. (BT)
11/14/2006
SIX RULES IN PROPERTY INVESTMENT - Rule No 6
Getting SUBJECTIVE inputs or opinion from market experts will give the investor a better idea about the property.
Always ask questions and get others’ opinion: -
• Should I buy or rent housing or business space?
• Should I buy new or purchase existing space?
• What is the best way to finance the purchase?
• Should I renovate/refurbish the existing space?
• Should I sell existing space?
• Is it time to refinance current space?
• Should I invest in an apartment building, office building, shopping centre, vacant land or industrial building?
• To what use should I put the site?
Malaysia Daily Media Highlights
RHBCAP: RHB Islamic Talks with Dallah ended
It was reported that RHB Islamic Bank has broken off talks with Saudi’s Dallah al-Baraka Group, which had been seeking to take a strategic stake in the Islamic lender, RHB Islamic Bank Chairman Datuk Vaseehar Hassan Abdul Razak said. Dallah al-Baraka Group which has a 15% stake in Utama Banking Group (UTAMA) is interested getting a strategic stake in RHB via UTAMA with another Middle Eastern Islamic group.
RESORTS: Star Cruises turns in profit
Star Cruises, a 36% owned associate of Resorts World posted its first profit in four quarters, helped by increased travel demand and the sale of a vessel. Net income rose 83% to SG$60.4m in the three months ended September 30, compared with holidays is helping operators including Star Cruises to counter rising fuel costs. An estimated 11.7mn people will go on cruises this year, an increase of 4.5%, according to the 19-member Cruise Lines International Association. The company’s operating expenses per capacity day dropped 0.4%. Fuel made up 18% of operating expenses in the period, compared with 16% a year earlier. (Bloomberg)
The performance for Star Cruises was strong as group capacity had increased by 17.7% with the inclusion of 2 new ships.
AIRPORT: Looking to expand LCCT
Malaysia Airports Holdings Bhd (MAHB) managing director Datuk Seri Bashir Ahmad said the company would expand the LCCT in three to four years to accommodate the anticipated passenger volume of over 10m a year. He said the budget carrier terminal would be expanded to handle up to 15m passengers annually. He said AirAsia was close to achieving six million passengers this year and believed the low-cost carrier would achieve 10m passengers annually within three to four years.
Express Rail Link Sdn Bhd (ERL) wants to build and operate the proposed KLIA and low cost carrier terminal (LCCT) rail link project to stem a decline in passengers on its high-speed train service to KLIA from KL Sentral. Its chief executive officer, Dr. Aminuddin Adnan, said the company had seen a drop of up to 30% to 4,000 passengers daily from 5,500 since the commencement of the LCCT in March this year. AirAsia passengers used to make up about 30% of our passengers before the LCCT opened. The 13.4km link would shorten travel time between the two terminals to 11 minutes from 20 minutes currently, adding it would take 15 months to complete construction of the link. (theedgedaily.com)
Bolton: Unit sells “The Body Shop” franchise for RM80m
Bolton unit Kejora Harta is disposing 100% stake in Rampai Niaga Sdn Bhd – which holds the “The Body Shop” franchise in Peninsular Malaysia to Rampai Niaga directors Datuk Foong Choong Heng and Datin Cheah Kim Choo for RM80m cash. Bolton will record a gain of RM9.4m from the proposed disposal which was in line with its strategy to sell non-core assets and refocus on property development. (theedgedaily.com)
LFECORP: Secures RM360m contract from Denmark
LFE Corporation unit LFE International LTD has received a letter of intent from Northcom ApS of Denmark for the purchase of electronic equipment for USD$100m. LFECORP had received the letter from Nothcom confirming its intent to enter a contract to purchase computer-processing units, electronic good and digital streaming devices over 36 months, starting on Jan 1, 2007. The contract would see LFE International contribute positively towards the future earnings of the group. (theedgedaily.com)
KUB: Subsidiary awarded RM54m job
KUB Malaysia, 70% subsidiary KUB-Fujitsu Telecommunications (Malaysia) Sdn Bhd has secured a RM54.3m contract from Telekom Malaysia to implement an end-to end service for TM’s metro Ethernet system. The contract was for the supply, delivery, installation, testing, commissioning, and post-acceptance maintenance and support services for the metro Ethernet system. (theedgedaily.com)
YTL Power: Unit is UK’s top water firm
YTL Power International’s wholly-owned utilities company, Wessex Water, has been named Britain’s top water and sewerage company. A report by the UK’s Water Services Regulation Authority (Ofwat) revealed that Wessex Water is the only business to receive the maximum seven stars for customer services for the second successive year. Wessex Water provides water and sewerage to over 2.5m customers within the south west region of England.
Malaysia: Launching of high impact projects in the next 6 months.
Malaysia’s Minister of the Prime Minister Department said the high impact projects approved by the National Implementation Taskforce Meeting chaired by the Price Minister will be launched sequentially in the next six months. He said the Prime Minister is pushing hard for all these projects to commence according to the specific timeline.
11/13/2006
Malaysia Daily Media Highlights
Gamuda: Seals Bahrain Job
Gamuda Bhd inked the US$248.75 contract it won in July to build two causeways, associated embankment works flyovers at the Sitra Causeway as well as on Nabih Saleh Island in Bahrain. Gamuda is to build two three-lane causeways, one 200m going north and the other 400m going south, which can be converted into four lanes each in future. The job is scheduled to be completed in 32 months.
The causeway project was announced on the Bursa on 1 August this year to add to its other Middle East projects namely Qatar Airport and Dukhan Highway. Apart from this, Gamuda is also potential to benefit from double tracking rail project (value between RM0.5bn and RM0.9bn) and Pahang-Selangor Interstate Water Transfer and Flood Mitigation Projects.
