Property Market Outlook for 2010 | Malaysia
The Malaysia Property Market Outlook for year 2010 is look Very Promising as there is NO Fire Sales so far.
The "Wait and See Attitude" by potential property investors and homebuyers may end very soon, as sentiment is given a boost by the attractive purchasing environment, low interest rate, undervalued property prices compared with the region and Malaysia has shows a solid potential as a promising emerging property market for foreign investors.
For those who are still looking forward to the beginning of a first major bubble in the housing market in Malaysia, Just Forget IT!
There would be NONE!
Let listen to the Property expert on the their views on what to expect in 2010 from the residential and office property markets in Malaysia.
Property consultants VPC Alliance Sdn Bhd managing director James Wong, chief operating officer of Henry Butcher Marketing Sdn Bhd Tang Chee Meng and CBRE Malaysia executive chairman Christopher Boyd are features in the video.
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Property Market Outlook 2010
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Goverment Support on easing of foreign ownership
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Launches in Bandar Kinrara- Home Buyers Queuing Over 10 Nights for I&P Properties in Bandar Kinrara Puchong
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Low Interest Rate Make Property Investment An ideal Option
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WOW!!! We need Police to control the Potential Home Buyer!
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For the sake of Dream Home: 10 Night Camping to Buy a Property
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For the sake of Dream Home: Long Queue is not a Problem to Buy a Property
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Are YOU still NOT Convince? 
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Property prices may rise 5% to 10%
Property prices in Malaysia are forecast to increase by 5% to 10% this year against last year in line with the recovering economy.
Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia president James Wong said the market did not expect a big jump in property prices this year as the economy was not fully recovered yet.
The economic recovery will largely influence the property market performance and Malaysia’s gross domestic product (GDP) growth rate this year is forecast at 2% to 3% from the estimated contraction of 3% last year.
“Condominiums and apartments are currently selling well and landed property prices, which had held through the economic crisis last year, are expected to grow this year,” Wong said after the opening of the Malaysian Property Summit 2010 yesterday.
Citing examples, Wong said the St Mary’s serviced apartments were 80% taken up within five days of their launch, Sky Residences recorded a 70% take-up rate and the 50-unit Verticas Residensi in Bukit Ceylon achieved a 60% take-up rate during soft launch.
“This shows that condos and apartments are not short of buyers. And developers that postponed property launches last year are not expected to do so this year,” he said, adding that property prices last year were estimated to have dropped by 5%.
However, Wong raised some concerns about tenancy of condominiums and apartments.
“A lot of new developments are facing a hard time in getting tenants,” he said.
Another area of concern would be the office market that saw the supply of four billion sq ft of space last year, according to Wong.
“Thus, there is a slight concern on the take-up rate, especially for tenants that will occupy huge space of 20,000 sq ft and above as well as the effect of the new supply on rental rates,” he said.
Valuation and Property Services Department director-general Datuk Abdullah Thalith Md Thani said this would be a good year for the property sector as key economic indicators that related to the growth of the industry were expected to perform better than last year.
The expected recovery in the GDP of Malaysia’s main trading partners – the United States, Japan and Singapore – and improved prices for crude oil, crude palm oil and rubber would augur well for the country, he said.
In fact, the property market, which had slumped in the first half of last year, had improved since the second half-year, he added.
fr:biz.thestar.com.my/news/story.asp?file=/2010/1/27/business/5549928&sec=business
Sime Property and Sunrise team-up for RM1b development
Sime Darby Property Bhd and Sunrise Bhd have formed a 50:50 joint-venture (JV) company, Sime Darby Sunrise Development Sdn Bhd, to undertake a RM1 billion property development in Bukit Jelutong.
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Bukit Kiara Properties makes foray into Ampang
KUALA LUMPUR: Bukit Kiara Properties Sdn Bhd (BKP) is moving beyond its home turf of Mont’Kiara to develop The Ambangan in the vicinity of Embassy Row in the U-Thant area of Ampang.
The exclusive freehold five-storey condominium project will have only 19 units and will be sited on slightly less than an acre in Persiaran Madge, according to BKP group managing director N. K. Tong.
Each unit will have a built-up area of about 3,000 sq ft. The area is home to several small boutique developments which have sprung up in the last 10 years.
Malaysian, South Korean and Singaporean developers had in the early part of the millennium converged on the U-Thant/Madge area because it was seen as offering an alternative to the Kuala Lumpur City Centre (KLCC) site.
Divided by Jalan Tun Razak, the U-Thant area’s land prices were trailing that of the KLCC area, and because the authorities had a height restriction for the U-Thant area, the financial outlay was also reduced without compromising on exclusivity.
Rental yields in the KLCC area have of late come under pressure, while those in the highly populated Mont’Kiara have dropped since the fall of Lehman Brothers in September 2008.
N. K. Tong is the son of “Condo King” Datuk Alan Tong of the Sunrise-Mont’Kiara fame.
It was Alan Tong who saw the potential of what was then known as Segambut and renamed it Mont’Kiara. That location turned out to be a hit. When Alan Tong subsequently left Sunrise, his son set up BKP in 2000 but remained on what was then his father’s home turf. BKP has three projects, all at Mont’Kiara.
It is currently selling Verve Suites, a four-tower development, of which two towers have been fully sold, while 85% of the third tower has been sold. The fourth tower will be launched in the second half of the year.
N.K. Tong’s foray into Ampang is significant in more ways than one. Sunrise Bhd, one of the first developers in Mont’Kiara, is also beginning to go beyond the area into the city centre and Bukit Jelutong, with a new strategy to offer multiple products in multiple locations.
fr:biz.thestar.com.my/news/story.asp?file=/2010/2/1/business/5584686&sec=business
Challenging times for condominium segment
THERE is an oft-quoted line: what goes up, must come down. With the anticipated recovery in the property sector, the focus now turns to the condominium market. Over the last decade or so, this segment has increasingly become a very big sub-segment of the property market.
The overall perception today is that there is a general oversupply of condominiums and serviced apartments. Because of this overhang of more than 90%, the market is expected to be rather challenging this year.
According to the National Property Information Centre (Napic), in the last 24 months the oversupply exceeded 90% for both the luxury and non-luxury category. This is significant when compared with other sub-segments of the property market, namely detached units (zero overhang), semi-detached (1%) and terraced housing (3%).
Henry Butcher Marketing Sdn Bhd chief operating officer Tang Chee Meng says if one were to look at the stock of residential properties coming onstream, the bulk in Penang, Selangor and Kuala Lumpur are condominiums. Because land is scarce, developers are trying to maximise land use.
In a recent talk on the luxury condominium market, he says his main concern is the oversupply in KLCC and Mont’Kiara. Tang is focusing on the luxury segment of RM700 per sq ft and above.
He says there are difficulties in renting out the larger units because there is a scarcity of expatriates.
The number of skilled, trained and professional foreigners entering the country has been dwindling since early last year. Although the situation may reverse, for the next year or so this seems unlikely.
There are other issues haunting this segment. The recent return of the real property gains tax (RPGT) and a possible future increases have also resulted in wary resignation.
Incidentally, sales of luxury condominiums were boosted by the suspension of RPGT in 2006. Besides the RPGT, the possible rise in interest rate is another cause for potential buyers to be more circumspect.
Investment options
At the global level, the weak and uncertain economic situation has also lowered the level of interest among foreign investors.
“There are more attractive investment options offered by overseas properties where prices have dropped more significantly and currency exchange rates have become more favourable,” says Tang.
He says although some have reported that up to 40% of their units have been sold to foreigners, the percentage of Malaysia’s properties bought by professional foreigners is actually less than 3%, taking into consideration the middle and high-end category.
“Some of them have been living here for many years. They are not speculators or investors. We are not seeing foreign investors coming back in a big way. Most of the buying is done by locals at the moment and they go for smaller units so the large units are difficult to sell. They also prefer to buy units that come with tenants,” he says.
He says the completion of several new projects in the KLCC area has also put further pressure on occupancy and rental rates.
There are luxury condominiums in other locations like Bangsar, U-Thant and Damansara Heights but they do not boast such massive numbers. Tang, therefore, expects the market in Bangsar and Damansara Heights to recover fast.
Giving an overall picture of the situation around the KLCC and Mont’Kiara area, Elvin Fernandez, managing director of Khong & Jaafar group of companies, says the KLCC and Mont’Kiara condo market is high-end that appeals to modern singles or households that prefer city centre living that one may buy to stay or to invest in. City centre living is a growing long-term trend as opposed to the suburban living. Notwithstanding that broad trend, the micro factors insofar as Kuala Lumpur’s high-end condo is concerned, the financial crisis has rocked this market quite a bit.
“Although many believe the global crisis is behind us, equally as many believe the issues and problems that caused and came with the crisis will continue to impact us as we go forward.
“City centre condos are presently pressured by low rental yields of below 5% net. That is not sufficiently attractive as it ought to be more than 5% to commensurate with long term and sustainable risks in the hierarchy of risks within and outside the property market,” he says.
Suburban condominiums, on the other hand, are higher density substitutes for landed properties.
Landed properties are preferred and the low initial net yields reflect this, but with the scarcity of land in suburban areas, particularly just outside the city centre areas, higher density housing is an increasingly acceptable substitute.
The pricing and returns of suburban condos will follow the substitute landed except that a slightly higher risk will prevail and this will translate to a higher expected net yield.Higher yield also means a lower unit value.
While net yields for landed houses in prime locations may be 2% to 3% net at present (they ought to be moving to higher numbers going forward) the long-term sustainable net yield for suburban condos should rightly be about 6% net and above.
Change in conditions
Taking the cue from the current market conditions, over at Mont’Kiara, Sunrise Bhd being the biggest player there, says it will not be giving emphasis to large units of 2,000 sq ft and above.
Incidentally, these two locations – KLCC and Mont’Kiara – have come under scrutiny because of their sheer numbers which go into several thousands.
Says Sunrise executive chairman Tong Kooi Ong: “The profile of the Mont’Kiara resident has changed. The old strategy of selling to Malaysians and renting to a professional foreigner worked many years ago. It will be a sunset industry if we follow this strategy today and this is obvious if you look carefully at the tenancy market.”
“There is a shift in the expatriate population and this will affect the property market. The average occupancy is 75% in Mont’Kiara. Now it takes about two years to fill a condo; last time, we could have filled it up faster. Our buyers have become residents themselves. If you cannot get RM15K a month, why buy a RM3mil unit? The guy who buys a RM3mil unit is not renting it. He is buying to stay,” he adds.
At its peak, owners have reported exuberant yields of double-digit with 9% being on the conservative side. Today, the yield has dropped to about 5%.
Known as a one-product, one-location developer, Tong says the company will be going into different locations offering different projects from now on. It recently signed a joint venture with the Sime Darby group to go into commercial development in Bukit Jelutong, Shah Alam. The company has secured more than 50% bookings, valued at about RM500mil, when it launched condominium project MK 28 in December last year. The average selling price of RM785 psf was also higher than expected. Tong says the company will continue to develop MK 20 and 22, both condominiums, in that area later on.
S. K. Brothers Realty (M) Sdn Bhd general manager Chan Ai Cheng says Mont’Kiara is very developed. The appeal here is the international schools. In light of the number of completed projects of late, she is aware of unit owners in certain projects there who are facing challenges in securing tenants and had to reduce rentals after the units remained untenanted for close to a year.
“Generally, it would seem like supply outweighing demand. However, not all units are facing the same challenge,” she says.
The U-Thant area will have its niche appeal and following while KLCC properties will tend to be more speculative as they attract not only locals but foreigners as well, although, for the time being, the foreign market has dried up.
On the other hand, the Petaling Jaya condominium market appeals more to locals and this will continue to be mainly a family-based, owner-occupier market.
“PJ properties are seen to be resilient because of strong local demand. Some projects are thriving and are in hot demand while places like Pavillion Residences keep raising prices. Selected established condominiums like Hampshire Residence remain well occupied,” she says.
