Friday 28 June 2013

Shopping malls still in demand in Shah Alam

FILLING up shops in malls is not a problem in Shah Alam due to the limited supply in the area, despite the fact that this sub-segment of the property sector has reached its saturation point.
“The industry has reached its saturation for over the last 10 years. We are in an oversupply situation but we still have developers who are interested to build malls,” says Henry Butcher Shopping Centre Consultants Sdn Bhd managing director Tan Hai Hsin.
“However, Shah Alam does not face any serious oversupply (situation). One of the reasons is because cinemas were not allowed to operate in Shah Alam until last year,” he adds.
Tan tells StarBizWeek that generally in the Klang Valley, the occupancy rate for shopping malls is 85%.
“Some malls are very well occupied and some are empty. It depends on how it is set up, the type of properties and the management,” he says.
A mall that is 100% owned by a single owner tends to do better than a mall that is strata titled, as all the retail shops in the mall are individually owned, Tan opines.
“(The shops or outlets) are individually owned; it is difficult to manage because you are dealing with hundreds of owners, each of them chooses their own tenants.
“Hence, there is no control on tenant mix. This factor tends to effect the success of a shopping mall,” Tan says.
Meanwhile, Tan believes the upcoming CentralPlaza@i-City shopping mall has huge success potential, because of its location.
To date, there are only two other shopping centres on the whole stretch of the Federal Highway, one is Mid Valley which is in Kuala Lumpur and the other one is a cluster of shopping malls (examples are Empire and Subang Parade) in Subang.
“The next mall on the Federal Highway will be the CentralPlaza@i-City located in Shah Alam. It will cater to a sizeable market close to 700,000 of Shah Alam’s population and some 900,000 of Klang’s population,” Tan says.
He says that upon completion, the CentralPlaza@i-City shopping mall will be the largest shopping centre in Shah Alam. It is due for completion by end of 2016 with a gross floor area of around 1.5 million sq ft and net leaseable area of around 1 million sq ft.
“When it comes to malls today, size matters,” Tan says, adding that the Klang Valley “urban family” prefers to go to bigger shopping centres, particularly during weekends.
“They want to go to a place where they can spend hours, at least half of the day, there, because it offers various choices in one place for all the family members,” he says.
Having said that, shoppers between Shah Alam and Klang will soon enjoy more options because CentralPlaza@i-City is going to adopt a Thai retail concept.
Previously, according to Tan, most of Malaysia’s shopping malls adopted the Japanese retail concept, where the hypermarket, or supermarket, is located below and retail shops above it.
“Nowadays, we are moving away from that concept, although we still have a hypermarket in a mall. However, with hypermarkets mushrooming in Malaysia, more people prefer to make a short trip to a hypermarket, or to smaller malls to run their daily errands and utilise their weekend to enjoy the environment of a bigger mall,” he explains.
Nonetheless, Tan notes that having Thai retail in the country is a “refreshing” concept, because most of international brands that come to Malaysia will start their journey in South-East Asia in Singapore first, as seen in brands such as Topshop, Uniqlo and H&M.
“Brands usually establish themselves in Singapore before they come to Malaysia.
“However, many Malaysians and Singaporeans like to go to Thailand for shopping, not because of the brand but for its design and value for money,” he says.
I-Bhd signed a memorandum of understanding with Thai-based mall designer specialist Central Pattana Public Co Ltd (CPN) last year to jointly build a mall at i-City.
I-Bhd through its unit i-City Properties Sdn Bhd intends to hold 40% stake and CPN, through its local subsidiary, the remainder in the joint venture company.
The mall will be designed to cater to the needs of Thai retailers.
“Klang Valley people have always opined that most of the new malls share similar concept. Hence, Central Plaza will be able to offer a refreshing concept,” Tan says.
Adding to that, he says the accessibility of Central Plaza will be a further catalyst for its success. “They are going to build a ‘fly-over’ that will be directly linked to the mall, similar to Mid Valley.”
According to I-Bhd representative, the design for the mall is expected to be ready within a month. It will be managed by CPN.
In terms of retail space within the i-City township, Tan believes that both the commercial space outside of the mall and the retail space within will be able to complement each other.
“Some retail shops operate more suitably outside malls and this adds variety within the township,” Tan explains
Source The Star, June 22, 2013

