Only World Group Holdings Bhd (OWG) expects to complete the project to revitalise the 65-storey Komtar tower in Georgetown, Penang, in the second half of this year.

The food outlet and water amusement park operator had announced on Monday that it would use RM48mil from the estimated gross proceeds of up to RM50.17mil from a private placement exercise to fund part of the total expansion cost of Komtar.

On Wednesday, OWG gave further details to Bursa Malaysia on the revitalisation project that it clinched from the Penang Development Corp in December 2012 (prior to its listing in December 2014).

The Shah Alam-based company explained that the Komtar revitalisation project involved the proposed refurbishment and enhancement of five specific levels within Komtar leased to OWG – levels 5, 59, 60, 64 and 65, with a total built-up area of 130,333 sq ft – to create high end commercial space for retail, food and beverages and recreational purposes.

OWG was granted a 45-year lease, with the option to extend the lease for another 15 years.

“Subsequently in 2015, additional floor (level 66) and new spaces (levels 3, 4 ,5 and 6) were added to the project which would at least double the total built-up area,” it said.

On Jan 18 when it announced the private placement, OWG gave the total expansion cost for the Komtar revitalisation project as RM180mil, substantially higher than the amount given in its initial public offering (IPO) prospectus. The remaining cost of the project, which is expected to turn Komtar into an integrated tourism destination, would be funded via internally generated funds and bank borrowings, it said.

In its prospectus dated Nov 26, 2014, OWG had said the revitalisation project would cost RM60mil and that it would use 60.44% (RM30mil) of its IPO proceeds to partially fund the project. According to the document, the project was scheduled for completion in the third quarter of 2015.

OWG shares lost 14 sen to close at RM2.39 on Wednesday.

Source: TheStar.com.my

Penang government today announced the rebranding of low-cost and medium-cost houses to affordable housing types A and B.

With the rebranding, low-cost houses costing RM42,000 each will now be known as affordable housing type A and low medium-cost houses priced at RM72,500, as affordable housing type B.

State Housing, Town and Country Planning Committee chairman Jagdeep Singh Deo said houses priced at RM150,000 each would be known as affordable housing type C; a house worth RM200,000 as type D; that costing RM300,000 as type E, and one costing RM400,000 as type F.

He said the Penang government had been studying the said rebranding based primarily on the fact that the word “low” had a very negative connotation and would bring about a stigma to the purchasers of such units.

“Further, it was noted that purchasers of such units would inevitably be first-time home buyers and it would not be proper to have such a connotation through such a label being given to their first roof over their head,” he said at a press conference, here, today.

However, he added, there might be legal implications as a result of such rebranding as there were several statutes that referred specifically to “low-cost” housing, which might require amendment.

* Click here for full list of affordable housing projects in Penang *

Source: Bernama

Those who are waiting for this proposed project at Batu Maung, you can expect to see the launch of the semi-detached and bungalow houses soon with the latest acquisition by PLB Engineering Bhd.

Read the news below:

PLB buys Penang property developer for RM23.5mil

PLB Engineering Bhd has acquired property developer Phoenix Residences Sdn Bhd (PRSB) for RM23.5mil.

The property development firm, whose shares were last month reclassified from construction sector to properties sector, told Bursa Malaysia that its unit PLB Land Sdn Bhd signed an agreement on Monday to acquire 100% equity interest in Penang-based PRSB.

PLB’s announcement did not specify the size of PRSB’s landbank or its exact location in Penang.

However, it said PRSB’s property came with approved development plans and development license already issued by the Urban Wellbeing, Housing and Local Government Ministry, making the asset a very marketable property.

“The value of RM23.5mil is justified considering the location of the property at the Penang Island, near amenities and infrastructure like the Second Bridge with much potential for value appreciation,” it added.

PLB said that based on PRSB’s audited financial statements for the year ended June 30, 2014, the company was in a net assets position of RM112,066 with a net loss for the year of RM76,906.

PLB shares were last traded at RM1.45 last Friday.

Source: TheStar.com.my

The Penang state is mulling various avenues to finance the operation of the rail system that forms part of its Transport Master Plan (TMP), among which is the set-up of a revolving fund with recurring rental revenue from property leasing once its planned 3,000-acre (1,214ha) land reclamation in the south of the island to finance the construction of the RM27 billion TMP is completed.

It is also considering taking full ownership of the entire rail system — comprising the light rail transit (LRT) and the monorail — as part of its long-term financial plan for the state’s transportation sector.

For starters, Chow Kon Yeow, Penang’s local government, traffic management and flood mitigation committee chairman, said the revolving fund could finance the operation of the LRT, which will be managed privately by a company selected via open tender.