The Selangor Dredging group, which recently launched the second phase of Five Stones, has an overall take-up rate of 66% for the 192 units in Block D and E. Over at Damansara Perdana, if there is no issue with leasehold, Chan says it is possible to get units at attractive prices and there are many options to choose from. As more projects enter the market, developers will have to keep improving. We are already seeing this in Ara Hills, by Sime UEP group, which have provided a high-voltage perimeter fencing as an added safety feature, she says.
fr:biz.thestar.com.my/news/story.asp?file=/2010/2/13/business/5662557&sec=business
Sime finds JV best way to go
Sime Darby Property’s announcement to develop a parcel of land in its Bukit Jelutong development in Shah Alam together with condominium developer Sunrise Bhd raised some questions recently.
The company’s managing director Datuk Tunku Putra Badlishah explains the rationale for the joint venture in an interview with P. Gunasegaram and Eugene Mahalingam and elaborates on the conglomerate’s property strategy
Q: Why is it necessary to bring in a joint-venture (JV) partner?
We have gone into joint-venture partnerships in the past and intend to continue this strategy into the future. The reasons are several.
The first reason is to accelerate the development of our land-bank. As you may be aware, Sime Darby Property has the largest land-bank in the country totalling 36,000 acres. Having such a large land-bank is both a blessing and a curse, and as you can imagine such an asset sits heavily on the balance sheet.
To ensure superior returns to our shareholders, all Sime Darby operating divisions are required to monitor their respective return on invested capital (ROIC) as a key performance indicator (KPI) and if the asset is not generating a return, the ROIC will be negatively impacted.
Sime Darby Property currently develops between 400 and 500 acres a year and at this development rate, it will take us more than 70 years to develop our entire land-bank! Collaborations with other developers will increase our asset turnover without the need to significantly increase our manning and overheads.
Second, such arrangements allow us to realise the enhanced land values within our developments and “monetise” our land-bank. The cash generated can then be used to finance the subsequent development and reduce the need for external funding.
Another reason is to create better value by leveraging on each other’s strengths and expertise. As the cliche goes, we hope that in our partnerships 1+1=3. There is also the opportunity for cross organisational learning, technology transfer and sharing of best practices.
In undertaking any development, there is also an element of risk and the joint-venture model means that the risks are shared.
What about contracting it out to the best bidder?
If a property is considered non-strategic, we will generally undertake a tender process and sell to the highest bidder. This applies to industrial, petrol station, kindergarten lots, among others. However, if the development of a particular piece of land will impact the overall neighbourhood or township, a joint venture is preferred as we want to ensure that the development undertaken will have a positive impact by improving the overall value of the surrounding properties and enhancing the lifestyle and well-being of existing and future residents.
Furthermore, we always undertake a decision-tree analysis to compare the benefits of selling land outright versus undertaking the development ourselves or through partnerships. Apart from the factors mentioned above, the net present value (NPV) calculation will help us decide the best option from a financial standpoint.
Guna, you also questioned whether it would have been better for us to buy the capacity and expertise to undertake the development in question rather than share the development profits with another party. I have elaborated on the benefits of the joint-venture arrangement earlier and it goes without saying that hiring development consultants will negate the said benefits.
In our joint-venture arrangements thus far, a joint management committee comprising staff from all partners is formed to run the project. Therefore, it is a truly collaborative and synergistic effort as all parties have a stake in the ultimate success of the project due to the profit-sharing component.
In a typical client-consultant relationship, the consultant’s compensation is fee-based and not related to the profitability of the project. The nature of the relationship is also fundamentally different from a joint venture and limits the opportunity for cross organisational learning.
Although we use many consultants such as planners, architects and engineers, we have found that “buying” expertise in this way is very much a temporary arrangement and limited to a particular project. Therefore, there is little sustained benefit to the organisation.
Is there any particular reason why Sunrise was chosen?
This joint-venture agreement was not conceived overnight and was almost two years in the making. In any partnership, the “chemistry” between the partners is most important.
During our “courtship” period, we found out that Sunrise shared many of the same values that we hold dear. A commitment to quality and customer service, dedication to development innovation and maximising return to shareholders are some of the shared values that come to mind.
Also their past experience with Plaza Mont’Kiara and their successful Solaris developments are very relevant to what we intend to create in Bukit Jelutong. Sunrise has also built a strong and loyal customer database, evidenced by the high incidence of repeat buyers for their projects.
This is something we hope to take advantage of. Historically they have also delivered development margins in excess of 25%, among the highest in the industry.
What about the valuation (for the land in Bukit Jelutong)?
In any sales transaction, the ultimate price is determined on a willing buyer, willing seller basis. In this specific case, two valuations were undertaken by different firms and the values quoted ranged from RM80–RM100 per sq ft. Therefore, the RM125 per sq ft sales price we achieved is in fact 25% above valuation.
Residential land there (in Bukit Jelutong) is going for about RM150 per sq ft.
It is true that residential land in Bukit Jelutong is being transacted at higher prices and this is a reflection of the success we have had in marketing Bukit Jelutong as a premier residential community.
There is a general perception that commercial land must be more expensive than residential land. I don’t agree with that as the price of property is dependent on several factors including supply and demand, the plot ratio and potential uses allowable for the development.
The valuers would have taken all these factors into account in deriving the market value for the land.
The gross development value (of the Bukit Jelutong project) is RM1bil but the total land price is about RM114mil. Considering the gross development value, isn’t the land price a bit low?
The gross development value of any project is dependent on the developer’s ability to enhance the sales value of the development components.
As I have said earlier, we hope this synergistic partnership can result in a 1+1=3 scenario. The enhanced gross development value projected is a good example where the joint management committee has been able to drive value to maximise the development revenue for the benefit of the shareholders.
You also questioned the significance of this project to Sime Darby. At the transacted price of RM114mil, Sime Darby Property makes a profit of RM74mil on the land alone. Assuming the JV company is able to deliver a 25% development margin, the development profit on the projected RM1bil revenue is RM250mil. Adding our 50% share of the development profit to the land profit, the total profit attributable to Sime Darby Property is just about RM200mil. Given the 21-acre development land, this translates to profit per acre of close to RM10mil!
From my experience, I don’t believe many projects would be able to generate such returns. So there is no question that we are happy with the projected returns from this project and that from the standpoint of Sime Darby Property, this is indeed a significant project for us.
So does this mean you will have future joint ventures of this nature?
Yes, it’s a strategy we will continue to pursue and we are in constant negotiations with other parties to explore potential partnerships.
You may have heard about the Sime Darby Vision Valley, where we have masterplanned 37,000 acres just around KLIA alone. For this large-scale development, we intend to take the partnering strategy a step further by inviting not just local developers but also foreign partners and investors to participate in this project.
From the explanations given, I hope you will agree that such joint ventures make sense for Sime Darby Property.
fr:biz.thestar.com.my/news/story.asp?file=/2010/2/16/business/5681799&sec=business
Developers optimistic on 2010 outlook
They expect growth to continue despite cooling off of broader regional market
GEORGE TOWN: Property developers are optimistic that there will be growth in the local sector despite the cooling off of the broader regional market.
This is based on the Government’s projection of a 3.2% gross domestic product (GDP) growth this year, the brisk sales of high-end properties in Kuala Lumpur and Penang in 2009 and the fact that prices of Malaysian properties are still affordable to investors.
Real Estate and Housing Developers Association (Penang) chairman Datuk Jerry Chan said the prices of Malaysian homes, having appreciated 5% to 10% annually, was still affordable.
“The prices, with room to appreciate further, are still attractive to foreign buyers wanting affordable holiday homes and those with the disposable income to upgrade their properties,” he said.
Chan said given the high cost of land in Penang and the increase in building material prices, property values in the state were likely to rise by 5% to 10% this year.
“To build a 1,000-sq-ft apartment on the island will cost RM350,000 to RM380,000, taking into consideration the land and construction costs.
“This means a 1,000-sq-ft apartment will have to be priced close to RM500,000 to generate profit,” he said.
Meanwhile, IJM Land Bhd managing director Datuk Soam Heng Choon expects the recovery of the local property sector in the second half of 2009 to resume into 2010.
“There is a lot of optimism among local investors as the stock market is on the rebound and good liquidity in the market augurs well for the property sector.
“The take-up rate should remain steady with more first-time homebuyers coming into the market while the demand for high-end properties should be good with a ready pool of upgraders and investors.
“Prices should remain stable with reasonable appreciation, given that speculative buying is well under control,” he said.
Mah Sing Holdings Bhd deputy chief operating officer Teh Heng Chong said landed property prices in prime locations in Penang, Klang Valley and Johor Baru would still hold up this year.
Teh said the demand for properties in such locations would come from those with the buying power who preferred homes in a secured environment.
“That is why our recent previews of high-end projects, such as the RM209mil Perdana Residence 2 in Selayang and RM690mil Garden Residence in Cyberjaya, attracted large crowds,” he said.
Perdana Residence 2 and Garden Residence Resort Homes are both super-linked houses priced from RM828,000 and RM738,800 respectively.
“For Perdana Residence, we have potential buyers indicating they will take up 162 units while for Garden Residence Resort Homes, there are people expressing interest to buy 200 units,” he added.
Teh said the group’s main property launches in the Klang Valley this year would be iParc in Bukit Jelutong, Garden Villas in Hijauan Residence, Garden Residence in Cyberjaya, and Perdana Residence 2 in Selayang.
Mah Sing also plans to launch more phases this year in its existing projects like Hijauan Residence in Cheras, Aman Perdana in Meru-Shah Alam, StarParc Point in Setapak, as well as Sri Pulai Perdana and Sierra Perdana in Johor Baru.
SP Setia Bhd property division (north) general manager S. Rajoo said there was still room for property prices in the country to appreciate, unlike in some other neighbouring countries where prices had stagnated.
“The drivers of property demand in the country comes from first-time buyers, those who can afford to upgrade their lifestyle, and investors from Indonesia and Singapore.
“And with land scarcity being a concern on Penang island, buyers would generally jump at the chance of owning a property in the location of their choice,” Rajoo said.
Eastern & Oriental Bhd executive director Eric Chan Kok Leong said the local property sector looked promising this year, with demand expected to pick up.
He said the recovering economy was projected to improve the overall market sentiment, boosted by the attractive mortgage rates which were expected to remain accommodative, given the ample liquidity in the banking system.
“From a broader perspective, investors, anticipating inflation to follow the economic recovery, may decide to hedge their positions by investing in property.
“For us, we have seen a steady take up for our properties as 2009 drew to a close and we are confident of a better performance this year,” he said.
fr:biz.thestar.com.my/news/story.asp?file=/2010/2/17/business/5559315&sec=business
Developers to launch RM1b projects in Penang
This is in view of recovering economy, demand for high-end homes
GEORGE TOWN: Four major Kuala Lumpur-based developers plan to launch some RM1.16bil worth of luxurious residential properties in Penang this year, in view of a recovering domestic economy and continuing demand for high-end homes.
The properties are IJM Land Bhd’s RM422mil The Light Collection I & II, SP Setia Bhd’s RM60mil Brooks Residences, RM230mil Reflections condominium and semi-detached schemes for its Setia Pearl Island project, E&O Property Development Bhd’s RM380mil first phase of the Quayside project, and Mah Sing Holdings Bhd’s RM71mil first phase of the Legenda@Southbay.
The RM165mil Light Collection I, scheduled for launch in the second quarter on a 7-acre site next to the Penang Bridge, comprises 152 condominiums and 24 water villas, priced at RM650 per sq ft and RM800 per sq ft respectively.
The built-up areas for the condominiums range from 1,375 to 1,580 sq ft while the water villas have a built-up area of 3,169 sq ft.
The RM257mil Light Collection II, scheduled for launching on a 8.58-acre site in the second half of 2010, comprises 297 condominiums with built-up areas ranging from 516 to 3,528 sq ft, priced at about RM700 per sq ft onwards.
IJM Land managing director Datuk Soam Heng Choon said residential properties in the mid to high-end categories had proven to be good hedging instruments and would serve as the main growth driver for the property sector this year.
He said IJM Land also planned to launch in May its RM123mil Maritime Square, which comprises 244 serviced suites and 67 shop and office units.
SP Setia Property (North) general manager S. Rajoo said the RM150mil Reflections condominium scheme and the 54 semi-detached homes for the Setia Pearl Island project in Sungai Ara would be launched in the first and second quarter respectively.
