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Reaping The Bounty Of Agar Trees
Published: Thursday September 26, 2013 STORY AND PHOTOS BY GRACE CHEN http://www.thestar.c….0&h=413&crop=1 More than meets the eye: Some of the agar tree products at the visitors’ centre. Daily sales on weekends can touch RM100,000. The Gaharu Tea Valley in Gopeng took a total of RM40mil to set up and has a current workforce of 100. On weekends, 2,000 visitors contribute to a rough estimate of RM100,000 in daily sales of tea, biscuits, instant noodles, miracle beauty powders, incense, perfume and oils — all harvested from the surrounding agar trees, standing some 200,000 strong in the 121ha (330 acres) plantation that needs about half a million ringgit a month to run. It took managing director, David Ho, 21 years to build up the business, starting in1992 when he received the first 200 mother trees from a Japanese botanist from Niigata. It took another 15 years of Ho’s personal care before he could get the seeds for replanting, sustaining himself and family on his full-time job as the owner of a heavy machinery business. “When I bought the land for RM10,000 per acre in 1991, my first thought was to plant palm trees. From rough estimates, I would have been able to bring home a clean profit of RM200,000 after five years. That was my initial plan,” said Ho, now 59. http://www.thestar.c…2609_pg26c.ashx Special crop: The plantation has some 200,000 agar trees propagated from 200 seedlings in 1992. A visit from a Japanese secondhand heavy machinery dealer in 1992 changed his mind. “The Japanese dealer and I, we are old friends. During his visit, he introduced a Japanese botanist who revealed he had spent his life cultivating a special crop of agar trees, each containing the genes of a superior lineage from 12 trees. “This botanist wanted someone to propagate his work and he thought I might be a suitable candidate. “But I had to be able to sustain the venture for the first 15 years without income,” recalled Ho. http://www.thestar.c…609_pg26f1.ashx David Ho (l) holds a sapling with wife, Khor Lye Keen. Each costs RM 38. The offer struck a chord with the former student of SM Jelapang, whose favourite subject was Chinese history. The meeting had immediately reminded him of his History teacher, Pan Tau Siew, who had once mentioned the agar tree in one of his lessons. As Ho remembers it, Pan had said it was regarded as divine by emperors as the agar tree was believed to promote longevity. Because it was the norm for emperors to have no less than a few thousand wives, the essence of the agar tree was also sought for its aphrodisiac qualities. “So, I said yes,” Ho said. The 15-year wait not withstanding, Ho had his personal reasons. “Everyone then was either doing palm oil or rubber. I wanted to be different. Call it my shot at achieving immortality,” he ruminated. Stressing it was not his intention to live forever, Ho instead expressed hope to be remembered as the proponent of the agar wood industry one day, just like Henry Ridley was synonymous with the rubber industry in the Malay peninsula. The deal was not without conditions. “I was not to plant any palm or rubber trees on the land because to do so would contaminate the land with pesticides and fertiliser. The botanist was insistent that the agar trees must grow in a fully organic environment as the produce was to be used in medicine,” says Ho, who now holds a 70% share in Gaharu Tea Valley with the rest going to the Japanese. http://www.thestar.c…2609_pg26f.ashx A sample of how infected agar wood looks like. Harvesting the resin (ref to cylinder at top) for incense and resin So, he sat behind the steering controls of his backhoe to do the terracing, draining and to fashion a dam to catch the cascading waters from the mountains. He spent some RM5mil to do the concrete works and played the role of a single parent to the 200 seedlings that later grew into 200,000 trees, giving an estimate yield of some 100,000 seeds a year. The second condition was everything had to be sold back to Japan. The Japanese had big plans for the produce. It is a known fact that agar wood will be worth more when they are infected by a fungus which will trigger the defence secretion of the much sought-after black resin used in perfumes and incense. To do this, workers have to manually drill holes into the bark, following a diamond-shaped pattern. http://www.thestar.c…2609_pg26d.ashx A clean room worker shows off a tray of dried tea leaves at the RM 10 million factory in the plantation. Wooden chopsticks, dipped into a special enzyme made according to a secret recipe provided by his Japanese partner, are then hammered into the holes. Some 15 workers are required for every acre to perform this procedure and provide pre- and post-drilling care. Plans were also made to tap the full commercial potential of the agar tree. Its leaves will be used for tea and herbal soup formulations, plus a miracle beauty powder. Its wood will be for crafts and furniture. The original plan was to realise all this in Japan where a factory