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Tuesday, February 17, 2009

'Property mart may take 2 years to rebound'

MALAYSIA'S real-estate market, glutted with luxury homes planned in boom times, may suffer the full effects of the global economic slump in coming months and take two years to rebound, property consultant Rahim & Co said.

“Before it starts recovering, we have to face the worst,” Abdul Rahim Rahman, the company’s chairman and founder, told reporters today in Kuala Lumpur. “The real-estate market is usually slower to recover than the economy.”

Luxury condominium prices near the Petronas Twin Towers in central Kuala Lumpur will extend declines by June after dropping as much as 20 per cent from last year, as oversupply crimps sales and demand dries up, Rahim said. Condo prices lost 5 per cent to 10 per cent in the Klang Valley surrounding the capital, he said.

Malaysia’s government may next month put forward a second stimulus plan, adding to November’s RM7 billion (US$1.9 billion) package, in a bid to avoid joining neighbouring Singapore in recession. Interest in luxury apartments is evaporating even as developers roll out projects planned before the worldwide slowdown, Rahim said.
“In 2006, 2007, our calls were all, ‘what have you got, is there anything interesting to buy?’ Those calls have stopped,” he said.

There may be 30 per cent too many luxury apartments in the centre of Kuala Lumpur, he said. Developers are committed to introducing new projects so they can cover costs and are exacerbating the glut, Rahim said.

The global recession, partly caused by a real-estate slump in the US, triggered economic slowdowns from the UK to New Zealand. In Malaysia, Rahim is advising clients to delay new projects to the third quarter, consider shrinking them, or use cheaper furnishings to make prices more attractive.

“Demand is very, very weak,” Robert Ang, managing director of Savills Rahim & Co, the firm’s international real-estate agency, said today. “I don’t see prices even stabilising or picking up in the near future, especially luxury condos.”

The number of high-end apartments in Kuala Lumpur will double to more than 30,000 in the next three years, Malaysian property consultant Regroup Associates Sdn Bhd said in December.

The average price of luxury condominiums in the centre of the Malaysian capital has fallen to between RM1,000 and RM1,500 a square foot. Foreign buyers pushed prices to more than RM2,000 in 2007.

By Bloomberg

Worst yet to come for developers: Citi

The research house notes that more developers are providing more incentives and rebates to attract homebuyers

CITI Investment Research continues to hold a negative view on Malaysian developers, saying that the sector's worst is yet to come.

"We noticed that more developers are joining in the bandwagon to provide more incentives and rebates. Clearly a sign of more difficult times and a reflection of significant drop in monthly sales," the foreign research firm wrote in a report dated February 13 2009.

During the 1998 financial crisis, residential property transactions fell by 30 per cent, it added.

Citi cited SP Setia Bhd, which has been aggressive in advertising its 5/95 home loan package in both the newspapers and putting up banners in town. This package will last until April 19.
Under this package, a buyer makes a 5 per cent downpayment (versus 10 per cent normally) with no other cash outlay until property is handed over. SP Setia will bear all legal fees, stamp duty on the sale and purchase agreement, loan agreement and memorandum of transfer and also service the interest during the construction period.

Mah Sing Group Bhd has an almost similar financing plan, which will last until March 31.

"Based on our computation, the impact on margins for a developer that provides such a package would be 7 per cent based on property price of RM500,000.

"If assuming 25 per cent margin for the RM500,000 property, the 5/95 package would slash margin by 7 per cent to 18 per cent," said Citi.

Citi said while the promotion looks attractive for homebuyers, banks will bear the risk of holding the property in two years time if the buyer decides to forfeit the 5 per cent deposit and walk away from the deal. The banks in SP Setia's panel are Malayan Banking Bhd, Bumiputra-Commerce Holdings Bhd, EON Bank Bhd and Public Bank Bhd.

By Business Times

Premier Australian property fair

With the strengthening of the Malaysian ringgit against the Australian dollar, it is timely to consider investing in Australian real estate.

There is good news for those interested in Australian homes and properties!

An exciting and prestigious international property event will take place soon in Kuala Lumpur and Penang.

There have been numerous real estate exhibitions in town but the Australia & International Property Fair 09 will display entirely international projects, focusing mainly on Australian properties.

The premier Australian property fair will be held for two consecutive days on April 11 and 12 at the Palace of The Golden Horses in Kuala Lumpur.

Thereafter, it will move on to Penang at the G-Hotel from April 15 to 16. The event will showcase all types of commercial and residential projects by established Australian and international developers.

Over the past decades, Australia has been the most popular choice for pursuing tertiary education abroad among Malaysians, as it is less expensive in comparison to the United States or the United Kingdom. Furthermore, it is geographically nearer.

With thousands of Malaysian students studying Down Under and an increasing number migrating there each year, it is no surprise there is a growing interest and market for Australian properties.

Unfortunately, these are available on a rather small scale or in limited choices through local real estate agents.

Interested buyers or investors should therefore mark their calendars for the upcoming Australia & International Property Fair 09 that is expected to offer a variety of choice properties.

For parents planning to send their children to Australia for further studies, the Australia & International Property Fair 09 will be an excellent opportunity to view properties for investment.

With high rental in big cities like Melbourne and Sydney, those who can afford it may wish to consider buying an apartment or townhouse for their children's accommodation and later putting it up for sale when the market is up.

Alternatively, some may consider keeping it for possible future migration or renting out the property for income in the interim.

With the recent strengthening of the Malaysian ringgit against the Australian dollar and no visible rise in real estate prices following the global economic downturn, it is timely to consider investing in Australian properties.

Besides Australian and international real estate, the fair will also feature related businesses and services which include banks, financial services companies, fund houses and migration agencies.

The Australia & International Property Fair 09 will serve as an excellent platform for international exhibitors in the property and related businesses to reach out to many prospective Asian buyers, especially from Malaysia and Singapore.

This international event is brought to you by BW Cyans Advertising Sdn Bhd.

By The Star