“The Reflections comprises 317 condominiums with built-up areas of 1,077 to 1,512 sq ft and priced from RM378,800 onwards.
“The Brooks Residences project, located in the prime residential vicinity of Jesselton Road, is expected to be launched in the final quarter of 2010,” he said.
Rajoo said the group planned to introduce an innovative financing package for its new projects in Penang soon.
“The special financing package is for the new launch of semi-detached homes in the Setia Pearl Island scheme and a new project, Setia Ara, on a 28-acre site in Sungai Ara,” he said.
Mah Sing deputy chief operating officer Teh Heng Chong said the first phase of the RM284mil Legenda@Southbay project would offer 19 bungalows with an estimated gross sales value of RM71mil.
Comprising a total 76 bungalows, the Legenda@Southbay is a gated and guarded project that comes with a clubhouse and is equipped with features such as personal pool, smart-home features, solar hot water system and rain water-harvesting system.
“We also plan to launch the first phase of the RM911mil Southbay City commercial project in Batu Maung this year.
“The Southbay City is an integrated commercial hub comprising serviced residences, commercial lots, lifestyle mall, and four and five-star hotels,” Teh said.
Eastern & Oriental Bhd executive director Eric Chan Kok Leong said the company’s property arm E&O Property would launch the first phase of the RM1.8bil Quayside luxurious condominium scheme for its sea-fronting Seri Tanjung Pinang project in Tanjung Tokong early next month.
“The first phase is a 26-storey block, comprising 298 units,” he said.
Quayside, resembling sea-fronting home projects in Sentosa, and Sovereign Island in Gold Coast, comprises seven high and low-rise blocks surrounded by 4.5 acres of water park.
The Quayside is located within the first phase of the 908-acre Seri Tanjung Pinang housing project.
fr:biz.thestar.com.my/news/story.asp?file=/2010/2/22/business/5559403&sec=business
Developers, analysts unperturbed by interest rate hike
Interest rates still low and remain attractive to house buyers
PETALING JAYA: Developers and property analysts are not overly concerned about Bank Negara’s overnight policy rate (OPR) hike to 2.25% from a record low of 2%.
Although Thursday’s rise in the benchmark interest rate was the first in almost four years, industry players do not expect property sales to be affected.
According to ECM Libra property analyst Bernard Ching, despite the interest rate hike, bank financing will continue to be cheap with effective interest rates at 3.8% to 4% from the previous highs of 6.5% to 6.75% about two-and-a half to three years ago.
“Going forward, we expect the OPR to rise gradually and the best thing to do is to lock in the current negative spread before the rates rise further,” Ching told StarBiz.
He said the housing packages being offered by developers were providing a low entry cost for housebuyers and fuelling demand for houses.
He expects these packages to continue for the next couple of months at least, as it would be premature to end them at this juncture.
Ching said upper-middle range buyers, who have the capability to service their loans, were mostly buying for investment purposes.
SP Setia Bhd president and chief executive officer Tan Sri Liew Kee Sin said the rise in the OPR was very minimal and that “we see it as a normalisation of rates, given the improved economic outlook this year.”
“Generally, interest rates are still low and remain attractive to house buyers. We do not see this affecting our property sales and are confident with our ongoing launches. We will continue with what we have planned for this year,” he added.
Mah Sing Group Bhd group managing director-cum-chief executive Tan Sri Leong Hoy Kum said with the rates still far below historical highs, the affordability level of property buyers was still high.
“We doubt that the rate hike will have any impact on property sales. This increase should be seen as a positive move as it indicates a normalisation which can curb inflationary pressures,” he said.
Leong said the expected economic expansion, improvement in employment market, high savings and healthy affordability levels would contribute to higher demand for properties in the coming months.
Mah Sing will be capitalising on its branding, product quality, location, concept and track record to capture its market share and achieve its 2010 sales target of RM1bil.
The company plans to have property launches in 10 new projects and four existing developments.
fr:biz.thestar.com.my/news/story.asp?file=/2010/3/8/business/5808036&sec=business
Banks raise rates
Bankers say rate hikes based on recent adjustment
KUALA LUMPUR: Banks have begun raising their base lending rates (BLRs) following Bank Negara’s move to lift the overnight policy rate (OPR) by 25 basis points last week.
Five of the largest banks in the country raised their BLR to 5.8%.
Malayan Banking Bhd (Maybank) and CIMB Bank Bhd were the first two banks to announce their interest rate hike from 5.55%.
The two banks raised their BLR and base financing rates to 5.8% effective today following Bank Negara’s OPR revision last Thursday.
In a statement, Maybank president and CEO Datuk Seri Abdul Wahid Omar said the interest rate revision was based on the recent adjustment in the OPR.
“We expect to see better growth from our core business segments, leveraging on the improving economic environment and as more customers take advantage of the diversity of our product and service offerings,” he added.
Public Bank will also raise its BLR to 5.8% today, according to Bank Negara’s banking info website.
“We are supportive of Bank Negara’s move to normalise interest rates as the economy regains stability and are immediately transmitting it to both savers and borrowers,’’ said CIMB group chief executive Datuk Seri Nazir Razak in a statement.
Nazir said it was the right time to raise interest rates as the economic environment had normalised and growth momentum was strong.
“We saw the fourth quarter gross domestic product (GDP) numbers and we are looking at a GDP growth north of 4% this year potentially,’’ he told reporters at the launch of CIMB Twin Yield Income Investment structured product yesterday.
“Those conditions suggest that it is time to normalise interest rates. As best as I can tell, it is a good decision.’’
CIMB also raised its savings and fixed deposit rates by up to 25 basis points.
The RHB banking group also raised its BLR for RHB Bank Bhd to 5.8% today.
In a statement, group managing director Datuk Tajuddin Atan said RHB would be balancing the increased borrowing rates by offering more competitive rates for depositors.
Hong Leong Bank Bhd will increase its BLR to 5.8% effective March 10.
Bank Negara raised the OPR as the economy has improved significantly and returned to its path to recovery.
“Given this improved economic outlook, the Monetary Policy Committee (MPC) decided to adjust the OPR towards normalising monetary conditions and preventing the risk of financial imbalances that could undermine the economic recovery process,’’ said Bank Negara in its monetary policy statement last week.
“At the new level of the OPR, the stance of monetary policy continues to remain accommodative and supportive of economic growth.”
A rise in interest rates is usually greeted with trepidation as economists typically worry about its impact on growth and demand.
This time around, that apprehension is not yet visible.
“At the moment the impact will not be great as it is coming off historic lows,’’ said AmResearch economist Manokaran Mottain.
The Association of Banks Malaysia said the increase in OPR would not impede access to financing nor affect the industry’s lending activities.
The banking industry recorded a loans growth of 8.6% in January and 7.8% in December.
Analysts said the impact the BLR increase would have on bank’s profits would depend on whether deposit rates would be raised by the same quantum.
They said bank margins were squeezed when interest rates were cut but they expected net interest margins to widen as interest rates rose.
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Jaya Upaya sees brisk sales of new bungalows
KUALA LUMPUR: Property developer Jaya Upaya Corp Sdn Bhd expects to sell all its boutique bungalows at Milano@Kemuning by the end of this month after receiving overwhelming response during the project’s launch on March 6.
Managing director Lee Cheng Bing told StarBiz the company had already sold 50% of the 38 three-storey boutique bungalows.
“We are optimistic based on the feedback we received during the property’s launch where we managed to attract about 300 walk-in potential buyers and investors.
“With the economy heading for improvement and attractive interest rates from the banks, we should be able to sell all the remaining units by end of this month,” he said.
Lee said the bungalows were priced at RM1.5mil to RM2.3mil for lot sizes ranging from 4,000 to 7,500 sq ft. The project is located near the Kesas Highway.
“A new highway is under development now to connect Kota Kemuning to Shah Alam.
“Milano@Kemuning will be much more accessible once the highway is opened,” he said.
He said the outlook for the property market was improving with most big developers upgrading their developments to come up with more premium products.
“We can see in the areas surrounding Milano@Kemuning that people are still coming to buy properties from the developers though the prices have increased now.
“Our launch that day saw the participation of some buyers in their mid-30s and this is a good sign that more young professional buyers are coming into the market,” he said.
Milano@Kemuning is a gated residential scheme on 3.2ha of freehold land next to Alam Impian township and near Kota Kemuning in Shah Alam.
The project has a gross development value of RM80mil and targets completion by the end of 2011.
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CMP to build high-end condos in Johor Baru
KUALA LUMPUR: Central Malaysian Properties Sdn Bhd (CMP) will be developing high-end condominiums in Johor Baru that may cost about RM1.5mil a unit.
Called the “Lido Residences”, it was part of the company’s integrated Lido Boulevard waterfront project and each unit was expected to be about 1,900 sq ft in size, CMP managing director Datuk Chan Tien Ghee said.
“It (Lido Residences) will comprise 900-odd apartments over a 24-acre estate. The units will be fully furnished and will be facing Johor City as well as Singapore,” he said after a contract signing ceremony between CMP and Jan De Nul (Malaysia) Sdn Bhd yesterday.
Apartment units within the area currently were priced RM700 to RM800 per sq ft, Chan said, adding however that CMP had yet to finalise the price of its condominium units.
“Right now we’re still looking at our pricing.”
CMP has appointed Belgium-based dredging company Jan De Nul to carry out reclamation works at the site.
The deal is worth RM238.6mil. Chan said the works would take 15 months to complete. Once completed, about 94.18 acres would be reclaimed land while 28.17 acres would be on a piled concrete deck.
Preliminary works commenced this month.
On the reclamation, Jan De Nul group managing director J.P.J. De Nul said: “If you have a booming coastal area, what is cheaper than to make your city bigger by gaining a stretch (of land) from the sea?”
According to CMP’s website, Lido Boulevard spans 2.4km along the Tebrau Straits coastal line.
Encompassing an area of 122.35 acres, the project will be divided into six parcels and expected to be completed in 2016.
Chan said the project would have a gross development value of over RM4bil.
CMP is a special-purpose vehicle set up to undertake the development of the Lido Boulevard project.
The company’s main shareholders comprise businessman Tan Sri Vincent Tan Chee Yioun and Chan himself.
The project is a joint venture with Johor State Secretary Inc, an investment holding company of the Johor state government, which is also the land owner.
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Developers have strong presence in Johor
State a key earnings contributor for many public listed property firms
Johor is a key earnings contributor for many public listed property developers, according to MIDF Research.
In a recent Equity Beat report on the Johor property sector, the research house noted that most key developers continued to have a strong presence in the state with gross development value ranging from RM400mil to RM5bil.
It identified the state’s land availability and close proximity to Singapore as the two main contributing factors, adding that demand for residential properties in Johor could continue to stay healthy in the immediate term.
However, the report also cautioned the downside risk would be steeper than expected in view of the hike in interest rate and a hiccup in the recovery of both Malaysia and Singapore’s economy.
“Actually, there is a combination of several factors and the key one is Iskandar Malaysia which is a big boost for Johor’s property sector,” SP Setia Bhd executive vice-president (property division – northern and southern region) Chang Khim Wah told StarBiz.
He said Iskandar Malaysia was gaining momentum with an influx of local and foreign investors since its launch on Nov 4, 2006.
It had received RM55.56bil in cumulative investments up to end-2009, of which 60% were foreign direct investments.
Some investors had already commenced work on the ground and created some 44,000 jobs.
Chang said Iskandar benefitted the property sector as it raised the standard of residential properties and property developers had to deliver quality products.
He said house buyers in Johor Baru now demanded well designed homes with quality finishing.
“Property developers here cater for both locals and foreign buyers (Singaporeans) and must be able to meet their expectations,” said Chang.
He said economic recovery on both sides of the Causeway offered good opportunities for developers here as demand for properties normally grew in tandem with the economic growth.
Chang said SP Setia’s four ongoing projects in Johor – Bukit Indah I & II, Setia Indah, Setia Tropika and Setia Eco Gardens – would keep the company busy for eight years.
Meanwhile, KGV-Lambert Smith Hampton director Samuel Tan Wee Cheng said developers had not really taken advantage of Johor’s close proximity to Singapore.
He said developers should look at Singapore’s permanent residents and expatriates based there as their potential buyers.