had already been set up. Then, disaster struck. In 2011, Japan was hit by what was recorded as the fifth most powerful earthquake in world history. In the ensuing chaos, the factory designated to receive the fruits of Ho’s labour was reportedly swallowed by the earth. http://www.thestar.c…2609_pg26b.ashx To induce the tree to produce the much sought after agar resin for perfumes, holes are manually drilled into the bark. “It was devastating news,” said Ho, who added that the Japanese botanist was unhurt. Immediately, it was decided that operations should move to Gopeng, Perak, where a RM10mil factory with 30 staff was set up. The recipes to harvest the bounty of the agar wood trees were also entrusted to Ho. Today, the primary product of the factory is agar tree leaf tea which is exported to China, Hong Kong, the US, Canada, the Middle East and Indonesia. A rough estimate of 20 tonnes of tea has been exported to these countries. “Currently, the usage rate of the agar trees in the plantation is only 0.1% as the majority of utilisation is focused on only the leaves. Daily, about 1,000kg of agar tree leaves are harvested. After drying, the factory is left with only 300kg for processing. These are then included in formulas for biscuits, soup sachets and even instant noodles, which sees sales of 100 packets per day at RM3.50 per unit,” says Ho. But what of the black resin, which is regarded as black gold to perfumers? “The current price for this black resin is RM2,000 per kilogramme but I will have to wait five or six years to obtain a good yield from the treated trees. Of course, the longer the wait, the better,” said Ho, who has a 21-year-old infected tree in the plantation, a must-hug feature for visitors. While he waits to harvest the black gold, Ho’s focus is to concentrate on promoting the goodness of the agar tree. One active way is in educating visitors of its huge potential. There is a lookout point where they can catch a breathtaking view of the entire plantation of agar trees and rest stops for hikers where passion fruit plants provide shade as they watch workers go about marking boundaries to indicate the kind of follow-up care required. At present, the visitors’ centre is the main sales arm for agar tree products and Ho has become a celebrity of sorts. Taking position as right hand man in this long-term venture is his son, Nicklaus, 34, a University Nottingham graduate who promotes his father’s dream at agricultural expositions. Continue reading
Chinese Property Investors Widen Footprint in U.S.
Photo from Grand China Fund Grand China Fund owns a stake in this Atlanta residential complex. SHANGHAI—The upswing in the U.S. property market is attracting Chinese developers and investment firms, and they are dipping their toes into new cities. While Chinese institutional investors are still drawn to their traditional favorites of New York, Los Angeles and San Francisco, many are now also headed to cities such as Houston, Boston and Seattle as they seek geographic diversity as well as bigger lot sizes. These other cities—lesser known to some Chinese firms—now appear to offer fresh opportunities as energy or technology drives their economies and local Chinese communities expand. In the second quarter of this year, Beijing-based real-estate investment firm Grand China Fund took an 80% stake in a 286-unit residential rental complex in Houston. That followed a 2012 investment in a 170-unit residential project in Atlanta, with another local partner. The firm put a total of about $15 million into the two projects, which are valued at more than $50 million. For both projects, it said it was attracted by the prospect of higher yields amid the lower prices compared with property in California and New York. Gaw Capital Partners, a Hong Kong-based private-equity firm, is planning to raise $500 million for a real-estate fund that will invest in U.S. commercial property in the fourth quarter, targeting investors from Asia and North America. The fund manager said it will look at assets in “innovation centers” such as Portland, Ore., and Austin, Texas. China Vanke Co., 000002.SZ -2.23% the country’s largest property developer by market capitalization, is interested in investing in Boston, partly because of its sizable Chinese community, said the firm’s president, Yu Liang, at a news briefing in Hong Kong last month, without providing further details. Vanke had already jointly invested in a 655-unit high-end condominium in San Francisco with U.S. developer Tishman Speyer earlier this year. Chinese investors still are eyeing assets in New York and San Francisco, “but we are also witnessing increased interest in cities like Washington, D.C., Boston, Houston, Seattle and Chicago,” said Alistair Meadows, who oversees cross-border Asian-Pacific real-estate transactions at consultancy Jones Lang LaSalle JLL -1.20% . “Cities like Seattle and Houston are enjoying strong job growth driven by the technology and energy sectors. As a consequence, core office investments in these cities offering higher yields are proving attractive.” Slower