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Saturday, January 9, 2010

Promising outlook for landed properties

The residential property market should see a pick-up this year if buying interest remains sustainable and developers offer more creative and well planned projects.

Take-up rates have gradually picked up since the first quarter of 2009 and by the second quarter, newly launched properties recorded take-up of 31.7% – the highest over the past three years.

The strong take-up is especially evident for landed properties, including super-link terrace houses, semi-detached houses and bungalows, which cater to the upper-middle class.

Prices are also expected to rise in tandem with the economic rebound and landed residences have generally seen price increases of between 10%-15% to RM250 to RM300 per sq ft. While the high-end condominium market is still bleak because of an over supply situation, the outlook for landed residences in premium locations is much brighter.

Tan Sri Liew Kee Sin (left)... 'Developers will have to plan their launches carefully and understand market needs if they expect good take-up rates.'

Tan Sri Leong Hoy Kum (right) ... 'Residential properties that cater to the middle to upper middle market stand to benefit from the rebound in property demand.'

Developers are more confident of rolling out new projects this year to capitalise on the buoyant sentiment among property buyers.

Mah Sing Group Bhd group chief executive Tan Sri Leong Hoy Kum says with the brighter economic outlook, more Malaysians will be willing to spend on big-ticket items like property.

“We believe this will lead to a strong demand recovery in mid-tier to high-end landed properties,” Leong says, adding that these segments should rake in stronger sales.

He says residential properties that cater to the middle to upper middle market stand to benefit from the rebound in property demand.

GuocoLand Bhd director of marketing and sales KC Chong concurs that landed properties, particularly gated enclaves in good locations, command a strong following.

“They appeal to both owner-occupiers, as well as investors as there is a willing pool of tenants which prefer landed properties complete with security, management and common facilities.”

The “feel good” factor may lead many to upgrade this year, given the (still) relatively favourable financing schemes available, he says.

However, Chong cautions that given the likely increase in launches expected this year, developers will have to work hard to achieve their targets.

SP Setia Bhd president and chief executive officer Tan Sri Liew Kee Sin says developers will have to plan their launches carefully and understand market needs if they expect good take-up rates.

“Many developers today are selling an aspirational lifestyle rather than just a house. Innovative ideas and designs are important factors in selling properties today coupled with a strong brand name,” Liew notes.

ECM Libra analyst Bernard Ching says more positive consumer sentiment and current low mortgage rates will sustain demand for residential properties going forward.

“Based on historical data, we see a strong correlation between consumer sentiment index (CSI) and demand for residential properties. Since hitting a low of 70.5 in the second quarter of 2008, the CSI has rebounded above the 100-point neutral level since the second quarter of last year,” he says.

Ching says the Government’s decision to impose a 5% real property gains tax (RPGT) only on property sales within the first five years of purchase instead of a blanket tax irrespective of date of purchase (as announced under Budget 2010) will boost buying interest.

“This is certainly a positive measure that will provide a much needed relief to the property sector. With the relaxation of the RPGT, we believe buying interest will pick up pace, especially among upgraders who need to sell their existing properties first,” he adds.

Source : CEIC

He says another catalyst for the property sector will be the impending announcement by the Government to allow Employees Provident Fund contributors to utilise their current and future savings in Account 2 for property purchases.

“This is likely to boost housing affordability, especially among first time home buyers, and benefit the mass residential segment,” he notes.

According to DBS Group Research Equity analyst Yee Mei Hui, a strong appetite for upper mid-high end properties has seen recent launches breaching 70% take-up within the first weekend.

“Developers are increasingly confident and have set higher sales targets, bringing forward launches and replenishing their landbank. Demand is expected to pick up further on the back of an improving economic outlook,” she says.

Yee adds that given the threat of rising inflation caused by higher mortgage rates and the impending introduction of the goods and services tax, more Malaysians are also buying property as a hedge against inflation.

By The Star (by Angie Ng)

Taman Seputeh gets another boost

When Liew Tze Yong left for Australia several years ago, those in the property circle thought they would be seeing the last of him.

After all, he made his name with Gita Bayu, one of Malaysia’s first gated and guarded lifestyle developments. After that successful partnership with world-renowned resort designers Lek Bunnag and Bill Bensley, he was ready to sit back, relax and enjoy time with the family. Being a DIY man, there would be lots around the house to keep him busy.

