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Tuesday, December 1, 2009

Confusion over Real Property Gains Tax

Property owners and investors are confused over the interpretations of the real property gains tax (RPGT) which will be imposed from Jan 1, 2010.

In the 2010 Budget announcement last October, the government fixed five per cent tax on the gains made from property disposal.

An investor, who wished to remain anonymous, said he had checked with the Inland Revenue Department (LHDN) on the tax.

"They told me for the first two years it will be 30 per cent, similar to the old scale, and for properties over five years it will be five per cent," he said.
Earlier, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah had said the RPGT at fixed five per cent would be imposed irrespective of the holding period and the category of the owner.

"The RPGT for the first year is five per cent and is the same for the second, third, fourth and fifth year," he said when clarifying a news report in a local newspaper.

Meanwhile, Malaysian Investors Association president, Datuk Dr PHS Lim, said the LHDN's interpretation of the RPGT would be unfavorable for property investment.

He said it would have a negative impact on the economy which was targeted to grow by five per cent in 2010.

"The rate is too high. Investors will not find the Malaysian property market attractive. The US, Britain, Australia, Dubai and other venues can offer better alternatives to the Malaysian property market," he told Bernama today.

Lim said the government should review the RPGT as the Malaysian and global markets were still weak and fragile.
"We are not totally out of the economic woods yet," he said.

He said the construction industry was always vital to the Malaysian economy as it affected a spectrum of other manufacturing sectors like cement, roof tiles, bricks, steel, timber, wires, paint, sand and others.

"The industry also supports many professionals -– architects, designers, valuers and others.

"We should let the property market flourish and it will be a gain-gain situation if we have more people investing in properties. The high tax rates will drive them away," he said.

Lim said the high tax would also affect ''Malaysia My Second Home'' programme.

Several parties had also voiced concerns over the impact of the RPGT on the property market.

Associations from a broad spectrum of the property industry also planned to submit a joint memorandum of appeal to Ministry of Finance not to reinstate the RPGT from Jan 1, 2010.

Chairman of the construction and property committee of The Associated Chinese Chambers of Commerce and Industry, Datuk Teo Chiang Kok, reportedly said revenue from the RPGT would be insignificant compared to the damages to the country's image and credibility.

He said the proposed flat rate of five percent without regard to the holding period and differentiation between individuals and companies was deemed more punitive than the legislated RPGT rates in earlier Act.

By Bernama

Property sector can expect bumper year ahead

KUALA LUMPUR: Property developers can look forward to a bumper year in 2010 with more purchasers and investors expected to enter the market as economic conditions improve.

Real Estate and Housing Developers’ Association (Rehda) deputy president Datuk Michael Yam said the local property sector may see up to 450,000 potential home buyers for next year.

“Based on average household formation and population growth, there is an average demand for 150,000 units (homes) per year.

“If people have delayed buying in 2008 and this year (because of the financial crisis), you should have around 450,000 people waiting to get into the housing market in 2010,” he told reporters yesterday.

Yam was a panellist at The Time Bomb Returns – Benchmarking Management Cost seminar jointly organised by FIABCI Malaysia and the Malaysian Association for Shopping and Highrise Complex Management (PPK). Given the (high) potential demand for property next year, he said developers could face a serious supply shortage.

“I think there is going to be a shortage next year. At the end of 2007, developers, especially the members of Rehda, were making a conscious decision not to launch because construction cost went up 30%.

“And in 2008, the credit crunch hit and that really delayed the launches,” Yam said, adding that projects in Bukit Kiara, Kenny Hills, U-Thant, Bukit Pantai and Bangsar would “always sell.”

Meanwhile, PPK advisor Richard Chan in his keynote address, The complexity of share issue and maintenance charges, said developers should look into the issue of service charges prudently even before building or selling property.

“You must consider the cost of maintaining buildings today and in three to five years. Once property is old, the only income is derived from service charges. If you cannot collect a sufficient amount, you just cannot maintain the building and that is where the main problem starts. This has become the main complaint of strata owners,” he said.

Chan said service charges could include components such as electricity, water, sewerage, security, housekeeping services, advertising and promotions, servicing and maintenance, fire protection, landscaping and gardening and pest control.

By The Star

Petaling Jaya, Klang, Ampang Jaya and Kajang have been earmarked for redevelopment

Change needed: PJ Old Town, one of the places in the state which is no longer able to meet present-day needs and challenges.

URBAN regeneration is the only way forward for Selangor’s sustainable future, said Mentri Besar Tan Sri Abdul Khalid Ibrahim.

He said a total of 2,375ha of land in the state had been identified for regeneration and redevelopment in the Local Plans and Draft Local Plans of Petaling Jaya, Klang, Ampang Jaya and Kajang. Petaling Jaya alone has 1,672ha which had been identified for the purpose.

“The renewal and redevelopment of inner cities which are ageing and decaying, is not an option but is now a neccessity in Selangor to foster further economic and social development of the state.

