AVENUE Properties Bhd has introduced a scheme for retail investors to buy interests in properties.

The company launched yesterday Avenue Hotel Property Interest Scheme, offering 10,500 property interests or units where 70 per cent are available for the public to buy at RM4,800 each.

Chief executive officer Richard Woo said the scheme will offer property interest or unit holders seven per cent returns per annum, for the first 14 years of its 35-year tenure.

The rate of return is higher in comparison to fixed deposits, the Employees Provident Fund and endowment policies, where the returns are two per cent to six per cent, but lower than investing in properties and bonds.

Unit holders will be investing in a 130-room four-storey boutique hotel on Jalan Raja Uda in Butterworth, Penang, and the returns will be paid annually.

Woo told reporters that the rate of return will be more than seven per cent after the 14th year onwards, as the market matures.

He said the property interest is not transferable and neither can it be disposed of by unit holders during the first 12 months from the date of take-up.

"We expect the property interests to be fully subscribed over the next three to three-and-half-years, generating some RM50 million for the company," Woo said.

The business hotel, which is being constructed for as much as RM30 million, will be completed by the first quarter of next year. It is part of a 24ha rehabilitation project being undertaken by Avenue Properties.

Other components of the project, which is estimated to have a gross development value of RM500 million to RM600 million, are condominiums, a mall, and shop offices.

Khong Yue Chen, Avenue Properties group director for marketing and communications, said it is expecting an average room occupancy rate of 60 per cent in the first year of operation, with average rate of RM280 per room a night.

She said the company will offer a collection of resorts and villas next for unit holders to invest in.

SOURCE: Business Times