Airport: Bids for Jeddah Terminal Project
Malaysia Airports Holdings has submitted a RM200mn working plan to upgrade and manage an airport terminal in Saudi Arabia. Sources said MAHB submitted the bid via a joint venture with its Arabian sponsor, Arabian Co for Water & Power Development (ACWA Power). ACWA Power, owned by A. Abunayyan Trading Corp & Al Muhaidib Holding Co, is also the partner for a Malaysian Venture that won the kingdom’s first power and water desalination privatization project. (BT)
MMC: RM7.9bn Islamic financing for Malakoff Bid
MMC Corporation Bhd has proposed to raise RM7.9bn in Islamic debt papers to finance the acquisition of independent power producer Malakoff Bhd and also refinance the latter’s debts. The total acquisition of MMC would total RM9.31bn. MMC said on Nov 10 that its unit, Nucleus Avenue (M) Bhd (NAB), had proposed to issue up to RM1.7bn in nominal value of cumulative non-convertible Islamic junior sukuk and up to RM600mn in Islamic commercial papers and medium term notes. The remaining rM5.6bn would be nominal value of Islamic medium term notes, it said. (theedgedaily.com)
MAS: Secured shareholders’ nod for RPS
Malaysian Airline System has clarified that it had secured its shareholders’ approval for a redeemable preference shares (RPS) option to the exercise, and not a rights issue as reported on Nov 10. The national air carrier said its managing director and chief executive officer Idris Jala was referring to the RPS and did not refer to any rights issue when speaking at the Asia-Pacific and Middle East Aviation Outlook Summit in Singapore on Nov 9. (theedgedaily.com)
International Tender For Pahang – Selangor Raw Water Transfer Project
An international tender for the proposed RM3bn Pahang-Selangor raw water transfer project to be financed through a soft loan from Japan, is expected to be carried out by the middle of next year. Energy, Water and Communications Minister Datuk Seri Dr. Lim Keng Yaik, in stating this, said the cost of the project, which has been delayed for years, would be reduced from RM3.8bn to around RM3bn. This was after the government decided to review the process of appointing the consultant for the project. The project consultant would now be decided through an international competitive tender bidding process instead of direct appointment by the Economic Planning Unit (EPU). he added.
SIX RULES IN PROPERTY INVESTMENT - Rule No 5
Rule No. 5: Do We Follow Strictly the Investment Mantra – Location & Timing?
Timing and Location are always essential criteria for many investors to decide on the investment.
Timing:
From analysis of the property cycle, it is obvious that people buy property no matter in good times or bad times. The timing depends solely on the type of property. During bad economic periods, people still buy houses, hence, the low and medium types of property might not be seriously hit. But during bad times, property such as offices might be affected. Some companies might experience downsizing or shutting down and an over supply of office spaces will be available. This will definitely affect the office rental price. .
Location:
Local knowledge towards the location is more important than strictly following the location mantra. Invest in places that are familiar rather than in a place that is new.
11/10/2006
Berjaya Land to co-develop city in Vietnam
Berjaya Land Bhd (BLand) plans to cooperate with Vietnamese state-owned enterprise Tin Nghia Co Ltd in Dong Nai Province to jointly develop the district of Nhon Trach into a city. BLand would be conducting a feasibility study on the proposed project in the next six months after signing a memorandum of understanding (MOU) with Dong Nai’s provincial government on the matter in Kuala Lumpur on Nov 9. Its scope of work in Nhon Trach will include the development of a central business district, residential areas and transportation network.
SIX RULES IN PROPERTY INVESTMENT - Rule No 4
Rule No .4: Understand the Rules of the Game
To be successful in property investment, an investor needs to know the rules in property investment. Generally, there are five main items that the investor must be aware of: -
a. Major Property Legislations that Govern Property Investment/Development in Malaysia
b. Entry and Exit Procedure
Pre-Contract Stage
• Agency appointment
• Advertisement
• Enquiries
• Viewing and negotiation
• Preliminary agreement
• Preparation of contract/option
• Signing of option and payment of option
Contract Stage
• Financing arrangements
• Investigations and title searches
• Signing of contract and payment of deposit
• Signing of transfer instrument subject to undertaking
Post-Contract/Pre Completion Stage
• Purchaser’s solicitor send transfer for stamping
• Lodge caveat
• Repeat Searches
• Prepare completion statement (by Vendor’s Solicitors)
Completion Stage
• Final settlement of outstanding balance and handing over of keys/vacant possession
• Vendor’s solicitors hand over documents
• Registration of transfer
• Real Property Gains Tax Notifications
c. Technical Analysis
Analyzing Investment Environment
• Market conditions, legal and political constraints
Analyzing Investment Returns
• Initial Yield
• Payback Period
• Equity dividend rate
• NPV
• IRR
d. Property Taxation System
e. Financing
• Term loan
• Bridging loan
• Interest rate
• Etc….
Malaysia Daily Media Highlights
Strata Title Act to be amended
Natural Resources and Environment Minister Datuk Seri Azmi Khalid said that developers of gated community projects, unable to get bank loans due to problems of getting strata titles, can heave a sigh of relieve with the Cabinet’s approval to amend the Strata Title Act 1985. He added the other Act would deal with the management and maintenance of high-rise buildings, many of which do not have strata titles due to inadequate provisions in the law. Azmi said with more provisions, strata titles could be issued within two months.
IJM named main contractor for Kajang-Seremban highway
IJM Corp Bhd had been appointed as the main contractor to reactivate works on the RM840 million Kajang-Seremban Highway. The highway concession is now held by Lebuhraya Kajang- Seremban Sdn Bhd (LEKAS), of which IJM holds a 50 per cent stake in the company and the rest held by joint-venture partners Kaseh Lebuh Raya Sdn Bhd, Tunku Naquiyuddin Tuanku Ja'afar and Bumiputera institutions. To fund the project, IJM plans to raise RM750 million local currency bonds within the next three months. With a concession period of 32.5 years, the project, comprising a 48km three-lane dual carriage highway between Kajang and Seremban, is scheduled to be completed within 33 months.
Kumpulan Guthrie Bhd is selling its 27,245 sq m Guthrie Pavillion to its subsidiary Guthrie Property Management Sdn Bhd (GPM) for RM26.1 million.