“It is a well-known fact that Singapore’s cost of living is among the highest in Asia and private properties are beyond the reach of average Singaporeans,” said Tan.
He said the opening of Singapore’s integrated resort in Sentosa last month and Marina Sands Resorts next month would contribute to the escalating living costs in the republic.
Tan said most Singaporeans wanted to upgrade from the Housing Development Board flats to private properties especially landed ones but could not afford to do so, as such properties were extremely expensive.
He said developers should take this opportunity to attract these Singaporeans to buy properties in Johor Baru and with the strong Singapore dollar, they could get their dream houses here without burning holes in their pockets.
Tan said thousands of Johoreans and locals from other states who worked in Singapore but stayed in Johor Baru also offered market potential for developers.
However, he said frequent changes in the state’s housing policies from the RM100,000 levy imposed on foreigners and only allowing foreigners to buy properties worth RM250,000 onwards had dampened growth in the property market here.
Tan said the recent ruling doubling the price of property from RM250,000 to RM500,000 for foreign buyers would further depress the Johor property market after almost two years of slowdown.
“The Federal Government should review the new ruling. It is okay to impose that for properties in the Klang Valley but not outside it,” he said.
Tan shared Chang’s view, saying that Iskandar helped boost demand for high-end residential properties in the Johor Baru district, especially in Nusajaya.
He said the ongoing Legoland Theme Park, Indoor Theme Park, EduCity and BioXCell Biotechnology Park in Nusajaya would also create demand for houses here.
Tan said the completion of the New Coastal Highway, Eastern Dispersal Link Expressway, Senai-Pasir Gudang-Desaru Expressway would improve travel time and connectivity in the southernmost part of Johor.
He said with improvement in connectivity, buyers would be looking for houses in Mount Austin, Tebrau, Skudai, Senai and Kulai areas.
KSL Holdings Bhd executive director Ku Hwa Seng said the Johor government should play a more active role in promoting the state as the preferred investment destination.
He said even though property development was driven by the private sector, developers needed commitment from the government agencies and departments for growth.
Ku said the state government could open up more land for industrial activities to attract more Singapore-based companies, especially the small and medium enterprises, to relocate their operations to Johor, where land prices and cost of doing business were lower.
He said although land prices in Johor were becoming more expensive, this would not stop developers including those from the Klang Valley from coming here.
“We are looking for more land especially in Iskandar for future development,” said Ku.
KSL’s four ongoing projects in Iskandar – Taman Nusa Bestari, Taman Bestari Indah Ulu Tiram, Taman Kempas Indah and KSL City – will keep the company busy for the next eight years.
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Rehda: Outlook for Johor property market positive
JOHOR BARU: The outlook for the Johor property market this year is expected to be positive following the economic recovery in Malaysia and Singapore.
Johor Real Estate and Housing Developers Association (Rehda) branch chairman Lee Kim Chai said it was well known that Johor and Singapore had a long history of economic interdependence.
“Johor and Singapore complement each other in economic activities so economic recovery on both sides of the Causeway will bring benefits to both,” he said in an interview with StarBiz.
Lee said the economic recovery meant that consumers’ confidence was returning after a two-year low period following the global recession sparked off by the US subprime crisis and European financial woes.
He said banks were also offering attractive interest rates to house buyers and consumers were spoilt for choice with the numerous home loan packages available in the market.
Lee said Iskandar Malaysia was another main factor that contributed to the positive growth in Johor’s property market as it helped boost demand for houses here.
Iskandar was the first economic corridor launched in the country. Covering 2,217 sq km area in the southernmost part of Johor, it has received RM55.56bil in cumulative investments, of which 60% were foreign direct investments. .
Lee said the stakeholders of Iskandar should be commended for putting in much effort in attracting both local and foreign investors.
“Iskandar is now gaining momentum with many on-going projects by both the public and the private sectors,’’ said Lee.
He said construction of new roads and upgrading of existing roads within Iskandar would improve connectivity and accessibility; benefitting developers.
However, Lee said Johor Rehda wanted the Economic Planning Unit to look into the directive in its Circular dated Jan 1, 2010, that stipulated foreigners were only allowed to buy properties worth RM500,000 each compared with RM250,000 previously. He said the threshold should only apply for properties in the Klang Valley as it could further dampen the property growth in other states such as Johor and Penang.
Lee said the Johor government had already in place for many years a quota system where foreigners could only make up 20% of buyers for double-storey and the semi-detached houses. “Most of the time, the quota is not even filled. With the RM500,000 ruling, we can imagine the situation getting worse,’’ he said.
Lee said developers taking part in the Malaysia Property Expo hoped to rake in sales of RM200mil.
The event at Danga City Mall started yesterday and ends on Sunday.
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A new haven in Ipoh Lakeside development to raise the bar in condominium living
THE HAVEN is expected to raise the bar in condominium living in Ipoh when completed in 2013.
The Haven Sdn Bhd co-principal Peter Chan says the RM230mil lakeside development will boast five-star services and amenities.
“The Haven is a development of distinction with trappings of luxury and functionality. It is an idyllic hideaway amidst nature with its centrepiece – a 1.6ha natural lake and monolithic limestone rock formations,” he says.
The project comprises three blocks of 26-storey condominiums with a total of 489 units built on 9.63ha.
It will include all the facilities of an up market condominium including a club house complete with gymnasium, sauna, a cafe/restaurant, a 60 m pool, spa, children’s playground and ample car parking facilities.
Chan says preservation of nature formed the cornerstone of the development as the company recognises the need to care for the environment and to reduce its carbon footprint.
“Our aim is for The Haven to be among the first developments to harvest nature’s renewable resources to power and maintain common areas. We will use solar panels and wind technology. Water from the lake will be harvested for common washing areas,” he says.
According to Chan, the water from the lake can be used for drinking as its quality surpasses the World Health Organisation’s requirements.
Despite being so close to nature, The Haven is only 10 minutes from the city centre and between three and eight minutes to all the major hypermarkets.
The Haven, Chan says, will have multi-layered security such as closed-circuit televisions, computer card access for residents, fenced perimeter and regular security patrolling.
The size of the units range between 893 sq ft and 2,840 sq ft and are priced from RM270,000 to RM1.4mil.
“Response has been overwhelming since our show unit was opened for viewing recently,” Chan says, adding that buyers from Singapore and Hong Kong had purchase some 60 units so far.
“We are confident of its appeal as a home for those in Ipoh as well as a retreat or vacation home for other Malaysians and foreigners,” he says.
The Haven Sdn Bhd is a wholly owned subsidiary of Superboom Projects Sdn Bhd.
Superboom Projects is the developer of the 576-unit Permai Lakeview Apartments in Ipoh and Subang Galaxy in Shah Alam.
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Developer celebrates project’s early completion
CLOSE to 700 people were privy to the launch of the Acacia show unit at the Park Residences Resort Style condominiums at Bangsar South recently.
The guests were privilege card members and existing buyers.
“This luncheon is to celebrate the early completion of the project as well as to allow the existing buyers to view the actual units during the event,” said UOA general manager David Khor.
There are a total of 470 units in two blocks, Acacia and Begonia and 67% have already been sold. During the event, existing buyers brought along friends and family who were interested in the properties as well.
Khor admitted that building a mixed development in Kerinchi was not without its challenges but they persevered in making the place suitable for future buyers.
“When we first embarked on this journey many people questioned our success.
“This place was known for traffic jams and illegal hawker stalls but through careful planning and hard work we changed it into a vibrant development,” he added.
UOA built a hawker centre and with the help of Kuala Lumpur City Hall (DBKL) relocated the stall owners to the new centre and they also upgraded the LRT station for the people’s convenience.
“Since we share the same postcode as Bangsar, we decided to name this area Bangsar South and DBKL has officially recognised the name,” added Khor.
During the luncheon, a host of games and entertainment were also arranged. A clown with balloons entertained the children while performances by The Monti and Logi Show as well as David Lai’s magical act blew the crowd away.
A special 6% discount was given to buyers introduced by friends and family while existing buyers who purchased additional units were given an 8% discount during the event.
Members of the public will be able to view the showrooms during the official launch on Sunday.
The starting price for the units measuring 1,260sq ft is RM636,800.
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12,000 new houses in Perak this year
New deliveries to be 20%-30% higher than in 2009
IPOH: Around 12,000 new houses are expected to be delivered to buyers in Perak this year, a 20%-30% increase from 2009.
According to Real Estate Housing Developers’ Association Perak chapter chairman Datuk Francis Lee, the estimated figure of 12,000 was based on the number of applications submitted to the local authorities for planning, building and earthwork approval in the first quarter of 2010.
“Although the latest Property Market Report by the Valuation Department for 2009 is not out yet, the delivery of new houses in Perak for last year is expected to be between 9,000 and 10,0000, compared to 6,412 in 2008,” Lee added.
Perak-based developers that will be launching new property development projects in Ipoh starting from mid-2010 include Taiko Properties Sdn Bhd, Kinta Properties Holdings Sdn Bhd, Namcom Development Sdn Bhd, Pyhomes Realty Sdn Bhd and Morubina Sdn Bhd.
Collectively they are launching some 836 units of residential landed and high-rise properties with an estimated gross sales value of RM337mil.
The selling price of these new residential projects are between 10% and 15% higher than last year’s pricing, due to better demand and higher land, construction and marketing costs.
The launches with the highest gross sales value comes from Taiko Properties’ Bandar Seri Botani and The Thompson projects in southern Ipoh and Ipoh city, with an estimated gross sales value of RM194mil.
“To be launched for Bandar Seri Botani in the third and fourth quarters of 2010 are 317 units of double-storey semi-detached houses, double-storey linked houses, and bungalows, with an estimated gross sales value of RM79mil.
“These properties have buit-up areas of between 1,287 sq ft and 2,180 sq ft, priced between RM155,000 and RM365,000,” Taiko project manager Lau Eng Pun said.
The RM115mil Thompson project, scheduled for launching in mid-2010, comprises 46 bungalows in a guarded community with built-up areas ranging between 6,900 sq ft and 8,100 sq ft, priced from RM2.4mil onwards.
“The project, located on a 13-acre site, is between Jalan Tun Dr Ismail and Lorong Tun Dr Ismail, the most prestigious area of Ipoh city,” Lau said.
Kinta Properties is launching 136 units of landed properties, comprising linked and semi-detached houses, with an estimated gross sales value of RM31.9mil from mid-2010 onwards in Bandar Baru Sri Klebang.
“The linked properties have built-up areas ranging between 1,500 sq ft and 2,160 sq ft, priced between RM205,000 and RM298,800,” Kinta Properties chief executive officer Bernard Tan said.
In February, Kinta Properties launched 21 bungalows priced between RM449,800 and RM788,000.
Namcom Development Sdn Bhd is launching in the third quarter RM65mil worth of landed and high-rise properties comprising 158 semi-detached, double-terraced, and terraced houses in Klebang Ria, and 37 condominium units in Jalan Tun Dr Ismail.
Its managing director Chan Nam Sing said the landed properties with built-up of between 1,000 sq ft and 2,500 sq ft are priced between RM138,000 and RM368,000.
“The condominiums, with built-up of 1,500 to 3,400 sq ft, are between RM420 and RM450 per sq ft,” said Chan.
Pyhomes Realty Sdn Bhd is launching 142 units with an estimated gross sales value of RM46.4mil in Sg Siput, Batu Gajah, Pasir Putih Selatan and Gopeng in the third quarter.
They comprise semi-detached and double-storey terraced properties with built-up of between 1,980 sq ft and 3,180 sq ft, priced between RM208,000 and RM491,000, according to managing director Chan Hoong Mun.
Meanwhile, one of the largest commercial schemes in Perak being carried out now is Morubina Sdn Bhd’s RM80mil Kinta Riverfront Hotel & Suites project.
Its project coordination manager Anuar Abu Hassan said the project, comprising a five-star hotel and a 20-storey block of 249 condominum units, was 40% completed.
“We have sold 75% of the condominiums since the launch last year,” he said, adding that the project is scheduled for completion in 2011.
The condominiums with 808 sq ft in built-up are sold from RM215,000 onwards, while the 7,393 sq ft penthouses are priced from RM780,000 onwards.