“Public transport is a public good, so having a fund would be better. But it is too premature to identify how much the fund needs for operating costs. That will be subject to the contract awarded to the system operator … it will be on commercial terms.

“It would be ideal that once the approval is given, the operator comes in to work on the design and engineering with the consultant, although the construction of the system will take four to five years to complete,” he told The Edge Financial Daily.

But the state will not offer the use of the fund to the operator for maintenance or help with operation costs if it fails to run the infrastructure efficiently or if it incurs losses, said Chow.

He added that it will be a challenge to even meet the operation expenses of the planned rail system, but indicated that the state will take a leaf from Hong Kong’s management of its mass transit railway (MTR) system, which has proven to be profitable, as its revenue does not come only from ticket sales.

“You cannot rely solely on ticket fares. It (the rail system) has to also generate income from advertisements,” he said.

Chow was asked to comment on the financing model the state would take on to fund the entire RM9.7 billion rail system, which is regarded as the key to alleviating traffic under the RM27 billion Penang TMP.

On Aug 14 last year, the state appointed Gamuda Bhd-led SRS Consortium as the project delivery partner for the TMP. Also part of the consortium are Penang-based Ideal Property Development Sdn Bhd and Loh Phoy Yen Holdings Sdn Bhd.

Chow also said running a public transportion system using state funds is not really a novel idea, as it is similar to the federal government’s way of compensating highway concessionaires by using public funds to halt or delay toll rate increases.

Alternatively, Chow said the state can set up a department — like an LRT/monorail department — to run the rail system, as the capital expenditure for the infrastructure would be funded via land sales (on the reclaimed sites). This means the system will belong to the state.

“After owning the asset, we can run the system ourselves through the set-up of a department. We may establish a Public Transportation Corp to oversee the processes, and eventually, the entity will take over the asset in the future.

“We will then appoint operators (as in concessionaires). These are the ideas we are discussing now as it demonstrates our long-term vision to sustain the operation of the rail system,” he said.

The first priority of the TMP is the LRT linking Komtar and Bayan Lepas, he said, followed by the Pan Island Link, a 20km road connection that connects Tanjung Bungah to the Penang International Airport.

As for the LRT connecting George Town and Butterworth, and the monorail between Tanjung Bungah and George Town, those will be part of Phase Two that may take off 10 to 15 years later, according to Chow.

The detailed environmental impact assessment studies for the Bayan Lepas LRT and the land reclamation are expected to be completed and submitted to the department of environment by the end of June.

Source: TheEdgeMarkets.com

by Charles Tan

If we are buying a new place with two car parks and there are available car parks for sale, should we buy one more? These days, all condos should come with 2 car parks. Read here: Condos should NOT come with just one car park. A lady wrote in to ask about this. She had just bought a new apartment in Penang. It came with two car parks and she was offered the opportunity to buy one more for RM35,000. Her reason for buying? Her son would most probably be driving to college next year. In other words, that third car park would be for her son’s use.

I wrote her an answer as below:

Start of reply

I think emotionally you believe another car park is needed so that your son can also park his car within the condo. Let me tell you the financial aspect. If you rent a car park instead of buying. Typical rental per month is RM80 if not higher, depending on the condo. If it is RM80,then it’s RM960 per year. This is a total loss every year.

Assuming, you take out RM35,000 from your FD to pay for this car park. This RM35,000 FD would give you about RM1,400 per year. This is about RM117 per month. If the car car rental does not change at all and remain RM80 forever, you lose RM37 per month or RM1.23 per day. I would definitely choose to lose RM1.23 per day for the following:

1) Safety (instead of parking far away and walking when I come back at midnight etc.) – For your son, might be weekly….

2) Convenience (Rain / park faraway etc.) – Nearly daily….

3) It’s impossible for car park rental to stay at RM80 forever…. (In KL, the car park rental is typically Rm160 per month) – proven in KL.

4) You can afford it. (For those who couldn’t and needed to borrow money from relatives etc, I think better not buy lah)

5) In future, three car parks would be advantage if u want to sell your place.

End-of-Reply.

One important point I missed. This is in Penang. Car parks are definitely a premium today and in the future. Actually, there are lots of other reasons why more car parks would always be better. Seriously, if we can afford it today, better buy today because we may not be able to afford it in the future. RM35,000 per one car park slot? It may not stay this way forever. Happy buying and enjoying the 3rd car park.

>> This guest article comes courtesy of my friend, Charles, the founder of kopiandproperty.com. He is popular for sharing his thought on property investment mostly based on his own 13 years experience as well as from all the readings and conversations with property gurus in the industry. (Source)