A new bright spot for Cheras

THE integrated mixed project known as Sunway Velocity that Sunway Bhd has embarked on along Jalan Cheras, Kuala Lumpur, will emerge as a bright spot in that vicinity.
In the neighbourhood of Jalan Cochrane, redevelopment efforts have given a new lease of life to the area.
Sunway central region property development division executive director Ong Ghee Bin says in an interview with StarBizWeek that the Velocity project where people can live, work and play under one roof will further enhance the area.
He concedes that the selling prices of the properties, both residential and office, are at record high in that area, which was once considered “run down”.
“With this regeneration, we are able to transform the whole area,” he adds.
CH Williams Talhar and Wong Sdn Bhd managing director Foo Gee Jensays: “With the Sunway brand name, selling prices are at a premium, taking into account Sunway’s reputation for reliable quality of design, materials used and workmanship.”
He also says that expectations have always been high that redevelopment of the Jalan Peel and Jalan Cochrane area will offer investors the opportunity to own a property with high rate of capital appreciation, based on the track record at nearby Taman Maluri.
“Jalan Peel/Cochrane was originally a government housing area. Jabatan Kerja Raya (Public Works Department) workshops and the government printer were established in this area. This was followed by other private light and medium-scale industries surrounding the residential area,” Foo elaborates.
Among others, Malton Bhd has introduced Amaya at Maluri, a mixed development which sits on a 2.7-acre leasehold land with a gross development value (GDV) of RM215mil, which was launched at RM450 per sq ft (psf).
“In comparison, the current average asking price at Amaya Maluri is about RM700 psf … but it will not have the convenience of being integrated with 1 million sq ft retail space and office suites,” says Foo.
He points out that older developments like Pertama Residency and Plaza 393 cannot be compared with Velocity because they were built much earlier.
It is also worth noting that the 23-acre freehold land neighbouring some of Cheras’ mature townships like Taman Maluri, Taman Shamelin Perkasa and Taman Pertama is a rare find.
Sunway Velocity
Sunway can increase the attractiveness of integrated mixed development by improving traffic flow.
Besides having the two future mass rapid transit (MRT) stations Cochrane and Maluri that are 100 meters and 220 meters away respectively from the project, the developer has planned a tunnel with direct link from Jalan Cheras to the shopping mall basement carparks and an underpass from Jalan Cheras to Jalan Peel.
The builder has also proposed an elevated and covered walkway to link the upcoming MRT stations.
“We want to do things properly and we don’t mind paying extra for the infrastructure for people’s convenience,” says Ong.
On top of the connectivity of the project via various roads and through the MRT stations which are expected to be completed by 2017, the idea of a self-sustained development becomes even more seamless with all the planned covered walkway for people to go from one place to another within that locality, he adds.
The project is a joint venture with landowner Fawanis Sdn Bhd and has a GDV of RM3.8bil. It comprises three phases. Phase one and three consist of serviced apartments, retail shops and office suites.
There are several types of offices to cater to different business needs. For instance, its designer suites are popular among start-ups while its signature office blocks target small and medium enterprises, Ong says.
The designer offices, with a built-up area of 600 sq ft, are 85% sold and boasts of facilities like swimming pool and gym.
Serviced apartments known as V Residence, meanwhile, come in varying sizes. There are 564 units, of which 411 are studios and 204 small office home office (SoHo) units.
When launched last year, prices of the residential units started from RM750 psf.
Ong says subsequent launches of serviced apartments were priced at RM900 to RM1,000 psf. There was overwhelming demand.
“We have studio units to cater to the young adults or couples, apartment sizes ranging from 800 to 1,000 sq ft for smaller families and 1,000 to 1,500 sq ft for medium-sized families,” he says, adding that 334 units will be launched in August.
Phase two of Velocity, which includes a 1.4 million sq ft shopping mall, a 284-room four-star hotel, office tower and corporate office collectively worth RM1.5bil, will be owned and operated by Sunway.
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The mall, slated for opening at the end of 2015, is going to be an exciting lifestyle mall, he says, adding that the management will time its opening for the year-end festivities.
After the shopping mall, it will launch its hotel, and subsequently the office tower, Ong adds.
“Many of our existing tenants (from Sunway’s other malls) are interested to come over as it will have an interesting concept,” he enthuses.
He also says the group’s expertise to run and manage shopping malls, hotels and offices would bolster investors’ confidence.
“Owners of the retail shops can capitalise on visitors coming to the shopping mall as they will have to go pass the shops before arriving at the mall,” he explains.
There is also a two-acre recreational park.
Two property analysts tells StarBizWeek that selling prices for the project are rather high considering that it is not a “high end” area.
“The location does not warrant this kind of high prices,” quips one.
Foo says the rate of capital appreciation of the serviced residences will depend on the success of the retail mall.
“The challenge faced by Sunway is to establish a megamall in that locality similar to the success it achieved with the Sunway Pyramid in Bandar Sunway.”
However, real estate investment consultant Gavin Tee Swee Heng says the prices are reasonable, given the amenities and connectivity. Both these features will boost the rental market.
“The live, play and work concept will have a premium. It is a concept that is popular in large cities like Beijing and Jakarta. In Kuala Lumpur, the trend has just started,” he says.
He also notes that the place is good for owner occupiers whereas investors may have to hold the property for three to five years to see meaningful gains.
“Investors might not see immediate returns in terms of price appreciation but they do not have to worry about renting out the units as there will be demand,” he adds.
In terms of progress, phase one is 50% to 60% completed whereas phase two is 20% completed. Meanwhile, work for basement structure of phase three has begun.
The entire project is expected to be completed in 2018.
Source : Star, June 22, 2013