11/08/2006
SIX RULES IN PROPERTY INVESTMENT - Rule No 3
Rule No. 3: Understand the Value of Your Investment
Price is a term used for the amount asked, offered, or paid for goods or services. It is a an unchanging fact, whether publicly disclosed or kept private. Because of the financial capabilities, motivations or special interests of a given buyer and seller, the price paid for goods or services may or may not have any relation to the value which might be ascribed to the goods or services by others. Price is, however, generally an indication of a relative value placed upon the goods or services by the particular buyer and/or seller under particular circumstances.
Cost is the price paid for goods or services, or the amount required to create or produce the goods or services. When completed, it is a historical fact. The price paid for a type of goods or service becomes the cost to the buyer.
Value is an economic concept referring to the monetary relationship between goods and services available for purchase and those who buy and sell them. Value is not a fact, but an estimate of the worth of goods and services at a given time in accordance with a particular definition of value. The economic concept of value reflects a market’s view of the benefits which accrues to one who owns the goods or receives the services as of the effective date of the value.
For property investment, understanding the concept of value, price and cost is very important. As rules of thumb: -
·If the value is much higher than the price offered, then the property is worthwhile investment;
·If the value is below the price offered, the investor should predict if there is any opportunity to enhance the value of the offer. If not, then it is not advisable to purchase the property;
·If the value is higher than the price offered, and additional costs are incurred to repair or maintain the property ehich will affect its value, then it is not advisable to purchase the property.
In property development, certain developers are very much cost concern and neglect the value of the product. For instance, these developers determine the construction cost of the product, add on the profit and determine the selling price. Sometime the price that these developers fix does not actually reflect the value that is acceptable for potential purchasers. It might end up being over-priced or under-priced.
On the other hand, some developers study the market force such as demand and supply, purchasing power, etc., and understand the value of the product that is acceptable for the purchaser. From this point of view, the developers might fix the selling price slightly lower than the market value of the product and thence budget the construction costs. By reducing the selling price of the product, it creates room for investors to make money and increase the marketability indirectly.
Apart from looking at the market value, experienced and far-sighted investors also look at other types of value of the property: -
Hope Value
An increase in the value of the land produced by a belief that there is a chance that the demand for that land will change significantly.
Marriage Value
An increase in value, or a release of latent value, brought about either by the merging of two interests in the same property or the merging of two adjoining or contiguous properties into common ownership.
Existing Use Value
The Market Value of the land with the benefit of existing use rights only.
Development Value
The latent value in a property that could be realised by carrying out development work. The value could alter significantly by a subsequent grant of consent to carry out a new form of development or a change of use.
Forced Sale Value
The amount that may reasonably be received from the sale of a property (forced sale) on conditions that do not meet all the criteria of a normal market transaction.
Highest and Best Use Value
The likely use, selected from a number of available choices, to which land may be put, in compliance with planning and building regulations, produces the most profitable present land value.
Alternative Use Value
The value of the land or buildings on the assumption that they are or may be put to use that is different from the current use.
Malaysia Daily Media Highlights
Malaysian Firms Close to Securing Pakistan Deals
Malaysian companies are on the brink of clinching contracts for road and rail projects in Pakistan, as the governments from both countries will soon sign a memorandum of understanding for a contract to build elevated highways in Rawalpindi and Karachi, estimated to cost about rM202.95m/ Malaysia has also proposed to build a light rail transit system for Karachi. The Malaysian government submitted a conceptual report and another feasibility report, costing RM5.5m, will be done delivered to the Pakistan government soon. By doing the report, Malaysia will be first offered the contract or a first right of refusal, if the project is found to be viable. The Malaysian Works Ministry has given 12 names of Class A contractors to the Pakistan Government. However, one road project, a 17bn-rupee highway connecting Khanewal and Faisalabad may not take off for it is not suitable for privatization due to low traffic. Pakistan’s National Highway Authority and the Construction Industry Development Board signed an MOU to build the 184km highway in 2005. (BT)
Malaysia: Central Bank Malaysia (BNM) Reserves increase to RM293.4bn
BNM international reserves increased by RM0.1bn to RM293.4bn as at 31 October. BNM said the reserves position is sufficient to finance 8.1 months of retained imports and is 6.7 times the short-term external debt. The increase in reserves in October (RM1.3billion) was in tandem with the recent improvement in the stock market amid large trade surplus of RM9.8bn in September.