domestic economic growth in China as well as rising risks in the country’s financial sector are prompting investors to look abroad. The U.S. has become the most popular real-estate market to invest in so far this year for Chinese firms, followed by Hong Kong, the U.K., Macau and Singapore, according to data tracker Dealogic. Chinese property investors—from big players like sovereign-wealth funds and insurers to smaller ones such as local fund managers—are attracted to the U.S. market in general because of the economic recovery, ample market liquidity, and the stability of returns, real-estate consultants say. Rental properties in the U.S. typically have longer leases compared with China’s, and hence are less prone to disruptions or volatility. Tishman Speyer China Vanke invested in a condo project in San Francisco earlier this year. Acknowledging that Houston and Atlanta aren’t usually the first places Chinese investors think of when investing in the U.S., Zhang Mingeng, board chairman at Beijing’s Grand China Fund, cites costs as a key attraction. He said prices of some projects in these areas are still down around 20% from their peaks, and that growth prospects in these cities are positive. “Our investors, which include lawyers, exporters, merchants, accountants, have U.S. incomes and want us to branch into the U.S. for diversification,” Mr. Zhang said. “They are looking for safe assets that they can see and touch.” Grand China Fund manages yuan-denominated funds totaling four billion yuan ($653 million) investing in Chinese real estate, and a $60 million dollar-denominated fund investing in the U.S. Houston, in particular, has become more familiar to Chinese investors. China Petrochemical Corp., known as Sinopec, has operations there, and the city gained recognition with Chinese investors with the help of former Chinese basketball star Yao Ming, who played for the Houston Rockets. Mr. Zhang said he is looking for more real-estate projects in Miami, Orlando, Dallas and San Diego, in addition to New York and Chicago. “While the returns from the U.S. are not as high as what we get in our mainland China projects, they are good enough,” he said, declining to reveal the investment yield of his U.S. projects. “We like residential projects near universities, hospitals and military bases.” Asset managers said investors who aren’t eager to place all their eggs in one basket are looking for diversity, not just in asset classes, but also in their geographic footprint. “The large Asian institutional investors, including Chinese investors, are looking for safety, more stability and exposure to diversified currencies and returns,” said Goodwin Gaw, chairman of Gaw Capital Partners, which also provides outbound-investment advisory services to Asian institutional investors. To be sure, foreign investment in the U.S. still makes up a small portion of the market. Around 15% of the $25 billion invested in New York’s real-estate market in 2012 was from foreign investors, for instance, compared with 75% of the $24 billion invested in London in 2012, according to data from Jones Lang LaSalle. Not all Chinese investors are branching out. The coastal cities in the U.S. still attract plenty of Chinese investors, with deals this year such as Greenland Holdings Group’s $1 billion investment in a mixed-use project in downtown Los Angeles, and Soho China Ltd. Chief Executive Zhang Xin ‘s personal investment in a stake in the General Motors Building in New York, which attracted considerable media attention in China. Beijing-based property developer and investor Feng Lun, chairman of Vantone Holdings Co., said he is sticking to investing in New York City. Vantone has leased 20,000 square meters of space in One World Trade Center, and has invested in joint ventures in two residential projects in the city. “We’ll focus on New York City, preferably Manhattan, to ensure our current operations are successful before branching to other cities,” Mr. Feng said. Write to Esther Fung at esther.fung@dowjones.com A version of this article appeared September 25, 2013, on page C8 in the U.S. edition of The Wall Street Journal, with the headline: China Casts a Wider Net Over U.S. Market. Continue reading
The Future Of Global Real Estate: Where To Put Your Hard Earned Money
Photo: Ken Lund/Flickr Monday, September 16, 2013 – Moving A Needle by Jona Jone MANILA, September 16, 2013 – Many developed and developing countries are making promising contributions to the world of international real estate. Such an important upturn in international real estate investing currently takes place between China and the United States. The Chinese have become the second-largest foreign buyers of U.S. homes, not far behind the Canadians according to the National Association of Realtors. Consumers from China and Hong Kong also spent $1.71 billion on commercial property in the U.S. in 2011. Currently, it appears that the Chinese investors are attracted to commercial projects, residential properties, and shopping centers to name a few. According to Zhang Zu Wei of China