Bank Negara is studying the risks arising from DIBS with a view of potentially imposing curbs on it

PETALING JAYA: Bank Negara is studying the risks arising from the developer interest-bearing scheme (DIBS) with a view of potentially imposing curbs on it, sources said.
Although it is unclear if or when such curbs would be put in place, Hong Leong Investment Bank (HLIB) said that it may be “later this week”, adding that such a move would be a negative for future sales in the primary property market.
Other industry players think that the measures might be introduced in the second half of the year.
DIBS has become a popular easy financing package offered by property developers in joint-promotion activities with banks in recent years.
Under the scheme, buyers need not fork out much initial downpayment to buy properties, as the developer supposedly absorbs the initial interest. This is until the buyer takes possession of the property.
A high number of buyers enter this scheme with the intention of flipping the property when they gain possession of it, making a profit without having to come up with much capital in the process. Such a scenario fuels speculation.
“Typically, under the scheme, buyers only foot between 5% and 10% of the house price upon signing the sale and purchase (S&P) agreement and only begin payment when the project is completed,” a property consultant told StarBiz.
“There are caveats to this scheme, as buyers commit to a financial obligation upon the signing of the S&P and the interest cost has actually been already passed on to buyers via the higher selling prices.”
DIBS is mainly offered to the high-rise residential segment. Some property consultants have opined that the presence of DIBS in the market has caused prices to be set on an artificially higher trajectory.
Notably, the Singapore government banned DIBS in 2009.
“While the exact measures are yet to be revealed, we believe the curbs would impact this easy financing scheme,” HLIB said in a note yesterday.
According to analysts, most of the sales in the recent property bull cycle were tied to the attractive DIBS scheme at the expense of the secondary property market which has remained sluggish. And given the persistent rise in household debt, the Government is mulling over measures to limit it.
“In the recent past, Bank Negara has been compiling information on the scheme and studying its impact on the sector,” a source said.
Bank Negara had yet to respond to StarBiz’s queries as at press time.
“The difference between the non-DIBS and DIBS pricing can range from as low as 5% to as high as 30% if other incentives like early-bird discounts, stamp duty waivers and cash payments are taken into account,” said Elvin Fernandez, managing director of Khong & Jaafar group of companies.
He advocates regulators to compel developers to be transparent on the various incentives, as it may be difficult to do away with DIBS packages.
“Developers should inform buyers and bankers of the actual value of the discounts they are getting so that house buyers know the true value of the house they are buying,” he said.
UOB Kay Hian Research noted that new launches in selective high-rise projects in the suburbs of the Klang Valley were transacted at over RM1,000 per sq ft (psf) vis-a-vis RM450 psf two years ago.
“Household debt has risen to 80.5% of nominal gross domestic product as at end-December 2012, up from 60.4% as at end-2008.
“We also note that outstanding banking sector loans in the household sector has risen 3.6% year-to-date as at end-April to RM638.5bil from RM616.5bil as at December 2012. As the rise in consumer credit is partly linked to housing, curbs may be introduced to dampen speculation,” UOB Kay Hian said in a report yesterday.
On the financial impact of curbing DIBS on property companies, HLIB said that it would be “negative for future sales in the primary market but the extent of damage varies with the degree of exposure to the high-rise segment for each individual developer”.
UOB Kay Hian reckons that if DIBS or similar schemes were to be tightened, it could “significantly dampen new property launches as speculators will be filtered out”.
The company also does not rule out the possibility of a further upward revision in real properties gains tax (RPGT) to dampen speculation.