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More foreign investors targeted for Nusajaya
UEM Land MD says good progress being made there
GELANG PATAH: UEM Land Holdings Bhd is targeting more international investors to participate in the development of Nusajaya this year.
Its managing director Datuk Wan Abdullah Wan Ibrahim said the company was eyeing investors from China, India, Europe, Singapore, South Korea and the United States.
“Nusajaya is progressing well and moving on the right track and we are confident of keeping the momentum going as planned,’’ Abdullah told StarBiz.
He was speaking at the launch of “Green Programme”, a collaboration between UEM Land and Universiti Kebangsaan Malaysia at SK Taman Nusa Perintis 1, near here on Saturday.
The Green Programme is outlined under the Nusajaya Green Plan launched in December last year to ensure a sustainable development of the country’s first economic growth corridor.
Abdullah said the company was unfazed by the Dubai World saga and now the Greece debt crisis as the two were unlikely to affect the global economy.
“Even during the global economic slowdown in the last two years, Nusajaya attracted interest from both local and foreign investors,’’ he added.
Abdullah said the company believed there were always opportunitie,s even during times of economic uncertainty, as there were investors and individuals with funds.
He said the company’s high-end residential projects, East Ledang and Horizon Hills, a joint venture between UEM Land and Gamuda Bhd, had attracted a large number of foreign buyers.
Abdullah said foreigners made up 65% and 56% of the buyers at East Ledang and Horizon Hills respectively and that the projects had recorded good take-up rates.
UEM Land is the master developer of the 9,308ha Nusajaya, the key driver of Iskandar Malaysia which was launched on Nov 4, 2006.
Nusajaya comprises eight catalyst developments – Kota Iskandar (Johor State New Administrative Centre), Southern Industrial and Logistic Clusters, Puteri Harbour Waterfront Development, EduCity, Medical City, International Destination Resort and Nusajaya Residences.
Nusajaya is one of five flagship development zones in Iskandar. The other four are the JB City Centre, Western Gate Development, Eastern Gate Development and Senai-Kulai.
Abdullah said works on infrastructure and several development projects in Nusajaya were on schedule and were expected to be completed in the next three to five years.
These include the RM1.4bil Coastal Highway linking Johor Baru city centre to Nusajaya, Asia’s first Legoland Theme Park, Indoor Theme Park @ Puteri Harbour, Marlborough College, Newcastle University Medical Faculty and Pinewood Studios.
“On completion of these projects, Nusajaya will have enough content to attract investors and residents,’’ he said.
Abdullah said it would be much easier to convince and attract investors to Nusajaya as they could witness the developments taking place.
He said another contributing factor was that Iskandar received continuous support and commitment from the Federal and Johor governments.
“The support from the Federal and Johor governments is important to ensure the success of Iskandar, which in turn will ensure that Nusajaya succeeds too,’’ Abdullah said.
He said other stakeholders, namely Iskandar Regional Development Authority and Khazanah Nasional Bhd-backed Iskandar Investment Bhd, also played crucial role in determining Nusajaya’s success.
Abdullah said its close proximity to Singapore was another added advantage for Nusajaya as it would not only able to attract Singaporean investors but also expatriates and multinational corporations there.
“As the master developer, UEM Land has an enormous task to ensure that Nusajaya succeeds and looking at its progress, we are well on our way to achieving it,’’ he said.
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Property market to perform better this year
KUALA LUMPUR: The property market this year will definitely perform better than in 2009 due to an improvement in the general economy, Deputy Finance Minister Datuk Dr Awang Adek Hussin said Tuesday.
As to whether, normalisation of the overnight policy rate (OPR) by Bank Negara Malaysia would affect it, he said: “Bank Negara may normalise the rate, but I think, not to the extent of impacting adversely the property market”.
He was speaking to reporters after officiating the fifth International Real Estate Research Symposium (IRERS 2010) organised by the National Institute of Valuation (INSPEN), here Tuesday.
Also present at the event were Datuk Abdullah Thalith Md. Thani, the Director General of the Valuation and Property Services Department and INSPE NDirector Datin Faridah Mohammed.
INSPEN is the training and research institute of the Valuation and Property Services Department, Ministry of Finance.
In his keynote address, Awang Adek pointed out a marginal drop of 0.7 per cent of the total volume of transactions last year, while the total value reduced at a higher rate of 8.3 per cent.
Themed, “Surviving the Economic Crisis: Opportunities and Challenges in Real Estate”, IRERS 2010 is a real estate research forum held in collaboration with several international universities and property organisations.
Awang Adek said a strong banking system will also help boost the property market, especially the residential segment, while stimulus spending supports the non-residential sub-sector.
On the construction side, Awang Adek said there would be ample office space in the market for the next couple of years, as indicated by the available space of 11.8 million sq m in the country.
On the RM67 billion stimulus package, he said spending for the first package, was virtually completed and for the second, it was well underway.
Meawnhile, commenting further on the property market’s performance, Abdullah Thalith said it was the right time for BNM to increase the OPR to curb speculation elements
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Iskandar to hold more roadshows in Singapore
Iskandar targets investments in tourism, leisure, services and property sectors
SINGAPORE: Iskandar Investment Bhd (IIB) will hold more roadshows in Singapore within the next six months to attract more investors to Iskandar Malaysia.
President and chief executive officer Arlida Ariff said IIB wanted to attract more Singaporeans – who were already making inroads in Iskandar in the education and the health sectors – to the tourism, leisure, services and property sectors.
“There seems to be renewed interest from investors in the republic in Iskandar following the economic recovery both in Singapore and Malaysia,” she told journalists yesterday after presenting a keynote address in the Iskandar Malaysia Forum 2010 jointly organised by IIB and the Institute of South-East Asian Studies.
Arlida said Singapore was one of Iskandar’s top investors with its private companies holding more than RM2.64bil worth of investments in the manufacturing sector.
In fact, long before Iskandar was launched on Nov 4, 2006, Singaporeans already formed a large group of foreign property buyers in Johor and had regarded the state as their second home, she said.
Now, more Singaporean property buyers were attracted to Johor’s real estates, especially with the upcoming business and lifestyle developments that were due to be completed in Iskandar, she said, adding that Singapore investors would normally give their first preference to invest in Malaysia, particularly in Johor, before looking at other areas in the region.
“This is due to the close proximity between Singapore and Johor and historically both countries have been interdependent on each other economically.”
Arlida said the forum was a good platform for potential investors from Singapore to get a first-hand information from IIB on the opportunities in Iskandar and the development taking place in Malaysia’s first economic growth corridor.
She said many participants at the forum wanted to know whether Prime Minister Datuk Seri Najib Razak was committed to continuing the development in Iskandar as the corridor was the brainchild of his predecessor, Tun Abdullah Ahmad Badawi.
She said stakeholders of Iskandar – the Federal and Johor Governments and the Iskandar Regional Development Authority – and IIB had assured investors that the policies remained unchanged despite the change in leadership.
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Coping with the big tickets
THE REAL ESTATE
By ANGIE NG
ALTHOUGH there are buyers who have no qualms paying the prevailing high price for their dream house in a well sought after location, many Malaysians are really worried about the rising house prices and wonder how they are going to manage.
There is certainly cause for concern as a property is a big ticket item and paying for it takes up a big chunk of a person’s income. Depending on how much downpayment has been paid for a property, mortgage loan repayment can easily takes up to 40% of a borrower’s monthly paycheck.
National Housebuyers Association (HBA) honorary secretary-general Chang Kim Loong laments that even new graduates are finding it increasingly difficult to make ends meet these days.
He says a new law graduate who earns RM2,200 a month is also not in a position to sign up for a new house on their own (unless they have rich parents to chip in).
A decent terrace house in a relatively good location cost nothing less than RM400,000.
Owning a car is also another must-have item at least until the public transport system gets a total overhaul. Add them up with the other daily ancillary expenses including food, toll rates and petrol, among other things, we see why many people must be struggling to make ends meet.
There are some industry players who have the habit of comparing property prices in Malaysia with those in other countries like Singapore, China, Hong Kong and Bangkok, and comment that local property prices are still much cheaper.
It is not healthy to make such conclusions based on the property price alone. Other factors also should be factored in and it is important to see how much disposal income they have left after paying for all their expenses.
One of the most important considerations is the people’s income level. Malaysia is not yet a high income economy and most Malaysians are still stuck in the middle income trap. Although there is the aspiration to move the country up the income ladder, it will take a few years at least before that can be realised.
The whole economic structure needs to be revamped. Even at the service industry sector such as restaurants, employers have to be prepared to employ only Malaysians and pay them higher salaries.
Instead of relying on the cheap foreign labour, it is about time to revert back to our local staff. This is one of the necessary early changes that need to be implemented for the realisation of the Prime Minister’s New Economic Model.
As we know, things are getting more unpredictable these days and we are witnessing first hand that the only certainty is uncertainty.
The contagion effect of the global financial crisis is still raging in some parts of Europe and may spill over to other parts of the world.
Like pendulums, economies and industries are being subjected to the vagaries of the ever changing external environment. The most susceptible will be industries that depend on external demand, including commodities and manufacturers of products for export.
While the landed property market is still quite well cushioned from the external factors, there is still some degree of influence as far as foreign demand is concerned.
Being quite a “domesticated” market has its advantages as developers can depend on local buyers to drive demand.
The country’s relatively young population provides a ready catchment market and consistent demand for houses, especially mass housing products.
But the high-rise condominium market, especially in the KLCC area, is still languishing.
It will take a while for the new supply of condominiums to be absorbed and for prices to get back to their previous high.
For landed housing, demand has been kept robust by the prevailing low interest rates and easy availability of bank financing.
Given the intense competition among banks and ample liquidity in the system, mortgage rates will likely remain accommodative.
Nevertheless, it is important for all stakeholders to keep a close watch on the market and make the necessary changes whenever necessary to ensure the market remains stable.
Deputy news editor Angie Ng hopes buyers and industry players will exercise prudence for a sustainable and healthy property market.
fr:biz.thestar.com.my/news/story.asp?file=/2010/5/8/business/6209455&sec=business
New accounting method likely to affect property stocks
PETALING JAYA: The International Financial Reporting Interpretations Committee on real estate development (IFRIC 15), which will become applicable for the accounting period commencing July 1, is likely to affect investor sentiment in property stocks, analysts said.
Under the new ruling issued by the Malaysian Accounting Standards Board, property developers are to recognise revenue based on the completion method instead of the percentage-of-completion method in current practice.
ECM Libra Capital Sdn Bhd research head Bernard Ching said the new ruling could deter shareholders that based their investments on a company’s earnings.
“Investors that are not so sophisticated and less informed about the company’s operations will be deterred when they notice that the company’s earnings aren’t so consistent,” he told StarBiz.
“Fundamentally, this new ruling does not change anything as there is no cashflow impact. The only difference is recognition of the company’s accounting profits,” said Ching.
He said developers exposed to strata-high-end projects, which often take three years (as opposed to landed residential projects that take only two years) to complete would be most affected.
“Developers with projects that are few and spaced would have the most impact as opposed to say, township developers that have more projects. Large companies with good track records are least likely to see any impact.”
Ching said a way around this was for developers to become more transparent with their investors.
“The bulk of the listed property companies do not engage their investors. Companies like Sunrise Bhd are great at engaging investors, as they have regular analyst briefings and are quite transparent with their projects.”
“It’s up to the developer to be more transparent with their launches. Companies that consistently make headlines will continue to do well under the new ruling.”
An analyst from a local bank-backed brokerage who requested anonymity called the new ruling “silly.”
“It’s a silly rule. What is wrong with the way earnings are reported that requires it to be amended? Whoever came up with the ruling I feel has zilch industry experience.
“In terms of dollars and cents, it’s business as usual for the developers. Only on paper does it look different. However, it would deter investor confidence as company earnings would look choppy.”
He, however, added that the reaction, if any, would be temporary.
“Investors who are not aware may be shocked and this may create a knee-jerk reaction. But I think after a while, they will adjust.”
The analyst said he wasn’t going to revise his outlook for property stocks because of a “change in accounting rules.”
