YNH BUILDS ON SUCCESS IN MONT' KIARA

PROPERTY developer Yu Neh Huat Bhd will be making its presence felt in the Klang Valley property scene to ride on the strong demand for niche residential properties here. The move is part of the group's expansion plans to venture into the fast growing and exciting market of the Klang Valley, and to diversify out of its market strongholds of Sitiawan, Seri Manjung and Lumut in Perak.

To kick off its foray into the Klang Valley, the group will be launching its maiden development featuring 250 units of serviced apartments near the Kuala Lumpur City Centre (KLCC). The freehold land was acquired for about RM20mil about two to three years ago, and the development would translate into a gross development value (GDV) of RM180mil to RM200mil. Construction for the serviced apartments will begin in the next few months for completion in three years.

The units, with built-up areas from 500 to 2,000 sq ft, will be priced from about RM800 per sq ft. Chan Yan Meng showing the key areas of the Manjung Point township located along the existing Ipoh-Lumut highway and between Lumut and Sitiawan. With him is accountant Lim Wen Tzer.?We are talking to several parties to manage the serviced apartments and are confident of tying up with a renowned operator to turn the property into a highly sought-after address,? Yu Neh Huat executive chairman Datuk Dr Yu Kuan Chon told StarBiz in an interview.

The group has also purchased a three-acre parcel near Garden International School in Mont'Kiara for a luxurious condominium development. The 28- and 29-storey blocks will have a total of 230 condominium units. The 2,000-sq ft units with full condominium facilities will be priced from RM330 psf for a GDV of RM130mil. Construction is expected to take off by the middle of next year for completion in three years. Another Yu Neh Huat project in the Klang Valley will be located in SS14 in Subang Jaya. The RM50mil low-density condominium enclave will feature 70 to 80 units of between 2,000 and 2,500 sq ft priced from RM250 psf. Slated for launch in the first quarter next year, the project will also take about three years. ?We are eyeing a few more parcels of five to 30 acres land in Mont'Kiara and the Kuala Lumpur city centre for niche developments, including luxurious condominiums, as well as gated and guarded community developments.

These projects will have fast turnaround time and offer good profit margins for the group,? Yu said. He said most of the group's projects had a turnaround time of between 12 months and 1½ years. Its landed projects normally take only a year to complete compared with the industry norm of two years. ?While venturing into other niche market segments, we will continue to pay attention to our bread-and-butter business of building affordable homes for the Manjung district folks. The development there will keep us busy for the next 20 to 25 years and provides a stable earnings stream for the group,? Yu said. Yu Neh Huat's share capital of RM265mil will be expanded to RM350mil after the 85 million bumiputra shares are placed out in the next two months. This will allow the group to pare down its debt and to acquire new land bank. On its dividend payout policy, Yu said the group was committed to pay 10 sen per share for the current financial year ending Dec 31, 2004. Analysts are confident of Yu Neh Huat's earnings potential with its good land bank and product offerings. They expect to see a minimum of 20% earnings growth a year for the next few years. ?It is in its early stages of growth and can expect to register 20% to 30% growth in net earnings over the next two to three years,? an analyst with a local brokerage said.

Net earnings for the group's first quarter ended March 31 are expected to be between RM9mil and RM10mil. Its borrowings of about RM61mil to shareholders' fund of RM270mil translate to a gearing of 0.22 time. Lending credence to the group's strong potential is the fact that 45% of its shareholding is held by institutional investors who are mostly insurance institutions and bank-backed asset management companies. The Yu family holds a 52% stake in the group. A senior research analyst with a foreign brokerage said the three new projects coming onstream in the Klang Valley would be able to contribute between 40% and 50% to group earnings and sales in the next two to three years. ?The group has the advantage of having very strategic and well-located projects which will certainly help to earn it a good name in the new markets it is venturing into,? said the analyst. Its land bank of 1,127 acres should underpin development efforts over the next 10 years. ?