“So far, the towns of Petaling Jaya, Klang, Ampang and Kajang have been identified as in need of regeneration initiatives,” he said.

He added that the process would take about two years and would be carried out in stages.

He was speaking at the launch of International Conference for Urban Regeneration Towards Selangor’s Sustainable Future at Sunway Resort Hotel and Spa yesterday.

Abdul Khalid said the state government would consider issues from all perspectives to ensure that the projects were planned and implemented tactfully and coherently.

“This conference is a step forward in the process of consulting and gathering more ideas from the experts, professionals as well as the public.

“We will definitely embark on more consultation and provide more channels for proposals and suggestions from the communities and stakeholders,” he said.

The two-day conference saw representatives from the local and state government, developers, financial institutions, residents associations, architects, town planners and engineers.

Among the invited speakers were the senior resident fellow for urban development in Washington-cum- ex-Pittsburg mayor Tom Murphy and Fran Wagstaff who previously headed the Mid-Peninsula Housing Coalition, one of the largest and most respected affordable housing developers in northern California.

Abdul Khalid also said the urban regeneration concept involved a comprehensive programme of land redevelopment with the complex combination of economic, physical planning, management and social considerations.

“The ‘old’ is enhanced and ‘new’ developments are constructed to revitalise the economic growth and the social environments of the selected areas.

“Urban regeneration involves rehabilitation efforts of impoverished and derelict urban industrial areas and neighbourhoods by large-scale renovation or reconstruction of housing, public works, commercial uses and mixed-developments.

“These elements of urban regeneration are brought together to improve the social sustainability, economic viability and the infrastructure of city areas and to help improve urban landscapes,” he said adding that the urban regeneration would have higher potential than developing a new urban area.

The regeneration was also necessary when the olders towns in the state are no longer able to meet present-day needs and challenges.

He added that the urban regeneration and redevelopment programme was aimed at revitalising these towns, creating jobs, enhancing the quality of life, improving amenities and infrastructure, improving management of the state assets as well as generating more revenue for the state and local governments.

Furthermore, it would help control encroachment into agricultural and forest reserved areas due to limited build-up areas in the state.

By The Star (by - by Salina Khalid)

S’gor to redevelop urban land

PETALING JAYA: Some 2,375 hectares (ha) of land have been identified by the Selangor government for regeneration and redevelopment, Menteri Besar Tan Sri Abdul Khalid Ibrahim said.


The areas were identified in the Local Plans and Draft Local Plans of Petaling Jaya, Klang, Ampang Jaya and Kajang, in line with the policies of the State Structure Plan, he told the International Conference on Urban Regeneration here yesterday.

He said the redevelopment would be done in stages over the next 20 years and that it would be market-driven.

“The state government will create a competitive environment for redevelopment and for investors to be part of the programme,” said Khalid, adding that he would leave it to the business community to decide what the market needed.

“We do not have plans to work with any particular developers; that would be cronyism,” he told reporters.

Khalid also said the redevelopment of the 2,375ha land was worth “billions of ringgit”.

“Compared to the Iskandar project, the Selangor government need not invent infrastructure, but merely enhance it,” he said, adding there was already demand in the state given its urban setting.

He added the state’s concerns regarding redevelopment included the displacement of the urban poor, the surrounding neighbourhoods, traffic and public amenities.

“Most investors have not realised the potential of this existing market,” he said, adding the industrialised and urbanised Klang Valley, unlike the “imaginary” Eastern Corridor and Northern Corridor, was a reality.

In his opening speech at the conference, Khalid said urban renewal and regeneration was needed to transform old urban and industrial areas to revitalise economic activities, provide better transportation linkages and infrastructure for enhanced and efficient social environments.

Of the 2,375ha slated for redevelopment, he said 1,672ha is in the Petaling Jaya municipality, namely the industrial, commercial and residential areas of Sections 13, 51, 51A and 52.

“The Klang municipality has a total of 131.4ha in need of redevelopment, especially the Klang town centre and Kampung Pandan, besides the banks of the Klang River,” he said.

Khalid added that 412.4ha of land in Kajang, including its town centre and Sungai Ramal needed to be redeveloped, while the 159.3ha of land in Ampang Jaya covering Ampang New Village, Kampung Pandan Dalam and areas in Jalan Jelatek and Taman Keramat is also in focus.

He said these plans were in line with the state government’s economic stimulus package.

“The stimulus package, which includes the rehabilitation of the Klang River, is expected to generate an estimated RM10 billion in investments,” he said.

He added the overall plan to redevelop the urban areas was aimed at revitalising the towns, creating job opportunities, improving amenities and infrastructure, improving the management of state assets as well as generating more revenue for the state and local governments.

By The EDGE Malaysia (by Melody Song)

Dubai crisis unlikely to affect UEM Land

JV Partner Dubai World unit not expected to pull out of project

PETALING JAYA: The financial crisis that has hit Dubai is unlikely to have an impact on the property development being jointly undertaken by UEM Land Holdings Bhd and Dubai World, the investment arm of the Dubai government, analysts said.