“A company’s share price is based on cashflow, not on accounting profit. A change in accounting rules does not mean the company isn’t making money.”
Affin Investment Bank, in a recent research report, said earnings for developers were expected to be lumpy and volatile, and might appear negative on the surface.
“Analysis on profit and loss, such as profit margins, (including quarterly earnings) will be tough, as it will be purely based on the guidance from developers on their job completion schedule. Earnings from newly launched properties can only be seen two to three years after the properties are completed.
“As such, valuations based on earnings are not quite valid to reflect future earnings prospects. Instead, valuations based on RNAV (revised net asset value) will be widely used to assess the relative attractiveness of different property stocks,” it said.
The research house does not anticipate developers to continuously launch projects just to have a healthy balance sheet.
“The property sector is known to be cyclical in nature and pretty much depends on economic conditions. Despite the adoption of IFRIC 15, we believe developers will still launch new properties at the best and right time that they reckon.
“Rolling out new properties regularly to smoothen out earnings does not make sense as developers will have to carry higher inventory, especially during bad times, which slows down turnaround time.”
It also said developers with fewer launches and smaller landbanks could be badly affected.
“Earnings could be in the red for a few years before we see positive earnings contribution from property sales. Furthermore, companies which have established a dividend policy may not be relevant anymore and investors and analysts will have to depend on guidance from management.”
fr:biz.thestar.com.my/news/story.asp?file=/2010/5/10/business/6218972&sec=business
Desa ParkCity – a milestone development
HAVING a vision is so crucial. Whatever one sets out to do, without a dream, there will be no vision. And without a vision, there will be no goals, or milestones leading to that goal.
Desa ParkCity celebrated its 10th year milestone when one of its 10th precincts bagged FIABCI’s Prix d’Excellence Award (residential – low rise category) at the 61st World Congress of the International Real Estate Federation (FIABCI) held in Bali last week.
The 11-acre Adiva precinct comprising 160 triple, double-storey and walk-up apartments set against linear parks within the masterplanned development of Desa ParkCity became the world’s best in a property showcase which saw 54 entrants from 11 countries competing for 14 categories. FIABCI is the French acronym for the Paris-based federation
It was a milestone for both Perdana ParkCity Sdn Bhd, a subsidiary of Sarawak-based Samling group, and its group chief executive officer Lee Liam Chye, who has been steering that project from its conception. The two are synnonymous.
The victory also cements the successful rebranding of that location.
The success of Desa ParkCity goes back to 1999, a year after the 1997/98 Asian financial crisis. That year, Lee, together with several others, visited a quarry mine adjacent to Bandar Menjalara in Kuala Lumpur. Lee describes that 473 acres a piece of wasteland – “a hot potato that no one wanted” – with ravines, ridges, a hillock and parts of it secondary forest.
A little known figure in the property world, Lee, from Penang, was educated in Britain. He has a Bachelor of Science (honours) in estate management from the University of Southbank, Britain. He spent several years with Penang City Hall’s valuation department before joining the private sector. His previous projects include One Ampang Avenue, an apartment sitting atop some shops, and another project in Cebu, the Philippines. ParkCity is his big break.
“I’ve always asked myself why certain places in Britain and France, especially Paris, evoke strong emotions within me. These places promote concepts and percepts which are fundamental. Some of these cities may have been built a long time ago, but the fundamental concepts upon which they were built remain relevant until today. Only technology, the way things are done and building materials have changed, but ideals and the idea behind them remain relevant,” says Lee.
He had a vision to build a master planned development with landed strata units set amidst gardens and parks, with the living area overlooking a garden instead of the car porch and commercial amenities within walking distance. At that time, the only strata-titled projects were condominiums.
Said Lee during a 2003 interview, his first with StarBizWeek: “When I saw that piece of land, I saw the challenges, but I also saw the potential.” During that interview, he talked about creating a sense of place and space, with trees and parks all within a community.
Seven years later, a day after picking up the Prix d’Excellent award in Bali, Lee says: “There has to be commitment. You have to be genuine in what you want to build and from that point onwards, opportunities for innovation and creativity will come.
“ParkCity has the X factor. People who live there see the intangibles, they feel safe and secure.”
Prices of its landed properties have gone up quite a bit. When Safa, a non-strata development, was launched in 2002, it was priced at about RM400,000. Today, they are changing hands at about RM1.3mil. A three-storey Zenia, priced between RM800,000 and RM900,000 in 2005 is now ranging between RM1.6mil and RM1.85mil. With each new subsequent launch, prices of older precincts have increased. City Hall has approved 13,000 housing units. Lee says they will only build half of that.
Today, Lee will be holding a priority launch for about 2,000 registrants for its latest condominium The Westside One. He calls the 40-storey block of 338 condominium units “branded residences”. Sizes range from 969 sq ft to 2,066 sq ft with prices averaging RM580 per sq ft. This will be the third condominium project there. There will be several more condominium projects there with invariable density.
On June 26, he will be holding a priority launch for Casaman, a gated and guarded strata-titled 147 units of two- and triple-storey terraced homes with superior finishes.
“Casaman will be our most ambitious and will be different. It will have built-ups ranging from 3,100 sq ft for double-storeys and up to 5,300 sq ft for triple-storeys,” he says. Prices range from RM1.7mil to RM2.9mil.
“I have been asked: why are my terrace houses masquerading as semi-detached units? Because there is a constant demand for bigger homes.”
Are houses there overpriced, as claimed by some? Views differ.
Says a source from property consultancy CH Williams, Talhar and Wong: “You can’t say they are overpriced when there is demand.”
Some agents say there is a bit of a bubble in that location. But the demand continues to climb.
“Prices have been holding up well simply because there is a demand for landed strata-titled units. Those who buy into that community want the security,” says an agent familiar with that location.
Other projects in that area include Sunway SPK Homes, adjacent to Desa ParkCity, and Villa Manja, both by the Sunway group. Each of them have piggy-backed on the success of ParkCity but they lack the space and amenities available at ParkCity.
Recently, Sunway launched 180 townhouses with built-up of about 2,500 sq ft priced between RM1.03mil and RM1.1mil. About 80% are sold.
One of ParkCity’s biggest price boosters is its commercial area The Waterfront, which comprises a supermarket, eateries and a clubhouse. When Tesco opens its new supermarket in Bandar Menjalara, this may dilute some of the traffic at The Waterfront.
Says Lee: “An important point of this development is walkability. The community benefits from being able to take a pleasant walk to the shops. Today, the buzzword is sustainability and the green environment. We have been talking about that and the new urbanistic element 10 years ago. And the houses we built melt with the open spaces.”
As the community evolves, other components are being added – a private hospital to be operational in 2012 by the Sime Darby group, and an international school by next year.
fr:biz.thestar.com.my/news/story.asp?file=/2010/6/5/business/6382600&sec=business
Adiva project wins Fiabci award
BALI: Adiva, a precinct within Desa ParkCity in Kepong, Kuala Lumpur, has been named the world’s best residential (low rise) category at the 61st World Congress of the International Real Estate Federation (Fiabci) here last Thursday.
Fiabci is a French acronym for the Paris-based federation founded in 1948 to highlight real estate specialities and activities.
The 11-acre Adiva precinct won the Fiabci Prix d’Excellence Award under the residential (low rise) category.
The project comprises 160 triple, double-storey and walk-up apartments set against meandering linear parks within the masterplanned development of Desa ParkCity.
Desa ParkCity is a project by Perdana ParkCity Sdn Bhd, a subsidiary of Sarawak-based Samling group.
About 10 precincts are already occupied around a commercial area and work is in progress for the rest of the 500-acre development.
Adiva was the third precinct to be developed after Safa and Nadia. The developer has a vision to turn what used to be a quarry into one of the city’s most beautiful landscaped residential community.
The runner-up in the same category is Jakarta Garden City, a joint-venture development between Singapore’s Keppel Land and Indonesia’s PT Modernland Tbk.
The Fiabci Prix d’Excellence Awards received 54 entrants from 11 countries vying for 14 categories.
Perdana ParkCity group CEO Lee Liam Chye, who has been with the project from its birth, said: “We bought this land of about 500 acres for RM10 per sq ft in June 2000. It was a wilderness with rocks, granite and lots of trees and was part of what is today Country Heights Damansara.
“It was a hillock with ravines and ridges – a hot potato that no one wants – and we carved out the different parcels.
“People may say we paid RM10 per sq ft for this land, but we also spent RM250mil to blast the rocks and prepare it for development. It was a tremendous challenge but amid all that wilderness, I saw the potential.”
Lee said he and his team worked with the local authorities because legislations and town-planning controls had to be amended to legitimise and validate this new housing concept.
Adiva, with its ideals and ideas, played a large part in convincing the authorities to respond favourabley in facilitating the changes.
“I was educated in Britain and when I go there (Europe), especially to Paris, these places are so absorbing. I asked myself, ‘What is it about these places that provoke such emotions within me?’
“I asked myself many times. Today, I have the answer. The emphasis is on authenticity, the embodiment of history and culture. When I set out to plan and build this place, I wanted to create that sense of place and space. It’s exactly 10 years now and I have learned so much,” said Lee.
“When you see a duck swimming in the water, you only see the serenity and gentleness of the scene, but you do not see the furious paddling under the water. The same goes for the development of Desa ParkCity.”
Sime Darby group will operate a hospital there. A contract to build it will be awarded in about two weeks and the hospital is expected to be operational by the third quarter of 2012.
Another contract to build an international school was awarded two weeks ago. This will be completed by the middle of next year.
fr:biz.thestar.com.my/news/story.asp?file=/2010/5/31/business/6370811&sec=business
I&P to focus on new projects
PROPERTY developer I&P Group Sdn Bhd expects to fully develop its massive land bank of about 5,400 acres with a potential gross development value of up to RM10bil over a span of 10-20 years, says group managing director Datuk Jamaludin Osman.
“Each of our township will take about 12 years to be fully developed. Our focus will be on the launch of new projects or phases to cater to market demand,” he tells StarBizWeek.
The group’s prominent townships include Bandar Kinrara, Alam Impian in Shah Alam, Alam Sari in Bangi and Taman Pelangi in Johor Baru.
Jamaludin expects the outlook of the property market to be bright for the year and as such, is confident its launches will be well received by the market.
“The target revenue of RM1bil (for the current financial year) may be higher if market demand stays robust this year, hence more new launches are expected at our existing townships,” he says.
The new launches include terrace houses, semi-ds and also bungalows. The company is also planning to build service apartments on its existing townships in Klang Valley in future but this will be timed according to market demand.
During the group’s launch of Temasya Glenmarie, buyers flocked the launch venue to buy up the property while in Bandar Kinrara, I&P had to resort to a balloting system as the response was overwhelming.
“We believe our track record of delivering quality products to buyers and our strategic township locations are the pull factors,” Jamaludin says.
The price range of I&P properties are generally not cheap but are still sought after given their strategic locations and expectation of better returns on investment.
For example, the recent launch of Sapphire terraced homes in Bandar Kinrara, which had four designs with built-ups of 2,354 to 2,900 sq ft are priced from RM520,888 onwards.
Yet, the 104 units had to be sold via a balloting exercise because 448 registrations were received.
“Our products do give better returns on investment to buyers. For example, a terrace house in Bandar Kinrara is now worth about RM700,000 while in Alam Impian, a terrace house can fetch about RM500,000,” Jamaludin says.
He says the group has three target markets – first time buyers, up-graders and investors.
Asked whether the group has any plans to venture abroad like many of its peers, Jamaludin says not for the time being.
“We need to do a very comprehensive risk management analysis before making any plans to go overseas. We need to know the risk and also the market situation of the target countries if we go abroad,” he says.
I&P Group is a subsidiary of Permodalan Nasional Bhd. It was formed in May 2009 after the successful merger exercise between three companies: Island & Peninsular Sdn Bhd, Petaling Garden Sdn Bhd and Pelangi Sdn Bhd.
The exercise also saw several subsidiaries becoming part of the I&P Group, namely Perumahan Kinrara Bhd, Syarikat Perumahan Pegawai Kerajaan Sdn Bhd and I&P Alam Impian Sdn Bhd.
fr:biz.thestar.com.my/news/story.asp?file=/2010/6/12/business/6428070&sec=business
This 2010 it is predicted there will be a slight slump towards the last quarter of this year.This is due to higher interest bank rates and KLCI correction period.Investor are too careful and prefer to watch and see concept.