Through several savvy purchases in recent years, from Danaharta and other parties, the group looks well placed to tap robust demand for housing and commercial properties in the Klang Valley and Perak,? he said. Its stable recurrent income from the Manjung development will provide the necessary cashflow for the acquisition of strategic land for its foray into more niche developments. Manjung, with a population of 200,000, is a very stable market for the group as there is a ready demand from the nearby Lumut Dockyard. The 1,000 to 2,000 new personnel recruited by the dockyard a year need a regular supply of residential units.

Costs and returns of Commercial and Residential Properties

To my opinion, when we assess returns on investments. Firstly, In terms of yields for on residential properties, It can be categorized into landed and non landed properties. Usually at prime locations are such as bangsar, Damansara Heights or Mont'kiara the rental yield are around 7%-12% depending on the location and investors entry cost. This means that first buyer who bought from developer will usually enjoy more than 10% yield for non-landed properties. Example those buyer who bought mont'kiara Aman, Mont' Kiara Astana, Kiaramas Sutera, Sri Penaga , Bangsar Cascadium, Desa Damansara and so on.

On the other hand landed properties will usually achieve lower rental yield which is around 4-8% depending on the entry cost and location as well. However in comparisons, landed properties usually will appreciate higher the longer you hold the properties. eg. conservative estimation will be 100% appreciations in 10 years, which means average 10% a year. However condominium or non-landed properties in klang valley will usually enjoy the high capital appreciations in the first 5 years when the properties is still new, however the price will stay flat or drop the over the years.

In terms of commercial properties, one good example will be Glenmarie Temasya industrial park, i got to know this location through one of my buyer, he bought a few lots there for investment and the cost per semi detached factory are selling around 1.5-1.8mil and rental are going around RM15-18k which equivalent to more than 8% yields 3years ago, However, last few month, i found the price escalates and now average asking price are around RM3.2-3.5mil and rental still the same which is around RM15-18k. Meaning to say that, factory can achieve very high capital appreciation during good times and with government annoucing a lot incentive package for homeowner or investor. For example : waiver of Stamp duty for loan and SPA, Real Property Gain Tax (RPGT) tax. All these measure boost both commercial and residential properties.

Malaysia Real Estate market Remain POSITIVE

The malaysia real estate market remains positive althought slowdown in the world economy and the US subprime crisis. There are questions on : WHAT'S HOT , WHAT'S NOT? RIGHT TIME TO EXIT? RIGHT TIME TO ENTER? BUYING LAND THE HOT SPOTS ARE STILL HOT ? HIGH END PROPERTIES STILL GOOD PICK? FOREIGN BUYER REMAIN STRONG IN KLCC or other Prime AREA?


I believe malaysia property market has a great potential of positive growth in years to come, albeit slower. Good quality products in good locations will still see rapid growth, where pricing is concerned, Malaysia properties is far from overpriced. Also i believe those who cannot afford to invest on their own should consider patnerships, joint venture with family friends or private equity.

On buying land where and whether hot spots are still hot, there is no doubt the prime area like Bangsar, Mont'kiara, Sri Hartamas, Damansara Heights / Bukit D'sra, KLCC Area, Bukit Tunku, Sentul east and west, Desa parkcity and etc will remain growth in Malaysia.

Also constant transaction activity in the prime area and how parcels of land keep changing hands, according to my source, the Arabs are not the only foreigners who are buying, but the koreans and singaporeans have also joined the fray. Land is being bought up very quickly at prime area and prices have nowhere to go but up. For example, developer near KLCC says that land prices escalate, developers will have no choice but to shrink the size of properties on offer. Also properties in prime location remain hot and those looking to invest there should do so now !

Land is scarce in Prime location such as KLCC , Damansara and Mont'kiara and everyone know who owns what, according to my client who is developer many prime lots surrounding KLCC have been transacted. the market is still talking about the record RM2,000 psf that the YTL group paid for a tract of land in Jalan stonor, A residential development is planned for the 0.4ha plot. Many foreigners and big funds are looking for properties in KL because of the subprime in US. According to Ho chin soon, Just last week, a south korean investor walked into his office and bought a golden triangle map. and the same korean bought a plot of land near KLCC for RM1,400psf. also Suasana Simfoni sdn bhd a company that is partly owned by Singaporeans has bought two adjoining plot of land for RM172.1mil in Jalan Conlay and plan to develop luxurious residential.