Daily, “It’s no news that Chinese real estate developers and property buyers are flooding into the US – something that’s currently, to many Chinese, a better investment than gold – and it’s bringing more than just cash into the market.” The growing interest by the Chinese in US real estate is also creating new business opportunities. Shenzhen World Union Properties Consultancy Co. Ltd., a Chinese-listed company that offers real estate consulting services, sees the real estate appetite of the Chinese for U.S. land as a trend that may continue for a long time. Teaming up with local American realtors to serve the growing needs of Chinese investors is one approach that may prove to be productive. A recent article in China Daily notes that the National Association of Realtors affirmed that the Chinese are huge participants in acquiring residential properties in the U.S. The Chinese also ranked third in terms of land purchases in California, after the Mexicans and the Filipinos, the website Realtor.org noted. Sally Forster Jones, who works as an agent with Coldwell Banker International in Los Angeles, believes that the increasing level of international real estate purchases in LA is indeed an ongoing trend. Mary Alice Hines, author of “Investing in International Real Estate,” identified two types of passive investments international real estate investors are making. One type involves investing in securities based on international real estate collateral; the other investing in international real estate service firms and offices. The general term “real estate” also embraces real property development, sales and leasing relations across domestic borders. And indeed, the sub-category of international real estate could be regarded as one of the most dynamic branches of this business area. It is best broken down into two categories: international commercial real estate and international residential real estate. The majority of international real estate transactions will come about between corporations and may encompass or be a result of authorized urban planning, engineering, financing, and construction work. Persuading foreign investors into real estate development projects may be a priority for snowballing national revenue and an excellent strategy for finding new capital to build or improve infrastructure and services. The growth in international investment practices makes it feasible for investors to look beyond their own locales for above average performing investments. A major portion of international residential real estate transactions occur through individual purchases of lots or built units. Currently, most of these individual investments are for condominiums located in Asia, such as those existing or being built in the Philippines. Experts say that acquiring such property does not merely depend on location but also on reputation. These acquisitions account for the bulk of what is sometimes referred to as the second home market. As such, international investors may find that renting in South East Asia could be one excellent way of researching this type of investment before an actual purchase. The actual acquisition of a property, of course, always depends on the terms laid down between the realtor and the potential client. Renting in a desired locale for a time will enable an investor to research property acquisition laws and customs in a new market, better enabling him to evaluate each deal. In one article posted through investopedia.com, experts have duly noted how the tiger economies of Southeast Asian countries such as Hong Kong, Singapore, South Korea, Taiwan and China, and even the rising market economies of Thailand, Malaysia, Vietnam, Indonesia, India and Pakistan have all seen rapid growth in recent years. China remains the most promising country, currently, followed by India, although real estate inflation has become an issue in both countries. Kenneth Rapoza who contributes to forbes.com and covers Brazil, India and China wrote recently that the decision whether to jump onto the international real estate bandwagon depends on the individual. He finds the situation in China, for instance, to be most interesting. As compared to the housing market in the U.S., real estate investing the Asian tiger can be considerably different. Compared to the zero-money down, liar-loan scenarios common in the U.S. prior to the popping of the housing bubble, most buyers in China do not have mortgage issues. One simple reason: the Chinese indeed have an inclination to purchasing homes in cold cash. In the case of cash purposes, of course, there are never any foreclosure issues to worry about. Most importantly, there is no staying late at night worrying that the next day might be the owner’s last in their dream house. Chinese and Southeast Asian buyers of American real estate often make their investments on a cash basis as well. Perhaps such purchases will help head off a real estate bubble of the future by putting many housing units in the strong hands of cash buyers likely able to weather the next storm. Continue reading