Recent news that Dubai, a country known for its flashy lifestyles and the world’s tallest building, was deferring its debt payments has rattled investors.

“We believe the market has overreacted,” said UOBKayHian in a research report yesterday.

UEM Land signed an agreement in late 2007 with Limitless Holdings Pte Ltd (a subsidiary of Dubai World) for the setting up of a special purpose vehicle (SPV) to jointly develop Nusajaya’s Residential North precinct in Puteri Harbour, Iskandar Malaysia.

Limitless has a 60% stake in the SPV, known as Haute Property Sdn Bhd, with UEM Land taking up the balance 40%. Haute Property will develop the 111-acre Residential North precinct at Puteri Harbour with an initial investment of RM241.8mil.

According to previous reports, the estimated gross development value of the precinct, to be completed by 2013, is about RM1.5bil.

“We understand that Limitless does not intend to pull out from the project, but is not topping up its RM125mil project equity,” UOBKayHian said.

An analyst at a local bank-backed brokerage concurred that Limitless was unlikely to “pull out” from the project.

“Limitless has already invested in the project, so financing will not be an issue. However, future funding (from Limitless) could be a problem,” he said.

UOBKayHian said UEM Land could always seek funds from its parent company, Khazanah Nasional Bhd, should the need arise.

Another analyst concurred, saying: “Going to Khazanah is a valid option. Worst-case scenario, Khazanah could even take over Limitless’ place in the SPV.

“However, there could be a delay in the project if Limitless pulls out. But we don’t see that happening.”

Further, UOBKayHian said the debt situation in Dubai would not have a significant impact on Malaysian contractors.

“None of the major contractors has any business exposure in Dubai. While Sunway Holdings Bhd and WCT Land Bhd have high construction work exposure in the Middle East, the works are concentrated in the financially staid countries like Abu Dhabi, Qatar and Bahrain.

“More importantly, we do not foresee other Middle Eastern companies, such as Mubadala Development Co, Aldar Properties PJSC and Kuwait Finance House, pulling out of their joint ventures with Khazanah in Medini, Iskandar Malaysia,” it said.

By The Star (by Eugene Mahalingam)

REIT managers association gets endorsement

KUALA LUMPUR: The managers of 11 Malaysian real estate investment trusts (REITs) on Monday endorsed the formation of the Malaysian REIT Managers Association (M-REITMA) which will be completed once given the go-ahead by the Registrar of Societies (ROS).

Among other objectives, M-REITMA aims to create an environment for more investments to be injected into high quality real estate in the country; improve transparency in corporate governance, disclosure and financial reporting, training and discussion groups; and analyse legislation and government policies.

In a statement, M-REITMA said the the full status and approval by the ROS should take place by the first quarter of next year. The 11 REITs comprising AmFirst REIT,

AmanahRaya REIT, Atrium REIT, Axis-REIT, Al-Hadharah Boustead REIT, Al-Aqar KPJ REIT, Hektar REIT, UOA REIT, Quill Capita Trust, Tower REIT and Starhill REIT.

The REITs were all listed under the new Securities Commission Guidelines under the Real Estate Investment Trusts introduced in January 2005.

The REITs were represented by their managers during a briefing yesterday by protem committee chairman, Stewart LaBrooy of Axis REIT Managers Bhd, on the present status of M-REITMA.

The REIT sector is now over four years old with the first REIT having listed in August 2005. There are 13 listed REITs with a market capitalisation of RM5.4bil as at mid-November.

By The Star

UK house prices rise 0.5% in Nov

LONDON: British house prices rose 0.5% in November, the same as in October, suggesting that a rapid initial rebound from the five-year low set in February is now slowing, mortgage lender Nationwide was reported by Reuters as saying on Tuesday, Dec 1.

Nationwide reported monthly house price growth of above 1 percent over the summer, but the lender said three-month growth in house prices has eased since September, pointing to a more modest recovery from last year's slump in house prices.

House prices rose 2.8 percent in the 3 months to November, lower than the 3.5 for the 3 months to to October.

The average British property is now worth 162,764 pounds (US$268,000) -- roughly the same as in early 2006 and 2.7% more than last November. Last month Nationwide reported the first annual rise in house prices since March 2008.

"House prices are now rising at a more moderate pace than in the spring and summer months, when they experienced a very strong bounce from the early 2009 lows," said Martin Gahbauer, Nationwide's chief economist.

"The outlook for the housing market remains crucially dependent on labour market conditions, and here recent developments have been somewhat more encouraging than might have been expected," he added.

Despite a longer recession than many other industrialised economies, unemployment in Britain has risen more slowly than most economists had forecast, and unexpectedly fell to 7.8% of the labour force in the three months to September.

"Together with the fact that mortgage rates have fallen sharply as a result of base rate cuts, this has meant that far fewer borrowers have fallen into arrears than would normally be the case in such a deep recession," Gahbauer said.

"As such, the downward pressure on house prices from distressed sales has so far been significantly lower than expected."

By Reuters