Next year will be a better year. A lot of developers are selling their unsold units aggressively quietly now.
New launches and better connectivity
THE local property market is abuzz with new launches once again with reports of good take-up for quite a number of recently launched residential projects especially those in well sought after locations.
Things are looking up for the market, especially in the landed residential sector although the condominium market is still quite soft.
The overall sentiment has certainly improved and developers are reporting much stronger sales compared with the last two years.
In fact, residential property prices have appreciated quite substantially with prices even doubling in some areas.
Property buyers are taking advantage of the prevailing low entry cost and cost of financing to “catch the rising tide”.
Although interest rates have increased slightly, the hike is quite gradual and minimal, and have not impacted sales much.
Mortgage loans easily make up close to 30% to 40% of the total loans disbursed and this shows the importance of the property market to the overall economy.
Although the market has been quite resilient, it is important to ensure it will not be over-geared as too much borrowings could be a prelude to over-speculation and price bubbles.
While more launches mean more choices for buyers, the question is whether the flurry of new project launches is good or bad for the market.
This depends on various factors including the percentage of buyers who are buying for their own occupancy, the holding power of those who buy for investment, the strength of the local economy and market sentiment going forward.
More buyers buying for their own occupancy is a good sign as it shows the market is fundamentally stable and well supported. This seems to be the case for the landed residential market so far.
Those who purchase for investment but do not have the holding power may need to liquidate their positions to cut their losses in the event of a market correction. They are actually speculators and many of them usually resort to bank loans to finance their purchase.
If the market gets too speculative, it is unhealthy as the risk of artificially driven prices and overheating will be higher.
While things still seem to be going well, industry players should plan and build according to what the market actually needs and should not over-price their projects. Affordable housing projects that have good accessibility and infrastructure facilities are still in short supply.
Meanwhile, the commercial property sector is still facing a glut and there should be better planning to space out the developments.
While new project launches take care of the supply side of the equation, the demand side is also important and should be given due attention.
One of the factors driving demand for a project is its accessibility.
News that the Government is looking at a mass rapid transit (MRT) system to improve Kuala Lumpur’s public transportation network will give a boost to buying sentiment, especially for areas that will be serviced by the MRT.
It should be accorded top priority as it is a project that will improve the people’s quality of life.
Having a highly efficient and well integrated public transport system that is dependable upon will take the load off our heavily congested roads.
There are many ways to raise the quality of life for Malaysians and one of the fast tracked ways is to put in place a world-class public transport system right where it is needed most.
Much has been said about how disenchanted Malaysians are with the state of the existing public transport system as the various modes of transport and facilities are not integrated with nor complementary to each other.
Hopefully the latest initiative will look into all the important areas and will be implemented holistically with other ancillary facilities and services to ensure the whole public transportation network is totally integrated and complements each other.
Hopefully it will ply most of the heavily populated neighbourhoods and commercial centres not just in the city but also in other parts of the Klang Valley like Petaling Jaya and the suburbs. Besides the cost savings, it will also be a greener option and ensure a more oxygenated environment for city folks.
·Deputy news editor Angie Ng looks forward to leaving her car at home and enjoying the simple luxury of a cheap and safe mode of travelling around the Klang Valley in public transportation.
fr:starproperty.my/PropertyScene/TheStarOnlineHighlightBox/5324/0/0
Several parties offer to buy 1 Mont’Kiara from Aseana
PETALING JAYA: London-listed Aseana Properties Ltd has been approached by several parties to purchase 1 Mont’Kiara (1MK) development, a retail cum office space development, but no decision has been made so far, a statement from Aseana Properties said.
“As this asset is situated in a prime location in Kuala Lumpur, it is inevitable that we continue to receive offers from interested parties. Any confirmation of a transaction will be announced to the relevant regulatory authorities,” a statement from Ireka Development Management Sdn Bhd said.
Aseana Properties owns 1MK while Ireka Development Management, a wholly-owned subsidiary of Ireka Corp Bhd, is managing the property. 1MK is developed by Ireka Corp Bhd.
It was reported on June 11 that a real estate fund management company affiliated with Hong Kong’s Cheung Kong Group has made a bid for it. Property tycoon and the world’s 14th richest man Li Ka-shing controls Cheung Kong Group.
1MK is the newest retail centre and is scheduled to be completed by the third quarter of this year. It is situated at the entrance to Mont’Kiara and is located directly opposite Plaza Mont’Kiara.
The project is located on 3.4 acres and comprises several components: a 34-storey office tower which is already 92% sold, a 20-storey office suite tower which will be put on lease and a five-storey retail block. The residential components which consist of Ireka @ Kiara 1 and Ireka @ Kiara 2 have already been completed. The different components are interconnected.
The bids were for the 20-storey office suite tower which has a net floor area of 185,000 sq ft while the retail block has a net lettable area of 250,000 sq ft, which is about half the size of The Gardens at Mid Valley Mega Mall.
To give an indicative price of the 20-storey block, the first phase which comprises the 34-storey office tower block was sold in 2007 at an average price of RM550 per sq ft. The asking price in the secondary market is about RM700 per sq ft today while the unsold units from the developer in hovering between RM680 and RM700 per sq ft. At RM680 per sq ft, the 20-storey office suite tower market value would be RM126mil while the retail block, with a mark-up value of a conservative 20% more than the office space market value would be RM204mil. That would total up to RM330mil. It was reported that Cheung Kong Group made a bid for this 20-storey office suite tower and five-storey retail block for RM300mil.
SK Brothers Realty Sdn Bhd general manager Chan Ai Cheng said other than Plaza Mont’Plaza, there is nothing to compare with 1MK.
Solaris@Dutamas and Solaris@Mont’Kiara are commercial areas, but they are four-storey high and do not have office tower blocks, nor the residential or retail elements enjoyed by 1MK, according to Chan.
1 Mont’Kiara was developed as a joint venture with Singapore-based CapitaLand, one of Southeast Asia’s largest property developer.
CapitaLand Commercial (M) Sdn Bhd in a statement said CapitaLand’s interest in 1MK is through the Malaysia Commercial Development Fund (MCDF), a real estate private equity fund.
“The MCDF, which owns 14.9% of 1 Mont’ Kiara, has an active portfolio management strategy where the fund will seek to divest its properties at the appropriate time. As 1 Mont’ Kiara enjoys a prime location, there has been continuing interest by other parties to purchase the development,” the statement from CapitaLand Commercial said.
CapitaLand owns an effective 21% stake in MCDF, a private equity fund which is managed by its wholly-owned financial services business unit, CapitaLand Financial Ltd.
fr:biz.thestar.com.my/news/story.asp?file=/2010/6/23/business/6525386&sec=business
Sunway wins RM129m job from PML Dairies
PETALING JAYA: Sunway Holdings Bhd wholly-owned unit Sunway Construction Sdn Bhd has won a RM129mil contract from PML Dairies Sdn Bhd to build a dairy product factory in Klang, Selangor.
“The proposed project is targeted to be fully completed on July 11, 2011. It is expected to contribute positively to group earnings for the financial year ending Dec 31, 2010 onwards,’’ it said.
PETALING JAYA: UMW Holdings Bhd told the exchange yesterday that it viewed the RM19.23mil losses incurred by its oil and gas operations in the first quarter as a “temporary setback’’.
It said the group had a number of greenfield projects that it expected to “show positive results upon commencement in the second half of this year’’.
“We are in the final stages of negotiations with potential clients for the leasing of our jack-up drilling rigs, NAGA 2 and NAGA 3,’’ it said.
“Our new Indian OCTG plant in Hyderabad, India, is expected to commence production and sales of seamless tubular green pipes in the second half of this year,’’ it added.
The group categorically denied a report that implied that the division was sitting on huge losses which had not been accounted for and which needed provisions in the next few years.
It viewed the report as “baseless allegation and irreponsible’’.
fr:biz.thestar.com.my/news/story.asp?file=/2010/6/29/business/6565248&sec=business
Minister: China property prices will fall before long
BEIJING: China’s property prices will fall within a few months as government steps to cool the real estate market bite, Land and Resources Minister Xu Shaoshi said.
China introduced a slew of measures in April, including higher downpayments and mortgage rates, to curb excessive real estate price rises, which the government sees as a threat to social stability.
“Property transactions have fallen now and prices have stagnated,” Xu told a meeting of ministry officials on Sunday in Dalian, a northeastern port city.
“In another quarter’s time or so, the property market will probably come to a full correction and prices will fall. But it’s hard to say to what extent they will fall,” Xinhua news agency and other domestic media quoted Xu as saying.
He added that China’s land market had cooled and Beijing would continue to build more affordable housing, which could pull down the average level of house prices. Nationwide, property prices rose 0.2% in May, leaving them 12.4% higher than a year earlier. The increases were smaller than in April.
fr:biz.thestar.com.my/news/story.asp?file=/2010/7/6/business/6611527&sec=business
Young people buy ‘cheaper, more secure’ condos
By Boo Su-Lyn
July 18, 2010
KUALA LUMPUR, July 18 —Young Malaysians are snapping up condominiums or apartments due to lower prices and better security amid increasing living costs and rising crime rates in the cities.
Several exhibitors in their 20s at the Malaysia Property Expo (MAPEX) 2010 here said that there is a trend of young adults buying apartments or condominiums instead of landed property because of tight budgets, given escalating living costs like the recent fuel and sugar subsidy cuts.
“Majority young people take apartments as landed (property) is very expensive,” property sales executive Azlifah Shamsudian told The Malaysian Insider at the MAPEX.
“Landed property in Kuala Lumpur can cost between RM300,000 to RM400,000, while an apartment in KL costs about RM200,000. Popular locations are Damansara, Gombak, Ampang and Jelatek,” said Azlifah, 25, adding that the average age of her customers is 25 years.
Property sales advisor Jay Phun cited security as another main reason why young people chose condominiums.
“Condominiums are more secure. They are also cheaper and cost between RM200,000 to RM300,000,”added Phun, 21, noting that Petaling Jaya and Damansara are popular locations.
The Malaysian All House Price Index last year showed that the average price of houses in Kuala Lumpur was RM381,802, the highest in the country.
Statistics by the Valuation and Property Services Department also showed that condominium and apartment units formed the bulk of total residential property transactions in Kuala Lumpur at 49.1 per cent (9,936 units).
The city also took up 34.5 per cent of newly launched condominium and apartment units in Malaysia last year while units priced below RM200,000 had the highest sales performance.
“Landed property is very expensive, at least RM600,000 and above. That is the price in Petaling Jaya,” said 30-year-old product specialist Olivia Goh.
“So I am looking for condominiums. My budget is about RM300,000,” she said, adding that security was another major reason behind her choice to look for a condominium.
“I am from Penang. Sometimes when I go outstation, (the condominium) will not be empty as there is a guard,” said Goh.
Account manager Christopher Chew also cited price and security as the main criteria in his and his girlfriend’s hunt for a condominium to live in together.
“Our budget is about RM300,000. Landed property in Petaling Jaya costs between RM400,000 to RM500,000,” said Chew, 31.
“We can also rent out (condominiums). Landed (property) is more difficult to rent,” added Chew.
Contractor Noor Shahidan Pitah agreed with Chew, saying that there was a high demand for people to rent condominiums compared to houses.
“Condominiums to sell it off again is easier,” said Noor Shahidan, 52.
Sales engineer Wong Mun Keen said that condominiums was his preferred choice in investments as the returns were higher compared to landed property.
“A condominium in Damansara that costs about RM100,000 — I can rent out for RM950, compared to a house in USJ that costs between RM300,000 to RM400,000 which I can rent out for only RM1,000,” said 25-year-old Wong.
Sales executive Brahmma Muthaiya said that young Malaysians are hitting condominiums as their first choice of accommodation.
“Young people are all going for condominiums,” said Brahmma, 39.
“There is more safety and security. Cost is also another factor. Condominiums in Damansara Perdana are RM800,000 and above while houses cost RM1.9 million,” she added.