In Budget 2013, the Government had raised the RPGT for the second time since 2011, stipulating a 10% to 15% tax for the disposal of properties within two years of purchase, and 5% to 10% for the disposal of properties within three to five years. However, properties sold five years after purchase are exempted from the RPGT.
Source The Star, 25 June 2013

EPF development of RRI land should be an affordable housing project. Here’s why

Corporate Notes by Gurmeet Kaur
WHILE we wait with bated breath on how the Employees Provident Fund (EPF) is going to develop the Rubber Research Institute (RRI) land in Sungai Buloh, here is a wish – that the whole project be turned into an affordable housing project. Here’s why.
At 942.92ha, the RRI land development is the city’s largest suburban property project. Using a high plot ratio and if the units are priced at, say, RM400,000 and below, this would be a huge help to the young urban crowd who are looking to buy their first property.
We all know the difficulty that just about every wage earner is facing in the Klang Valley – the ability to afford a decent home.
File photo of Rubber Research Institute grounds in Sungai Buloh, before it was sold to EPF.
Migration to urban centres coupled with the fast growth of the population has created a big demand for houses in and around major cities, especially in the Klang Valley. But at the same time, private property developers have shifted their focus to high-end housing, obviously attracted by the higher margins.
This has left a big gap in the middle-income housing supply. It is estimated that the middle-income sector makes up half of the country’s population. So, a solution to their housing woes would surely go a long way in tackling the affordable housing problem in the country.
To be fair, there are already initiatives by a few agencies under the Federal and state governments implementing affordable housing schemes. They include Syarikat Perumahan Negara Bhd, Projek Perumahan Rakyat 1Malaysia and Government-linked housing developers like Sime Darby Property.
But given the sheer size of the RRI land bank, the supply of units that would come from its development would be massive and could easily serve much more than the 15,000 population target that the EPF is envisaging.
So, rather than trying to figure out complex joint ventures with high-end developers, the EPF should just tender out construction works for building affordable homes after a solid development plan has been put together by the experts.
The EPF can take a leaf out of the books of countries like Japan, which have good planners for this type of high-rise affordable homes.
No doubt, quality planning is important so that the development does not end up like one of those terrible places where developers’ shoddy planning and greed have created almost “ghetto-like” enclaves in creating their version of affordable housing.
With a 7.5-km green park of 64ha being the highlight of the RRI development, the township could be the model of an affordable housing project.
What makes the RRI land more suitable is the fact that it is going to be an MRT hub. So imagine all the thousands of families living there and using the MRT to work. Wouldn’t that be great to reduce congestion in the city?
File photo of progressed earthworks in preparation for the MRT depot at Sungai Buloh.
But then again, why should the EPF do it?
If the EPF does take this approach, would it mean that it is going to be losing money on this project? After all, the EPF’s subsidiary Kwasa Land Sdn Bhd – the project’s master developer – paid a high sum of RM22.50 per sq ft or RM2.3bil for the land in RRI from the Malaysian Rubber Board.
Still, with this land cost, one can make a decent return on the investment if the development is done in a prudent and efficient way. There are many options available to EPF to ensure that it gets a decent return and yet build the massive number of homes at affordable prices. For example, the commercial development aspects of the project could cross-subsidise the affordable aspect of the project.
So, the EPF should not miss out on this opportunity to have a huge positive impact on one of the most nagging problems among us KLites.
Source The Star, June 27, 2013