So when word got around that he was doing another gated and guarded project, this time in Taman Seputeh, Kuala Lumpur, his contemporaries sat up.

Liew, who is managing director of Planet Uno Sdn Bhd, has a tendency to set new benchmarks and go into uncharted terrain, literally and figuratively.

Gita Bayu is testament to that. Located in Seri Kembangan, Selangor, Gita Bayu was a forest and Liew created a location when there was none to speak of.

He turned that piece of land into a renowed green development, where houses are built around existing trees and the terrain preserved as much as possible to retain its original flavour and ambience. Today prices have risen to about RM170 per sq ft from RM40per sq ft.

Now that he has a good location – and Taman Seputeh is rather exclusive – developers are waiting to see what he is going to do. Liew, an architect by training, is excited about the work ahead of him.

“I’m not only going to build for my buyers, but my family members as well. I am going to set new benchmarks,” he says.

Taman Seputeh is located between Petaling Jaya and Kuala Lumpur off the Federal Highway. Quiet and neatly tucked away in a rather green location, it holds a lot of promise. In terms of amenities, there is the Mid-Valley Megamall and the established Jalan Klang Lama with its commercial hub.

Penang’s Hunza Properties Bhd has developed 15 acres comprising 80 units of semi-detached and 13 bungalow units in Taman Seputeh. Hunza has seven unsold bungalow units, launched about two months ago, at between RM500 and RM600 per sq ft. They bought the land from Liew’s family some years ago. The Berjaya group is selling land in Seputeh Heights for bungalow development at about RM400 per sq ft. Completed bungalows are at RM1,000 per sq ft depending on location and size and other details.

Liew has priced his units between RM700 to RM800 per sq ft with prices ranging from RM4.08mil to RM6.8mil.

What is interesting is that this will be a family project. Liew has always been passionate about houses and the external environment. But over and above that, he is also very detailed in his delivery.

“It will not be as fantastic as Gita Bayu but Seputeh Gardens will be different from most housing estates,” he promises.

The trees have been cleared but he has retained the contours of the land. Each of the 42 units will be located about a meter higher than the next and the houses set up to avoid a barrack-style straight line.

“There is the cascading effect because of the land contours. Because the houses are not build in a straight line but are instead set back considerably one from the other, there is the effect of a widening horizon when you drive up the road,” he says.

Liew’s Australian break has also taught him further about the use of trees and he has handpicked the specie and colour he wants. Located on nine acres, there will be 42 bungalow units with lap pools. The front portion will be two-storeyed, the back three-storeyed. All the roads with be tree-lined with species chosen by Liew himself.

Golden Shower for the entrance, Yellow and Red Flame for different parts of the development. Other species include Hopea Odorata, a medium-sized to large evergreen tree with a large crown growing to 45 m, bole straight with cylindrical, branchless, Bauhinia, a large flowering plant commonly known in the tropics as “orchid trees” because of its large mauve showy flowers, among others.

“The colours and variation you see in the show model will become reality when the project is completed. Life is rejuvenated by different seasons. I am using different species with their varying colours to denote the evolving times of the year.

“There are flowering trees which bloom abundantly at different times of the year in Malaysia although the seasons are not so clear cut in the tropics,” says Liew.

The overall development comprises two rows of bungalows of about 10 bungalows each and a cluster of about 20 of them with land sizes varying between 4,520 sq ft to more than 8,000 sq ft. Built-up ranges from 6,000 sq ft to 8,000 sq ft. There will be a green reserve within the development which does not belong to the family but forms part of a golf course.

Liew will be using that as a buffer. Hopefully, that stretch of land continues to be a green reserve in years to come.

Liew is very conscious about security and he says a good part of the project is adjacent to the Malaysian air force. He says that will be an advantage. Each of the 42 units come with six bedrooms including the maid’s, all with attached baths and fully fitted. But it is the first 25 buyers who have really got a bonus. That early bird package comes with extras worth more than RM300,000. He has already sold that first 25 units.

By The Star (by Thean Lee Cheng)

Fundamentals key in sustaining property sector

It’s a new year and many folks would be wishing for a speedy recovery of the global and national economy to promote greater wealth and job creation for the people.

It has been a dizzying past two years and many lessons that can be learned from the challenges that have unfolded – the latest being Dubai.