SIME: Bakun progress and plans to expand Hyundai Plant
Sime Darby said that the Bakun project is more than 60% completed and is “happy” with the rate of progress. In a separate development, Sime Darby is in talks with Hyundai Motor Co. to expand their car factory in Malaysia. The company may spend RM100m to quadruple the production capacity at the plant. Decision on the expansion would com e in the next 12 months. It would take three years for the plant to be expanded to enable it to produce 120,000 cars a year. (Bloomberg)
INTI: Investing RM40m to expand Subang Jaya Campus
Inti Universal Holdings is investing RM40m over 3 years to expand its Subang Jaya campus in 2 phases to accommodate 3,000 students and to tap into the lucrative working adult education segment. The 1st phase will cost RM20m generated from its own funds and is expected to be completed in mid-2008. the 2nd phase is expected to be funded partly from its own internal funds and/or borrowings and will be completed in year 2009. (theedgedaily.com)
Boustead Holdings: To acquire PSCI building and land for RM54m
Boustead Holdings has proposed to acquire 3 pieces of land measuring 6,672sq.m. and Menara PSCI in Penang from PSC Asset Holdings S/B for RM54m cash. The proposed acquisition is expected to be completed in 2Q07. The proposed acquisition will be financed entirely via bank borrowings. As at Sep 30, 2006, Menara PSCI has a total net lettable area of 211,428sq.ft., of which 71% or 149,643 sq.ft. has been let out to 48 tenants. For the financial year ended 2005, it generated a total gross income of RM5.48m. The building had an audited net book value of RM70m as at Dec 31, 2005. (theedgedaily.com)
APLI: To invest RM33m in Vietnam Plant expansion
APL Industries is investing RM33m to increase the output of its Vietnam plant next year, as it is making losses because it is running below capacity. Under the 1st phase of the expansion, APLI will invest RM8m in two boilers – biomass thermal-oil heat energy generators – and upgrade six dipping process machines, which will increase the Vietnam plant’s output and achieve economies. APLI will invest another RM25m in December next year to install 12 new production lines for its Vietnam plant to increase its annual production capacity to 7.1bn pieces of gloves. (theedgedaily.com)
MULPHA: Unsuccessful in Australia’s GHG bid
Mulpha International’s offer for Australia’s Grand Hotel Group (GHG) listed on the Australian Stock Exchange, was unsuccessful after it failed to secure at least 50% of the GHG securities when the offer closed on Nov 7. Mulpha said that it might bid for the GHG assets individually should the opportunity arise. MULPHA had on Aug 18 submitted an unsolicited bid for GHG at 85 Australian cents (RM2.40) per share. However, Singapore-listed Tuan Sing Holdings Ltd had on Nov 2 launched a A$213.4m bid for a 74.96% stake in GHG at A$1.10 each, which is 29.4% above MULPHA’s offer. GHG owns 4 of Hyatt International’s 8 Australian properties including the Grand Hyatt Melbourne, Hyatt Regency Adelaide and Hyatt Regency Perth. It also owns two Chefley hotels in Brisbane and Canberra and the Country Comfort Chain. (theedgedaily.com)
Indonesia: Central Bank cuts interest rates
Indonesia’s central bank cut its benchmark interest rate by 50bps to 10.25%, the sixth reduction in rate from a peak of 12.75% in May. The Central Bank Governor said interest rates may be reduced again next month after inflation slowed to a two-year low and the Indonesian Rupiah Strengthened. Lower borrowing costs are expected to spur consumer spending and revive business activities in the country.
11/07/2006
SIX RULES IN PROPERTY INVESTMENT - Rule No 2
Rule No. 2: Identifying Investor’s Objectives, Goals and Personal Constraints
Before embarking on property investment or development, a prudent investor needs to identify clearly the objectives of the investment. Investing without identifying the investor’s own objectives, goals and strengths or weaknesses can be factors that work against the investor. Effective strategies can only be advocated if the investment objectives are clear.
Investing in real estate can satisfy one, all, or any combination of the following objectives:-
Objectives
Security of Income - Most types of real estate investments such as office, shop, retail and even vacant land are able to provide a regular source of income in the form of rent through the leasing out the property. As rents are generally contractually fixed for a term of years, such as three years with an option to renew at the prevailing market rent for another three years, there is a certain degree of security of income at least during the term of the lease.
Security of Capital - Property offers one of the safest forms of investment in terms of security of capital as it is durable, has a long economic life, and for some types of properties, is relatively scarce. Moreover, whilst a building may be destroyed by fire, the land on which it stands is indestructible and generally appreciates in value over time.
Hedge against inflation – Real estate investment is widely perceived to be a good hedge against inflation. Real estate offers an investor protection against loss of purchasing power resulting from rising prices of goods and services to the degree that the investor’s equity increases in value at a rate at least equal to or greater than inflation. Investors from all industries acquire property to hedge against inflation of their individual/company’s assets, For example, developers purchase land to keep as land bank, fund managers acquire asset such as hotels,and office blocks, manufacturers acquire industrial properties, etc.
Means of Building an estate (wealth creation) – For an investor, building up an estate or property investment portfolio may be a means to become wealthy. Once an investor’s equity has increased through capital appreciation and repayment of the loan taken, the original property can be refinanced to free cash that can be used to buy a second property, or the increased equity in the original property may be used as a collateral or security for a loan to buy a second property. By refinancing a property investment and reinvesting these funds in more properties periodically, an investor can accumulate a large property portfolio over time.
Pride of ownership – The personal satisfaction derived from an investment is especially important in real property. For many investors, property ownership retains a mystical quality, with a value that defies measurement. Owning a private resident unit in a prime district, for instance, is generally regarded as a status symbol.
Diversification – Diversification in finance involves spreading one’s investments into many types, including stocks, mutual funds, real estate, bonds, and cash. Investors diversify investments such as from stocks which is highly volatile to property in order to reduce the risks of the portfolio.
Basic Needs – Many properties are acquired for the investor’s own use and enjoyment. In this case, the owner will derive satisfaction and benefit through using the property. The owner will save on the rental payments he or she would otherwise have to make on a comparable property. In addition, the owner/investor will benefit from the possible capital appreciation of the property.
Type of Property
Besides clearly identifying the investment objectives, investor also should identify the type of property to invest. Various types of real estate such as apartment, shop, office, factory, land, hotel, retail, casino, resort, infrastructure, and even the cemetery are offered for investment. Each type of real estate has its own characteristics and features.
Holding Period
There are two board categories of the holding period: -
- Long term
- Flip
Long-term means holding the property for years. Most investors or developers do that.to retain the property for future value enhancement or other objectives as mentioned earlier.
Flipping means selling the property as soon as possible after the investor has acquired it. In some cases, the investor can even sell it before he or she buys it, or sell it simultaneously at the time of purchase.
Holding the property on a long term basis will incur substantial holding costs such as quit rent, assessment, maintenance charges, insurance fees, etc. When flipping the property, substantial taxes such as Real Property Gain Tax will be charged.
Time Available
Investing in real estate is a time consuming activity. Different strategies require different amounts of time or the commitment of the investor for a certain number of hours in a week.
Cash Available
As mentioned earlier, property requires a high level of capital commitment. Besides the capital involved, investors should also analyse the holdings costs, transaction costs and maintenance costs.
