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OSK Property to launch RM700 million worth of properties in 2010.

KUALA LUMPUR: OSK Holdings Bhd's real estate arm OSK Property Holdings Bhd plans to unveil some RM700 million  worth of properties in Malaysia this year, capitalising on the combined effects of still-accommodative lending  rates and anticipation of higher inflation to spur real estate sales.

These planned property launches are mostly located in the Klang Valley where OSK Property intends to unveil its  Sutera Damansara project in Sungai Buloh, and Bangi Lakehill Villas, besides other projects along  Jalan Yap Kwan Seng and Cyberjaya.   

In Negeri Sembilan, the developer hopes to launch its Mont Jade, and Seremban 3 projects.

"The launches will depend on market sentiment and take up rates," OSK Property executive director and chief  executive officer Gerard Tan Boon Chuan told reporters at the company's shareholders meeting here on April 14.

Of the RM700 million worth of projects to be launched this year, Tan said RM300 million would come from the  Cyberjaya development which would comprise 480 units of low-rise condominiums on two recently-acquired tracts in  Cyberjaya.

OSK Property had acquired the tracts with a combined area of 529,190 sq ft from Cyberview Sdn Bhd, and Setia Haruman Sdn Bhd.

In statement to the exchange last month, OSK Property said the estimated RM300 million residential development  was expected to involve a gross development cost of some RM225 million, translating into a gross profit of RM75  million. The project is due for completion in 2013.

The Malaysian real estate sector will be closely watched as the local economy regains its strength. Analysts  said they still foresaw strong property sales here despite the recent 25 basis point (bp) interest rate hike to  2.25%

RHB Research Institute Sdn Bhd analyst Joshua Ng believes firm demand for real estate was supported by still-cheap mortgage rates and attractive financial packages offered by developers.

Ng also noted the fact that  home buyers were rushing to acquire properties to capitalise on existing financial packages in anticipation of  further lending rate hikes here to curb a potential rise in inflation as the economy recovers.

"We believe the current strong sales momentum would filter into the second half of 2010 in view of the above  mentioned positive issues," Ng wrote in a note to clients.

Meanwhile, OSK Property's Tan said the proposed redevelopment of Atria Shopping Centre within the established  Damansara Jaya enclave should start next year once the necessary approvals had been obtained.

According to Tan, the development order had been endorsed and the redeveloped Atria with a potential gross  development value of up to RM1 billion, would feature a four-storey podium and two 18-storey towers.

"There will be an increase in parking facilities with over 2,000 bays available," Tan said. OSK Property had  acquired the retail entity in 2007 from Lien Hoe Corp Bhd for RM75 million.

Tan said OSK Property which has no immediate plans to expand overseas, had some 1,800 acres of land with an  estimated GDV of RM3.4 billion in Malaysia. The company intends to increase its landbank especially within the  Klang Valley, the country's property hotspot.

Malaysia's central bank had in March this year raised the overnight policy rate by 25 bps to 2.25% after keeping  the country's benchmark interest rate at 2% at seven consecutive monetary policy committee  meetings. Economists  foresee a 100bps rate hike in the country this year.

The country's inflation, as measured by the consumer price index, rose by an annual pace of 1.2% in February  this year. Investors usually acquire properties as hedge against inflation which erodes the value of money.
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