The tiny Gulf emirate, hailed as a major economic phenomenon, plunged into severe debt woes causing its real estate market to collapse after a six-year boom.

Thousands of jobs were slashed and projects worth billions of dollars were cancelled or delayed.

The local property sector should take cue from Dubai’s debacle to ensure that our market’s sustainability and stability is based on industry fundamentals.

Only when property markets are driven by real demand from buyers can its growth be sustainable in the long term. Speculative activities should be curbed as it will artificially boost property prices.

The collapse of Dubai’s property market also shows the danger of an over-dependence on foreign buyers.

Many corporations with projects in Dubai, such as Malaysia’s LCL Corp Bhd, are still struggling to recoup their outstanding bills from their Middle Eastern customers and are in serious cash flow problems.

The bubble burst because the phenomenal rise in Dubai’s property prices and building frenzy of mammoth skycrapers were not supported by real demand but speculative buying.

The speed of Dubai’s collapse after it went into debt problems drives home the point that it is important to balance the market between owner occupiers and investment buying activities.

So far, Malaysia has been lucky as its market is driven by fundamentals and sustained by strong local demand. Foreign buying only accounts for 10% of transactions.

Property prices have also been pretty stable in the last two years.

The country’s relatively young population, with close to 50% aged below 21 years, bodes well for a stable and balanced property market driven by first time buyers.

Reinstating the real property gains tax on gains made from property sales within the first five years of purchase is a move in the right direction to curb over speculation in the market.

Property buyers seeking fast gains should rightly be taxed.

More proactive measures should be initiated to promote property demand as it will create spillover effects in other economic sectors.

It is not an exaggeration to say that property is one of the best investment assets right now and the onus is on developers to strut their best stuff to attract buyers.

·Deputy news editor Angie Ng wishes to see more Malaysians benefiting from the high income economy initiatives and living in wholesome neighbourhoods.

By The Star (by Angie Ng)

Ho Hup stakeholder may sell land to fund future projects

HO HUP Construction Co Bhd may sell part of its land in Bukit Jalil, Kuala Lumpur, if the funds raised from an alternative revamp plan is not enough to finance its developments, said Datuk Low Tuck Choy.

Low is the second biggest shareholder of Ho Hup and is trying to block an existing restructuring plan, which involves a 95 per cent capital reduction.

His alternative plan involves raising RM25.5 million from the issue of a renounceable one-for-four rights issue of 25.5 million irredeemable convertible preference shares (ICPS) priced at RM1 each with two free warrants for each ICPS subscribed.

The money will probably be used to kickstart its RM2 billion Jalil City mixed-development project. But there were concerns that it may not be enough.

"We will sell more land in Bukit Jalil if we need cash in the future to fund our activities," Low told Business Times yesterday.

Low said his aim is to strengthen the financially-troubled company, which has been in the red since 2006.

In fiscal 2008, its net loss was RM56.2 million.

Ho Hup was the ninth biggest gainer on Bursa Malaysia yesterday following news of the alternative revamp proposal.

The stock rose 17 sen to close at RM1.44, with 27 million shares traded.

Low plans to replace the existing directors as he felt they were not acting in the best interest of shareholders. He argues that the sale of two plots of land in Balakong and Bukit Jalil for RM7.2 million or RM30 per sq ft and RM5.7 million or RM50 psf, respectively, was below market value.

Low plans to remove Ho Hup deputy chairman Datuk Vincent Lye Ek Seang, the company's largest shareholder with a 28 per cent stake via Extreme System Sdn Bhd, group managing director Lim Ching Choy and five other directors.

"I will wait to see what happens at the special meeting on February 4," Low said.

Meanwhile, Lim declined to comment on the alternative revamp plan.

Lim, who joined Ho Hup on June 1 2009, is spearheading Ho Hup's corporate restructuring to reduce debt, inject new capital, sell non-core assets and generate revenue to become profitable.

"We are in line with what the authorities want," Lim said.

Ho Hup has proposed a 95 per cent capital reduction and a new share-placement exercise that will see new investors owning 59.5 per cent of the company, beefing up its capital base.

The money will be used to develop Jalil City.

According to the plan, Ho Hup is expected to get approvals from the authorities by March and be removed from PN17 by June.

By Business Times (by Sharen Kaur)