Malaysia Daily Media Highlights
DRB-HICOM: Short-listed for US$9bn Saudi rail project
DRB-HICOM has been short listed for a US$9bn (RM32.9bn) rail project in Saudi Arabia. DRB-HICOM submitted a comprehensive bid last month, and will know by next month if it is successful. The four-phase project involves building a 2,400km network of long rails, 250 concrete bridges, supply of 1,000 culverts and 4.5m concrete sleepers. (BT)
MMCCORP: RM133m storage tank project MMC and consortium
MMC and consortium partner PECD have won a RM133m contract from Malaysian Refining Company to construct storage tanks for Petronas Refinery Phase 2 in Malacca. The project will involve the design, construction and installation of two crude storage tanks, including the construction of all general services engineering works and necessary tie-ins for the project facilities. The project will be completed within 26 months. (BT).
Tanjung Offshore: Shipbuilding contract with Boustead Naval Shipyard
Tanjung Offshore has awarded a RM41m shipbuilding contract to Boustead Naval Shipyard Sdh Bhd for an anchor-handling tug and supply vessel. The construction of the vessel would be financed by internal funds and borrowings. Completion of the vessel is expected to be the third quarter of 2008. The company said the 60-metre vessel would be able to perform as a safety vessel for offshore drilling and workover rigs on 24 hours a day basis. (theedgedaily.com)
KPJ: Signs MOU in Islamabad
KPJ Healthcare signed a memorandum of understanding (MOU) with a foundation based in Pakistan and a Bangladeshi company to collaborate on nursing, health sciences education and training. KPJ Healthcare signed the MOU with Pakistan’s Memon Health & Education Foundation and United Enterprises & Co Ltd of Bangladesh after the opening of the Second World Islamic Economic Forum at the Jinnah Convention Centre. (Star)
Sumatec: Output to double
Sumatec is planning to more than double its copper production despite the delay of its mining operations that were initially slated for commissioning this year end. Its executive director and group managing director, James Chan said it planned to invest in a new copper plant to boost annual copper mining operations had been delayed and will only come on stream by February 2007, due to the late delivery of parts of the plant. The group has mining interest in a copper mine at Mengapur, Pahang, and also a gold mine at Lubuk Mandi, Terengganu that will start operation by end of 2006. (theedgedaily.com)
PSCL: Sells building in Penang to lower debts
PSC Industries has proposed to sell a building well known as Menara PSCI in George Town to Boustead Holding for RM54m cash. Boustead owns a 32.5% stake in PSCI. “The proposed disposal provides an avenue for PSCI to realise the value of its investment and to reduce its loan obligations to regularise the financial position as part of its plan pursuant to Practice Note 17,” PSCI said. (Star)
GLOBALC: RM250m fleet replacement
Globac Carriers is investing some RM250m over the next 5 to 7 years to replace its fleet of singlue-hull tankers with double-hull tankers; a move aimed at consolidating its position as a niche clean petroleum product (CPP) carrier and facilitates its regional market expansion plans. “We are in the process of ordering two 7,000 deadweight tonnes (dwt) double-hull tankers from a Chinese shipyard, which will be funded by the sale of our two container ships for RM80million. This will take about 12 to 18 months’” its chairman Datuk Azlan Hashim said. The shipping company now has six units of 7,000dwt single-hull tankers and a 12,000dwt double-hull tanker which is currently undergoing testing before commission. (theedgedaily.com)
Malaysia: Graft Index Ranking drop to 44th Place
Malaysia’s ranking in the Transparency International corruption Perceptions Index 2006 slipped to 44th place from 39th position last year. Within the Asia Pacific region, Malaysia was ranked 10th after countries like Singapore, Hong Kong and Japan but has scored better than China, India, Indonesia and Thailand. The survey ranked Finland as the least corrupt nation while Haiti came in last.
EU:2007 growth forecast raised
The European Commission (EU) raised its economic growth forecast for 2007 to 2.1% from 1.8% (2006f:2.6%) given the carry-over of strong growth momentum in 2H 2006 and the optimism arising from the lower oil prices. The EU also cut its inflation forecast for the year 2007 to 2.1% (previously 2.2%) as crude oil prices have retreated to below US$70 per barrel.
11/06/2006
SIX RULES IN PROPERTY INVESTMENT - Rule No 1
Property investment is a maze for the uninitiated. The rewards are tremendous but the process can be bewildering and risk-laden. Based on the experiences and exposures in property investment, the author has summarised six important rules that can assist general public who are interested in property investment.
Rule No. 1: Understand the features of Property as an Investment
Property has notable features that distinguish it from other types of investment, such as stocks and bonds. To venture into property investment, understanding the features of property is essential. Under certain circumstances, decision making in property investment always falls back to the fundamental basics of property features. An investor might consider buying a parcel of land even though the price offered is much higher. This is because the investor can foresee that the land offered to him is in a very unique location and the supply of this unique land is limited.
Generally, the features of property are as follows: -
Property as a unique asset
Property is heterogeneous or unique, i.e. no two parcels of real estate anywhere are identical. Even an adjoining pair of semi-detached houses or two neighboring flats will differ in some detail like the sitting of the bathroom and the type of finishes and improvements the respective owners put in.
Property as an immobile asset
Property is immobile, and cannot be moved to another location. Consequently, it is at the mercy of its physical environment. The addition of infrastructure, like an LRT station, in the vicinity of a property will affect its value. Thus, apart from the usual economic and social factors that influence the value of any investment, there is a unique spatial dimension to the analysis of property. The immobility and heterogeneity of real estate also lead to the delineation of sub-markets, often defined by sector – such as residential, retail or office – and location.
Capital Commitment
It requires a high level of capital commitment to invest in real estate, with the result that some kind of financing is invariably used. Hence, changes in credit conditions and regulations governing financial intermediaries like banks and insurance companies could have repercussions on the property market.
High transaction cost
The cost of a transaction in property is high. Because of the complexity of a property transaction, several parties are usually involved: estate agents, valuers, building surveyors, government departments, financiers, lawyers, etc. This implies that the parties involved will have to bear additional costs such as legal fees, valuation charges, stamp duties and mortgage processing fees.