KLCC Property seeks anchor tenant an undeveloped land near KL City Centre

KUALA LUMPUR: KLCC Property Holdings Bhd (KLCCP) is in talks with several parties to secure an anchor tenant for Lot D1 by the end of the year.
Group chief executive officer Datuk Hashim Wahir said the group was “working hard” to achieve its goal. He, however, declined to provide details on the potential tenant.
“At the moment, we are targeting to secure the anchor tenant, and if we can get the final investment decision by the end of the year, then it would take approximately four years to complete the development,” he said after the group’s AGM.
It had been earlier reported that KLCCP preferred multinationals as the anchor tenant of Lot D1, and that the KLCCP Stapled Group was capable of developing projects similar to Menara 3 Petronas.
Lot D1 is an undeveloped parcel of land located in the vicinity of the Kuala Lumpur City Centre, with about 1.4 million sq ft of gross floor area. It is located in between One KL condominium and Mandarin Oriental Hotel, and is currently occupied by a temporary structure.
Hashim said the group was aiming for a 6% to 8% growth in its operating profit for financial year 2013 on the back of its completed corporate exercise of becoming a stapled securities as well as from a higher income contribution from its office segment.
“We are expecting a revenue contribution of more than 50% from the office segment in financial year 2013 from 44% in the last financial year,” he disclosed.
The growth would come from the group’s recent acquisition of the remaining 49.5% shares in Midciti Resources Sdn Bhd, the owner of Petronas Twin Towers, from KLCC Holdings Bhd.
Despite the impending high supply of office space in the market, Hashim said the impact on the group would not be significant, underpinned by high occupancy rates for its commercial properties by “credible companies” and long-term tenancies.
“Our recent launch Menara 3 Petronas’ 95% occupancy rate, the 100% occupancy of Menara Dayabumi, and ExxonMobil are here to stay,” he added.
He is optimistic that both office and retail segments would experience robust growth for the long term, as currently both segments contribute some 80% to its revenue.
However, it would be a challenging time for its hotel segment, as the market is getting more challenging with more hotels sprouting up around the area.
“The supply must be in tandem with the demand. Hence, we are working with the Tourism Ministry and Kuala Lumpur City Hall to attract more tourists into the country,” Hashim said.
He also noted that the group was always open to assets that fit its profile.
Source The Star, 27 June 2013

