Wednesday, May 28, 2008

Redevelop the Wisma Angkasa Raya, Opposie KLCC

PETALING JAYA: Sunrise Bhd is believed to be acquiring Wisma Angkasa Raya, located opposite the Petronas Twin Towers in Kuala Lumpur City Centre (KLCC), for redevelopment into an upmarket commercial project.

In a filing with Bursa Malaysia on Monday, the property developer said it had entered into an agreement with Reliance Pillar Sdn Bhd and Lembaran Segimaju Sdn Bhd to acquire Tanah Tuah Development Sdn Bhd for RM57.4mil.

Sunrise will pay RM27mil in cash and make a RM30.4mil shareholders' advance to Tanah Tuah. It has paid a deposit of RM5mil.

According to the announcement, Tanah Tuah has registrable interest in a piece of freehold land within the KLCC.

“Tanah Tuah represents a good investment as the property that is being acquired by Tanah Tuah has potential to be redeveloped into an upmarket commercial development, which will further strengthen the group's presence in a prime location,” Sunrise said in the statement.

Tanah Tuah had in January agreed to buy the 1.6-acre land from the original owner for RM152mil but the agreement has yet to be concluded.

Sunrise said it had taken the necessary legal measures to safeguard its interest in the event the company's agreement with the vendors was completed before the completion of the accord between Tanah Tuah and the original owner.

Wisma Angkasa Raya, which is around 29 years old, is Kuala Lumpur’s first high-rise office building. The unencumbered property is a 24-storey commercial building comprising a 20-storey office tower and a four-storey podium with two basement carparks.

It has a total net lettable area of 167,728 sq ft and an occupancy rate of 96.4%.

Aseambankers research analyst Ong Chee Ting said that assuming Tanah Tuah had taken a 100% debt funding for the purchase, Sunrise’s RM27mil cash payment to the vendors would have raised its acquisition cost to RM179mil, or RM2,588 per sq ft.

“Even at RM2,588 per sq ft, it is considered a fair price. Assuming that KL City Hall grants Sunrise a 10 times plot ratio for redevelopment, similar to the upcoming Menara YNH in Jalan Sultan Ismail, the price per plot ratio works out to RM259 per sq ft.

“Adding RM500 per sq ft per plot ratio for the construction of an upmarket development and factoring in an efficiency ratio of 80%, the total construction cost comes to about RM1,000 per sq ft per net saleable area,” Ong said.

Given that KL City Hall has raised the plot ratio for commercial development to nine to 10 times now compared with Wisma Angkasa Raya's three times, Ong said the redevelopment could yield a gross development value of at least RM900mil.

“If Sunrise’s new property can be sold above RM1,300 per sq ft, there's still a 30% margin to be made. This translates to a development profit of RM208mil,” he said.

Ong said the risk for the redevelopment plan was a possible oversupply of new office space in Kuala Lumpur by 2010, although this risk is “mitigated by the property’s prime location''.

Monday, May 26, 2008

RM200mil Nursing College to take shape in Bandar Sri Sendayan, Seremban, Negeri Sembilan

PROPERTY developer BSS Development Sdn Bhd, a subsidiary of Matrix Concepts Holdings Bhd, expects anchor investor International University College of Nursing (IUCN) to boost the economic development in its new township, Bandar Sri Sendayan in Seremban.

Today, state government agency Menteri Besar Inc of Negeri Sembilan will sign a deal to sell 200 acres in Bandar Sri Sendayan to Run Education Sdn Bhd, the owner and manager of IUCN.

Run Education will invest about RM200mil to build IUCN, Malaysia's first international nursing school.

BSS, in a joint venture with Menteri Besar Inc of Negeri Sembilan, is developing the 5,235-acre Bandar Sri Sendayan, which has a gross development value of RM3bil.

“We believe that the new IUCN campus will accelerate the growth of Bandar Sri Sendayan as well as stir up the local economic activities in Seremban,” Menteri Besar Inc of Negeri Sembilan chief executive officer Datuk Mohd Hasiah Mohd told StarBiz.

He said Menteri Besar Inc is confident of attracting students from neighbouring countries, as IUCN would have a competitive advantage in terms of location, being only 20km from the KL International Airport.

IUCN had a target of 60:40 ratio between international and local students, he added.

BSS managing director Datuk Lee Tian Hock said IUCN expected the first intake of 5,000 students in September next year and hoped to accommodate 20,000 students by 2011.

“We hope IUCN would attract foreign and local students to pursue nursing qualifications in Seremban as the cost of living is relatively lower than the Kuala Lumpur city centre,” he said.

Located in the middle of Bandar Sri Sendayan, the IUCN campus would be developed in two phases and construction was scheduled to start next month, said Lee.

According to him, Bandar Sri Sendayan is expected to have a population of 60,000 when it is fully developed in 15 years.

Meanwhile, BSS and the Negri Sembilan state government agency are currently in talks with a foreign party to sell 1,000 acres for over US$1bil for an integrated tourism-related project.

The deal was expected to be finalised next month, said Mohd Hasiah.

>> More info about the land/properties

Saturday, May 24, 2008

Golden Triangle and Mont’Kiara still hot spots

KUALA LUMPUR: The Golden Triangle and Mont'Kiara continue to remain the top “hot spots” in the Klang Valley for property investments as these areas have shown marked increase in capital appreciation.

Property map “guru” Ho Chin Soon said some condominiums in the Kuala Lumpur City Centre (KLCC) development had breached RM2,000psf while the price of condominiums in the affluent Mont'Kiara neighbourhood were also rising.

Ho, who is the managing director of Ho Chin Soon Research Sdn Bhd, said the spill over effects from these “hot spots” was apparent but only in certain locations.

The Klang Valley, he noted, would remain the No 1 growth region in Malaysia for many years.

“Malaysia is an excellent country in Asia to invest in because of excellent infrastructure, solid legislation protecting land rights and liberal policies for foreign investors,” he said in his talk at the Malaysia International Property Showcase yesterday.

“We need to fine tune our economic policies to compete with the rest of the world in the light of globalisation. In order to compete we have to change. The recent 12th general election has started the ball rolling.

“People voted for change. They want greater transparency. There should no more be negotiated deals or land alienation but tenders and public sale of land,” he added.

Ho said there had been a lot of foreign interest in Malaysian property, especially last year when investors from South Korea and the Middle East bought office and condominiums en bloc.

He also advised investors to do their “home work” carefully and buy from reputable developers, as there were signs of the market softening.

“We have to take what developers tell us with a pinch of salt. Rental yields are going to come down,” he said in response to a question on the many vacant units in Mont'Kiara.