Lengthy transaction time
The transaction time required to complete a property sale is relatively lengthy. In order to balance the interests of both buyers and sellers, the property transaction process involves several stages from the payment of the deposit to the signing of the sales contract and the completion of the sale. At each stage, certain legal requirements must be fulfilled and this takes time to accomplish.
Property as an illiquid asset
Property is illiquid, i.e. it cannot be converted into cash at short notice. This is a consequence of the length of time needed to complete a transaction. Illiquidity exposes property investment to the risk of market shifts over time, a two-edged sword that can, at one moment, enhance the value of the property and at another moment, diminish it.
Management
Property requires management. Because it is a physical asset, neglect and obsolescence can afflict the property. Hence, it is important to manage, maintain and where necessary, renew its physical fabric to retard the onset of obsolescence and enhance its value.
Inelasticity of supply
Property supply is generally inelastic in the short run, i.e. the stocks of real estate cannot be readily increased at short notice, since it takes a considerable time period to build any type of property. A single two-storey detached house could take, for example, up to one year to complete. A large mixed-use commercial property could take, perhaps, four years or more to complete.
Data imperfections
Looking at real estate in aggregate, the property market is characterized by data imperfections. Unlike stock and bond markets, where trading takes place in a fixed geographic location, properties are transacted when and where buyers and sellers (or landlords and tenants) agree on a price (or rent) and enter into legally binding contracts, wherever they might be. This lack of a central trading place implies that data on transactions is not disseminated instantaneously or equally to market participants at low cost, as it would be in the case of stocks and shares.
Effect of market leaders
The property market is also imperfect in terms of supplier power. In economic terms, it is oligopolistic, i.e. there are several large property developers who behave as market leaders, setting benchmarks that others tend to follow. The result is that property prices may not reflect the true supply-demand equation at any one point in time. Prices tend to move quickly upwards but are “sticky” downwards. This, in large part, accounts for the booms and busts of the famous real estate cycle.
Government intervention
Land is one of the primary resources of any country. As such the use, development, management and ownership of land and built-up properties is often affected by government legislations and policies implemented to ensure their optimal use. While government intervention in the use of real estate is inevitable, the degree and extent of intervention depends very much on the type of government and the political climate of the country.
Malaysia Daily Media Highlights
MMC: To develop US$30bn Saudi economic region
MMC Corporation (MMC) announced that it has been awarded the rights to develop and manage the new US$30bn “Jizan Economic City” (JEC) in Saudi Arabia, together with the Saudi Binladin Group. MMC received the letter of award from the Saudi Arabian General Investment Authority (SAGIA) in Jeddah. Located 725 km south of Jeddah, by the Red Sea, JEC is envisioned to be a fully integrated and self-contained development which would comprise industrial and non-industrial zones on a site measuring approximately 117 sq km. JEC would be Saudi Arabia’s fourth Economic City to be launched after the Economic Cities of King Abdullah, Prince Abdul Aziz bin Mousaed and Madinah. It would be implemented over 30 years at a development cost of about US$30bn. MMC said that out of this amount, about US$17bn is anticipated to be the investment cost for the various projects within the industrial zones which would be borne by the different project proponents. The balance would be the development cost for infrastructure, commercial areas, residential areas and public amenities. “The new city’s industrial zone, representing more than two-thirds of the project, will accommodate a port, an aluminium smelter, a steel processing plant, an oil refinery, a copper processing plant, as well as fisheries and an agro-based industry. It would also include a power and desalination plant to support the industries, which will have an eventual capacity to generate 4,000 mega watts of electricity”, said Feiza Ali, Group Chief Executive of MMC. (Bernama)
DIALOG: ProJET for Sale
ConocoPhillips is putting up for sale its 40 ProJET stations in Malaysia and 147 stations in Thailand as part of a decision to sell non-strategic businesses, according to an unconfirmed source. The group is retaining its investment in the refinery project in Malacca and other upstream projects. (Star)
RANHILL: Mitsui-Ranhill group bids for RM1bn Brunei jobs
Ranhill Bhd, the country’s biggest engineering company, has teamed up with Mitsui Corp, Japan’s second largest trading company, to bid for RM1bn worth of contracts in Brunei, a Ranhill company source said. The Mitsui-Ranhill consortium that also includes QAF Oilfield Services Sdn Bhd, the second largest employer in Brunei, is bidding for contracts from the Brunei Economic Development Board (BEDB). The BEDB has called for tenders seeking a service provider for the country’s Sungai Liang Industrial Park (SIP) project. The core aim of the SIP is to attract as much as US$4.5bn (RM16.4bn) in foreign direct investment as well as to position the industrial park on the back of Brunei’s gas reserves as the premier site for petrochemical and manufacturing industries in South-East Asia. (BT)
PETRA: Buying two vessels for RM189m
Petra Perdana Bhd is acquiring two new anchor handling offshore support vessels for RM94.57million each under its fleet renewal plan to provide marine support services to offshore oil and gas facilities. The company said it had entered into two separate memorandum of agreements with SK Line Company Ltd to purchase the vessels. Petra Perdana said it expected to take delivery of the two vessels in December 2008 and September 2009 respectively, which would be funded through internal financing and bank borrowings. (theedgedaily.com)
PECD: Unit accepts RM133m contract
PECD unit and its partner MMC Oil & Gas Engineering SB have secured a RM132.9m contract to build crude storage tanks for Petroliam Nasional Bhd’s (Petronas) second refinery, Phase 2 in Melaka. PECD said on Nov 3 that its unit Warga Hikmat Kejuruteraan Sdn Bhd had accepted a letter of award for the contract. It was awarded by Malaysian Refining Company Sdn Bhd, a joint venture between Petronas and Conoco. It said the project duration was 26 months from November 2006 and would include the construction of all general services engineering works. PECD said the project would contribute positively towards its earnings for the financial year ending Dec 31, 2007. (theedgedaily.com)
China: Reserve ratio is raised to curb over-investment
China’s central bank raised the statutory reserve requirement of banks to 9% from 8.5% to curtail a credit-fuelled investment boom. The increase in reserve ration, the third hike since July, coupled with the higher interest rates will slow the creation of domestic liquidity arising from high inflows of trade surplus. The central bank said it will continue to pursue a stable monetary policy and maintain a stable growth in bank lending.