UOA buys Jln Ipoh land for RM130mil for mixed development project

PETALING JAYA: UOA Development Bhd has bought six parcels of land or 11.1 acres at Jalan Ipoh in Kuala Lumpur for RM130.3mil, with plans for an integrated mixed development. With the acquisition, the company said in a filing that it would collectively own approximately 28 acres of prime land in the said location, and was expected to commence development of the land next year.
However, development cost for the project have yet to be ascertained, pending the finalisation of detailed development plans.
It said the development will be highly accessible via major highways such as Duta-Ulu Klang Expressway (Duke) and Jalan Kuching.
In addition, it said the location was surrounded by densely populated residential areas such as Taman Kok Lian, Taman Impian, Taman Sri Kuching and Taman Rainbow.
The company said the transaction was done via its unit Tiarawoods Sdn Bhd with vendor Ng Kim Khin@Ng Beh Leow.
The land totalling 483,322 square feet is free from encumbrances except for some tenants who are currently occupying Lot 950 and Lot 4052.
To deliver the land to UOA, Tiarawoods will eject the squatters on Lot 950 and terminate a use of way.
Source The Star, June 27, 2013

Analyst: DIBS curb would have little effect on banks

y Maybank Investment Bank Research
It has been speculated that Bank Negara is studying the risks arising from DIBS with a view of potentially imposing curbs on it.
ASSUMING the developer interest bearing scheme (DIBS) is curbed, we estimate the worst case scenario to be a marginal 0.7 percentage points (ppt) shave off our 2014 industry loan growth forecast of 10.5% to 9.8%.
We believe domestic banks have been more tempered in their exposure to the mortgage segment and channel checks point to limited exposure at this stage. We maintain our industry loan and earnings forecasts for the individual banks for now.
Speculation has it that Bank Negara is looking to curb the DIBS. General guidance is that such loans have made up 15%-20% of new mortgage loans over the past few years and thus some dampening effect is to be expected.
Nevertheless, we believe the impact is likely to be contained by the fact that housing loan growth of the Big 6 banks has been measured and such loans account for less than 5% of total residential loans for the big banks.
Assuming DIBS loans account for 20% of new mortgage loans, we estimate the worst case impact to be a marginal 0.7-ppt decline in our 2014 industry loan growth forecast to 9.8% from 10.5%.
While industry housing loan growth rose 13% year-on-year (y-o-y) in 2011 and 2012 respectively, housing loan growth for the Big 6 banks rose 14% y-o-y in 2011 and at a more measured pace of 10% y-o-y in 2012, with foreign banks picking up the slack in 2012.
Public Bank continues to be the most aggressive in the market, with growth of 17% y-o-y in 2012, but with stringent controls, we understand that DIBS loans make up less than 2% of its mortgage book and that it has been very selective about which developers it ties up with for this scheme.
Based on our channel checks, AMMB (2-year housing loan compounded annual growth rate of 6%) has shied away from the property sector for several years while DIBS loans account for about 1%, 2% and 5% of CIMB’s, Maybank’s and RHB Cap’s mortgage books respectively.
Any move to curb the DIBS would be aimed primarily at further curbing speculative activity in the property market. To be fair, measures to date such as the raising of the loan-to-value (LTV) ratio in 2010 and a hike in real property gains tax in January 2013 have had some success.
Bank Negara had highlighted in its 2012 Financial Stability and Payment Systems Report that ever since the imposition of a LTV ratio of 70% on individuals with more than two housing loans, the annual growth in lending to such individuals had declined sharply to 14.5% y-o-y in November 2010 to 1.9% y-o-y in December 2012.
Individuals with multiple housing loans made up less than 3% of total housing loan borrowers and their borrowings accounted for 13.7% of outstanding housing loans.
Source : Maybank Investment Research, June 27, 2013