A press statement by MAPEX organiser Real Estate and Housing Developers’ Association of Malaysia (Rehda) revealed that 3,453 out of 4,827 housing units showcased at the property exposition are high-rise homes.
fr:themalaysianinsider.com/malaysia/article/young-people-buy-cheaper-more-secure-condos/
Welcome to a speculator’s market
COMMENT
By THEAN LEE CHENG
SINCE the last quarter of 2009, property prices have not gone up incrementally. They have escalated, especially for landed units. In certain locations, prices may be unsustainable.
Up to the first quarter of this year, intermediate two-storey houses in a popular part of Petaling Jaya were transacting at about RM650,000.
Yesterday morning, an agent said the company had sold several houses facing T-junctions (which are not popular units among buyers) in the same township. These were 2 1/2-storey houses. One was sold for slightly more than RM1mil, among the highest he has ever seen in that location for a house located opposite a T-junction while another was sold for RM950,000, the lowest among the three.
Even at RM950,000, he felt that it was rather high. He is also rather concerned about valuations these days. “I like this property business. I want it to grow. But not this way!” he said.
In certain locations, especially in gated and guarded communities, it has come to a point where valuers are reluctant to put a value on a property.
How do you pin a value on a house when next month the price will be different? Prices are simply moving too fast.
Due to pressure, the valuer may have to value it. If the previous transaction was RM1.6mil, he may then reluctantly value the next one at RM1.63mil. The result is that the price of houses in that gated and guarded development becomes increasingly higher. It eventually becomes a speculator’s market, not a buy-to-stay market.
While valuers play their role by succumbing to pressure to put a value to properties, banks do the same when they promote various kinds of creative financing. When banks advertise free legal fees, it is not truly free. That amount is already packaged into the scheme.
Banks too play a part in today’s increasing property prices. As banks consider the buoyant property market, and as competition among banks heats up, mortgages seem to be a good way to increase their loans business.
So they create all sorts of attractive schemes.
Last year, banks were promoting lending rates at base lending rate less 2.2%. Earlier this year, it was base lending rate less 1.9%. Today, a foreign bank is promoting base lending rate less 2.3%.
It is this which encourages people to sign up for several loans.
Over in the condominium sector, prices are driven by various factors. In a matter of weeks, a serviced apartment project will be delivering units to buyers. When it was launched several years ago, it was priced at about RM160,000 to RM170,000 for a 400-sq-ft unit.
Even before the keys are handed to buyers, prices of RM250,000 and RM260,000 are being bandied about today.
In the next 12 months, barring any contagion effect from their souvereign debt situation in Europe, developers will be having more launches. They are aggressively gearing up to launch their projects today.
So ultimately it looks like the resounding performance of our residential properties today is due to a lack of other better investment alternatives, including the volatile equity market.
So from buyers who are at a loss where to put their money, to the banking sector eager to give out more loans, to valuers pressure to put a value on a property, to agents eager to get their commission, and developers, at every level, all are part of the market forces at play.
Back to that house at the T-junction, here is some food for thought: Whether it is RM650,000 or RM1mil, the rental remains at RM1,500 a month.
·The writer remembers the US subprime crisis and how it pulled down the global financial system. There needs to be some prudence in our property market too.
fr:biz.thestar.com.my/news/story.asp?file=/2010/8/7/business/6815336&sec=business
Rehda optimistic of property market outlook
H1 survey shows 62% of developers are satisfied
KUALA LUMPUR: The Real Estate and Housing Developers’ Association Malaysia (Rehda) is optimistic of the future prospects of the property market in Malaysia.
“For the first half of this year, the Rehda Property Industry survey for the first half 2010 showed that 62% of the developers were more optimistic of the market conditions compared with 43% for the second half of last year,” said Rehda president Datuk Michael KC Yam at a media briefing jointly held by Rehda and RAM Ratings Services Bhd yesterday.
The survey showed that 58% of the respondents had launched new projects in the first half of this year, a significant increase compared with 31% in the previous half, Yam said.
He said with the current favourable market conditions, the survey showed that 69% of the respondents would launch new products in the second half of this year.
“The majority of the developers also anticipated prices to rise in the next six months.
“About 41% said their properties will increase in value by less than 10%, while another 40% of the developers expect their property prices to increase from 10% to 20%,” he said.
On the opportunities in the housing industry, Yam said the financial sector has been accommodative.
“The banking sector is liquid, credit for construction players has improved and housing non-performing loans have declined,” he said.
Yam said the regeneration of brownfield sites and the improvement in government policies had also been lauded for contributing to the favourable market conditions.
He said although the business has gained momentum, the industry still faced challenges like the increase in the base lending rate, removal of subsidies and the high production cost.
Yam said the current state of the housing industry was simmering and not boiling.
“It is still business as usual, but it needs continuous government support and accommodative policies to ensure its stability,” he said.
RAM Ratings chief economist, Dr Yeah Kim Leng, said the current monetary and financial conditions were conducive for sustainable growth.
“Following a 10.1% gross domestic product growth in the first quarter of this year, and with second quarter growth estimated at 8.8%, Malaysia’s first-half GDP growth will likely hit 9.4% year-on-year,” Yeah said.
The Rehda survey is conducted twice a year to assess the current housing industry conditions faced by its members.
fr:biz.thestar.com.my/news/story.asp?file=/2010/8/10/business/6826754&sec=business
There’s a price to pay for convenience
THE REAL ESTATE BY ANGIE NG
RISING house prices show that residential properties have become the “hottest” pick for investors who are flushed with cash and believe investing in a tangible asset is a good investment choice.
Although it may seem that the property market is on a “wholesale revaluation exercise” with prices climbing across-the-board, it is actually not so.
A check in the newspapers’ classified pages under the “houses for sale” column show that the price hikes are location centric. There is always a price to pay for convenience and living close to mature neighbourhoods with good basic amenities and infrastructure.
If one cares to check around, there are still many affordably priced (RM300,000 to RM400,000) new or second-hand houses out there, but one must be prepared to stay further away from the “conveniences”.
I believe there are various reasons why people invest in property over other investment instruments. The property market’s tenacity in withstanding the global financial crisis must have converted many sceptics to build up their investment portfolio with property assets.
Malaysians’ penchant to save has translated into lots of liquidity available for investment. Savvy investors will invest their money in instruments that will offer good returns over cost and risk.
The prevailing low savings interest rate and the under performing equity market are some of the “push” factors that are promoting property investment.
While these financial instruments are still affected by the external uncertainties in the US and Europe, property investments are very much locally-driven and has proven to be a reliable asset class.
The value of Malaysian properties, both houses and shop lots in good locations, have sustained very well so far and there have been more upsides than downsides.
The quick rebound of the property market in Singapore and Hong Kong may also have contributed to a resurgence in property buying here.
There is also pent-up demand for properties as some people who have procrastinated on signing on the dotted line previously have decided to do so now after seeing the market’s ability to withstand the tough times.
Supply has been slow to catch up after widespread project deferments by developers in 2008. New project launches have just resumed towards the later part of last year.
The high demand over supply has naturally resulted in housing prices escalating in various parts of Kuala Lumpur and the Klang Valley. Penang is also another hot property market where prices have come close to Kuala Lumpur levels and still climbing.
This is a good opportunity for less well known developers with reasonably sized land bank to build affordably priced homes to woo buyers.
One way developers can do this is to come up with products that allow buyers the flexibility to decide their own house built-up and layout plan, just like in the “Sims” computer game.
Instead of the “one-size-fits-all” model that is the norm now, it will be a value added service to buyers if there are various sizes and layout plans to choose from.
Some families have elderly folks and it would be more practical to have at least one or two bedrooms downstairs for a double-storey house.
I have heard mothers of teenage children staying in 2½-storey to three-storey houses complaining that they are “cut off” from what their children are up to these days. They yearn for “the closeness” of their single-storey or double-storey houses.
Large central parks would be another huge selling point as residents would like to unwind and relax in the open environment.
At the end of the day, all stakeholders must do their part to ensure the property market continues to be sustainable.
Developers should be more pro-active and ensure they take the necessary steps to “tune in” to their customers’ needs and ensure more timely launches to meet rising demand.
Buyers also have the responsibility to be prudent and not to over-commit themselves or default on their loans.
>Deputy news editor Angie Ng thinks it is a good idea for relatives or friends, who want to stay close to each other, to pool their resources to buy a nice piece of land and turn it into a nice housing enclave.
fr:biz.thestar.com.my/news/story.asp?file=/2010/8/14/business/6849313&sec=business
Banks to try and prevent speculation on property prices
By ANGIE NG and SHARIDAN M. ALI
PETALING JAYA: Bank Negara is engaging with banks on possible measures to curb excessive speculation on property prices while developers caution that it should not be imposed across the board to avoid dampening the property market.
Responding to queries on whether the central bank will be imposing a 80% loan-to-value ratio (LVR) for mortgages to avert the risk of a potential property bubble, the central bank said: “Bank Negara regularly engages with industry players as part of its surveillance and supervisory activity. The engagements cover a broad range of issues and areas that relate to developments on the ground, safety and soundness of the institutions and the overall system.”
It added that to ensure prudent management of credit risk in the banks’ balance sheets, the central bank regularly engages with the industry on developments in the underwriting and selling practices of financial institutions.
The share of housing loans to total loans is about 26%, according to the central bank.
When contacted, banking industry players said it was likely that any measures to be introduced would be pre-emptive measures to target certain quarters of purchasers and would not be across the board.
The measures are believed to be targeted at the high-end and non-owner occupied house purchasers.
Currently Bank Negara does not impose any standard policy on mortgage loans but leave it to the banks to manage.
But following a rise of between 10% and 30% in the prices of landed houses in some parts of the Klang Valley (including Kuala Lumpur) and Penang in the past one year, banking sources said Bank Negara might be looking at discontinuing the 5:95 and 10:90 housing loan packages, and preferred banks to impose higher downpayment for property purchasers.
The bank sources concurred that over the longer term, there must be the flexibility to allow more relaxed loan quantum if the market needs it, especially if there is a recession.
OCBC Bank (Malaysia) Bhd head of secured lending Thoo Mee Ling said part of the rationale for the 80% LVR for mortgages could be to curb speculative property prices in the market currently.
“If it is implemented, home buyers will have to self-finance a higher amount than they do now. In the short term, coupled with entry costs such as legal, stamp and valuation fees, the property market will take a dive and it will subsequently dampen the mortgage business.
“In the long term, the measure would curb speculative property buying and promote a healthier property market. Therefore, both the banks and property market will become more resilient to any potential crisis,” she said.
Datuk Michael Yam, the president of Real Estate and Housing Developers’ Association Malaysia (Rehda), said Bank Negara should not impose a mandatory LVR cap on mortgage loans at this juncture as it would dampen buying sentiment with spillover effects on other related industries such as construction and building materials suppliers.
“The local banking industry is well regulated and banks are very prudent and stringent in their credit assessment of borrowers. Banks have, on their own initiative, cut down loan margins to borrowers and only those who are credible and can afford to repay their loans will be offered a higher loan margin.
“Banks also are very selective of what projects they extend loans to.”
Caution and prudence should be exercised when considering any measure for mortgage loans, said Yam, adding that it should not be across the board.
“It is better to leave it to market forces to decide as the banks’ stringent lending criteria is enough to ensure the quality of loans in the market,” he added.
Yam said that up to 90% of the country’s population are living in affordable houses priced below RM250,000, and the current low downpayment for property purchases has promoted home ownership among the lower to middle income group.
Mah Sing Group Bhd group managing director cum chief executive Tan Sri Leong Hoy Kum said a conducive financing environment was important to support the property industry, which was a significant engine of growth for the economy.
“We hope that any implementation of the 80% loan to value ratio will take into proper consideration the industry’s feedback and current market conditions.”
Leong said there was no property bubble at this juncture “as property price increases have not been across the board.”
“The properties which have been enjoying price appreciation are those with good concepts by branded developers, and sited in good locations.
“One must also take into account the construction cost, and also increasing price of good land in considering the prices of properties, which have gone up by 10% to 25% in the past 1½ years,” Leong added.
fr:biz.thestar.com.my/news/story.asp?file=/2010/9/2/business/6964265&sec=business