US: Services growth surges in October
Activity in the US services sector compiled by the Institute for Supply Management rose to 57.1 in October (September: 52.9), higher than the consensus forecast of 54.5. Nine of 18 services sub-sectors reported increased activity in October. Prices paid index fell to 51.9 in October (September: 56.7), the lowest since July 2003, while new orders declined to 56.5 from 57.2 in September.
11/03/2006
Malaysia Daily Media Highlights
MCMC to proceed with evaluation of WIMAX Spectrums
The Malaysian communications and Multimedia Commission (MCMC) has been given the go-ahead to proceed with the evaluation of the 17 applications for the 2.3GHz wireless broadband access WiMAX spectrum. Energy, Water and Communications Minister Datuk Seri Dr. Lim Keng Yaik said: “They (MCMC) are going through the applications and will be seeking clarifications where necessary. If the applications have been made based on the wrong premise, for instance a state rollout instead of the nationwide rollout that we want, the MCMC will ask the applicant to clarify its position” Up to four block of spectrum will be up for grabs, but the minister said early last month that he was “inclined” to award only two blocks of spectrum of 30MHz each initially. (theedgedarily.com)
IJM: Award of RM331m contract
IJM Corporation Bhd’s unit has secured a RM331.4m contract from Bandar Raya Developments Bhd for the superstructure of a condominium project in Jalan Binjai, Kuala Lumpur. IJM said on Nov 2 that IJM Construction Sdn Bhd would build the superstructure for three b locks of residential units and four basement parking levels. The construction period was 32 months. Its 49% associate IJM Construction (Middle East) LLC had received a letter from Swiss Tower about the cancellation of a contract. It said Swiss Tower’s representative; Asteco Development Management LLC had informed IJM construction about the withdrawal of the letter of acceptance dated Aug 6 for the RM177.5m Swiss Tower Project Dubai.
Nam Fatt: No talks to sell Nam Fatt Stake
Nam Fatt Corp Bhd president and chief executive officer, Datuk Ng Keng Joo has not entered into any negotiations to sell his entire 16.6% or any part of his stake in the company. Shares in Nam Fatt had attracted buying interest since Oct 30 on market talk of a possible management buyout of major shareholders at a significant premium to its current share price. (theedgedily.com)
SIMEENG: Bids for jobs worth RM3bn – Rm4bn
SIME Engineering Services Bhd is bidding for contracts worth between RM3bn and RM4bn, most of them in the Middle East. Managing Director, Mohd Shukri Baharom said the company’s order book currently stands at RM2.4bn and that it has submitted further bids for engineering, procurement, construction, installation and commissioning (EPCIC) projects – mostly in the oil and gas sector.
MFCB: Proposes internal revamp, selling power plant
Mega First Corporation Bhd (MFCB) has proposed to sell its 51% stake in the Tawau-based Serudong Power Sdn Bhd for about RM39.3m under its internal corporate reorganisation. The stake comprised 8.2m shares to be sold to its own unit Mega First Power Industries Sdn Bhd (MFPI). Serudong Power has been operating a 35MW power plant in Tawau since December 1996. it said the RM39.3m would be used by MFCB to repay bank borrowings. Under a group debt settlement, MFCB’s three units, Mega First Mining S/B, Mega First Industries S/B and Mega First Resources S/B, would write off RM97.7m which MFCB owed them. MFCB would then provide for impairment losses totalling RM54.8m arising from a diminution in the value of its investments in the three units. (theedgedaily.com)
Malaysia: Rolling out of RM100bn High Impact Projects soon
Minister in the Prime Minister Department said twenty high-impact projects worth at least RM100bn are expected to be implemented soon to boost growth and rural development. He said some of there projects are already listed under the 880 projects announced earlier and are already budgeted under the 9MP. The Government is still seeking the best source of financing for projects not covered under the 9MP, which may include funding through private financing initiative (PFI) and foreign-currency denominated bonds. The Minister also expects 2H GDP growth to be strong with 3Q growth exceeding the 2Q performance of 5.9%.
EURO: ECB keeps interest rate unchanged
The European Central Bank (ECB) left its benchmark interest rate unchanged at 3.25% as predicted by most economists, after five rate hikes since December 2005. however, the ECB signalled that it is ready to raise interest rate next month given the concern over faster-than-expected economic expansion and cheaper oil which may fuel wage demand.
US: Productivity growth stagnates in 2Q, weekly jobless claims rises
Worker productivity in the US grew by 1.2% in 2Q, matching the rate of expansion in 1Q. Meanwhile, labour costs increased by 3.8% y-o-y and was up 5.3% for the first nine months of 2006. The report suggests that productivity growth may not be strong enough to deliver a strong economic growth and low inflation. In a separate report, the US initial jobless claims jumped by 18,000 last week to 327,000, the highest reading in three months, suggesting that companies may have stepped up the pace of firings as the economy slows.
IMF: US 2007 growth forecast cut to 2.6%
The IMF revised downwards the growth forecast of the US economy to 2.6% from 2.9% project earlier in September. The revision was prompted by the shaper-than-expected housing slump and weaker consumer spending. However, the IMF maintains its forecast of 3.4% for the US economy in 2006.