Selangor Properties delayed launches but earned from land acquisition

PETALING JAYA: Selangor Properties Bhd’s net profit for the second quarter ended April 30, 2013 fell almost 40% to RM6.83mil from RM11.3mil in the same quarter last year.
However, it said in its filing to Bursa Malaysia that revenue for the quarter improved marginally to RM60.76mil from RM59.33mil a year ago.
In the group’s property investment holding segment, it achieved a higher profit compared with a year ago amounting to RM5.7mil, due to profit from compulsory land acquisition.
Meanwhile, the delay in new property development launches resulted in lower revenue and has incurred some losses.
The education segment also reported lower revenue and profits due to a decrease in classes conducted during the festive and holiday period, as well as lower enrolment by international students.
However, the group’s Australian operations posted a profit of RM17.7mil compared with a loss of RM1.4mil a year ago. “Higher gain in the current quarter was due to a revaluation surplus of RM19.8mil from Claremont Quarters.
The main income is from the rental of Claremont Quarters and its current occupancy remains high at 98.5%,” it said in a statement.
The group expects the property investment and education segments to remain stable and continue to contribute positively to the group.
Source The Star, 28 June 2013

Hope for Ho Hup now it will develop ‘Pavilion 2′ with Malton in Bukit Jalil

Mall set to be bigger than KL original, lauches due to kick off early next year.
KUALA LUMPUR: Ho Hup Construction Co Bhd is set to be profitable this year, reversing eight years of losses, in large part because it had struck a deal with Malton Bhd to co-develop the 24.28ha of land it owns in Bukit Jalil.
Malton, controlled by Datuk Desmond Lim Siew Choon, is said to be building a regional mall there dubbed “Pavilion 2” after the property tycoon’s flagship Pavilion KL on Jalan Bukit Bintang, along with other properties.
With 2 million sq ft of net lettable area (NLA), Pavilion 2 is even bigger than Pavilion KL’s 1.32 million sq ft and close to Mid Valley and the Gardens Mall’s combined 2.57 million sq ft.
Early artist’s impression of Ho Hup’s One Jalil project.
Malton is currently finalising its plans with City Hall for the 20.23ha portion of the land it is entitled to. The company may kick-start launches in the first quarter of next year, according to Ho Hup executive director Derek Wong.
The authorities have approved some nine to 10 million sq ft of NLA across the entire freehold Bukit Jalil development and a plot ratio of four, he told reporters following a shareholder’s meeting yesterday.
The development order for Ho Hup’s 4.05ha had been granted in February.
Wong said the response to initial launches of shop offices on its slice of land were well-received, with 90% sold so far, generating RM260mil in total sales.
Ho Hup’s 4.05ha is divided into Parcel A, a 2.38ha mixed project comprising offices, a hybrid mall and apartments above the mall, and Parcel B, which is purely residential. Parcel A had a gross development value (GDV) of close to RM400mil, Wong said. The potential value of Parcel B has not been finalised.
Parcel B is slated to be launched in the first quarter of next year. Although the details have yet to be concluded, the condominium would tentatively be 15 to 18 storeys high, with units ranging from 600 sq ft to 1,000 sq ft and eight to 10 units per floor, Wong said.
He added that Ho Hup did not plan to revalue its Bukit Jalil land, considered its most crucial asset, which was carried at a net book value of RM144.23mil. The land was acquired in 1995 at a cost of about RM30 per sq ft.
Early archived master plan of Ho Hup’s One Jalil project, now likely obsolete.
Meanwhile, Wong said the firm was on track to complete its regularisation exercise by September or October, and would thereafter seek to exit the PN17 category for financially distressed companies by mid-next year.
It had received the regulator’s nod for its restructuring on May 13 and can only apply to be uplifted from PN17 after showing two consecutive quarters of profit upon the completion of the regularisation. The regularisation exercise involves a capital reduction, a rights issue of loan stocks with free detachable warrants and a scheme to repay its creditors.
“Most of our creditors are agreeable to the debt restructuring. It’s a good deal because they don’t have to take a haircut and are getting either shares or cash.
“Ho Hup has been profitable for three quarters in a row now. All our business units are performing up to expectations,” Wong said.
Source The Star, June 28 2013