11/02/2006
Malaysia Daily Media Highlights
AIRASIA: Fuel surcharge
Transport Minister, Datuk Seri Chan Kong Choy, said the government would leave it to Malaysian Airline System (MAS) and low-cost carrier AirAsia to decide if they want to reduce fuel surcharges. “We will let their mechanism determine the fuel surcharge,” he said, when asked if the airlines would reduce the charges in view of the lower crude oil prices. On allowing budget airlines to operate flights between Kuala Lumpur and Singapore, he said the government needed more time before deciding on the matter. Singapore’s Transport Minister Raymond Lim was reported as saying that the republic was awaiting the Malaysian government’s go-ahead for budget airlines to fly between the two countries. (theedgedaily.com)
Plus: Appointed concessionaire in Indonesia
Plus’s 55%-owned PT Lintas Sedaya has been appointed as the concessionarie to undertake the design, construction, ownership, management, financing, operation, maintenance as well as toll collection for the 116-kilometre Cikampek-Palimanan toll highway project on a build, operate and transfer basis. The concession period is 35 years. The remaining stake is held by PT Baskhara Utama Sedaya. (Bursa)
MUI: buys Metrojaya for RM273m
Malaysian United Industries (MUI) is buying a 91.06% stake in Metrojaya (MJB) from its parent company Pan Malaysian Industries (PMI) for RM273cash. The deal will allow MUI to strengthen retailing as one of its core businesses and allow PMI to reduce its borrowings. MUI is buying a 24.4% stake or 30.53m MJB shares from PMI for RM73.27m and 66.62% stake or 83.22m MJB shares from PMI’s unit Excelton for RM199.73m. (theedgedaily.com)
Airport: Eyes more management contracts abroad
Malaysia Airports Holdings (MANB) is in talks on managing airports in Jordan, Oman and Saudi Arabia as part of its overseas expansion plan, its managing director Datuk Seri Bashir Ahmad said. MAHB had said last June that it was in talks on airport management contracts in Kazakhstan, Saudi Arabia and a few other countries in the Middle East. MAHB now provides airport operation and technical services for the development, operation and maintenance of the new Hyderabad International Airport in India. (theedgedaily.com)
Gropel: Sells Ladang Bertam
Guthrie Ropel (GRopel) said it has completed the sale of its 914.2ha Ladang Bertam estate to 4 companies – Flora Horizon, Hartawan Development, Pilihan Teraju and Paduwan Development – for RM91.35m. In a statement on Nov 01, GRopel said the gain on disposal was RM65.3m. Ladang Bertam is a freehold property planted with oil palm comprised 4 divisions – Durian Tunggal, Bertam, Parit Melana and Krubong. (theedgedaily.com)
US-Malaysia FTA to open US$250bn of US Government Procurement
The US government will open approximately US$250bn worth of procurement to Malaysia under the US – Malaysia Free Trade Agreement (FTA) currently being negotiated, said US senior procurement negotiator, Jean Hillman Grier. The procurement was presently not available to Malaysian firms because without an FTA, the US government is generally prohibited from purchasing goods or services from Malaysia. (Bernama)
Malaysia: Sale of foreign currency Islamic bonds allowed
The Governor of Central Bank Malaysia said Malaysia will now allow the sale of foreign-currency denominated Islamic bonds for the first time to further strengthen Malaysia’s leading positive in the Islamic bond market. The Securities Commission also said the a non-Ringgit sukuk issued by both local and foreign financial institutions which is rated at least single A will be deemed as approved and may be offered to offshore and onshore investors. The above move will provide additional flexibility for both resident and foreign investors to diversify their investment into non – Ringgit investment in Malaysia.
11/01/2006
Malaysia Daily Media Highlights
MISC: Buys Aframax tankers
MISC bought 4 Aframax tankers from Japan’s Tsuneishi Corp for US$260m (RM730m) strengthening its position as the world’s second largest owner-operator of Aframax tanker. The first unit of the 107,500 deadweight tonnage (DWT) tankers will be delivered in 2009, while the rest in 2010. The continuous expansion of MISC’s petroleum fleet under American Eagle Tankers (AET), supported by regional offices in London, Singapore and Houstan will provide MISC with the critical mass to better service customers globally. (BT)
UMW: To list China Ops
UMW Holdings has stepped up the re-organisation of its China-based associate Wuxi Seamless Oil Pipe Co Ltd (WSP), which would lead to a possible listing of the new holding company of WSP. UMW’s effective interest in WSP shall remain unchanged at 30.6% after the restructuring. The proposed restructuring was to unlock and enhance the value of its investment in WSP.
Malaysia Finance Ministry to ensure swift 9MP implementation
Malaysia’s Deputy Finance Minister said the Ministry of Finance (MOF) will do its part to ensure that the 9MP projects will be implemented quickly to get the economic momentum rolling into 2007. He said the MOF is also involved at “hands-on level” of 9MP implementation, such as land issues with state administration. He also reassured that the bulk of the financing for 9MP will be from domestic sources.
US: Consumer sentiment falls marginally in October
US Consumer confidence complied by the Conference Board fell slightly to 105.4 in October (September: 105.9) weighed down by job prospects in the coming months despite the easing of energy prices. The report suggest that the positive impact of lower energy prices could be offset by the negative wealth effect from the housing sector correction. In a separate report, the Chicago based National Association of Purchasing Management (NAPM) said its business index fell to 53.5 in October, the lowest reading since August 2005.
IMF: China should make Yuan more flexible
The IMF said China should allow more flexibility in its currency and reduce its dependence on exports as the main engine of growth. The IMF said the robust growth in China has accorded the right timing to introduce more flexibility in Chinese Yuan as a more flexible Yuan would help to make China’s growth more sustainable. The IMF also raised China’s 2006 growth forecast to 10.5% from earlier estimate of 10%.
UK House Price Growth to slow in 2007
UK house price inflation will slow next year, but home owners in Scotland and Northern Ireland should enjoy above-average growth, according to Knight Frank Residential Research.
Average UK property prices will grow 6% during 2007, it said, down from an estimated 9% this year.
However, Scotland and Northern Ireland will experience the tail end of the recent housing market boom, with prices expected to grow by 9% and 10% respectively.
That will squeeze out pockets of “excess” affordability, and the property market in Scotland and Northern Ireland will under-perform the UK average from 2008, the forecast said.
At the same time, the “London effect” which has led to strong growth in the centre of the English Capital in 2006 – will spread to the majority of the south. (Reuters)
