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Monday, March 8, 2010

China sees long-term growth in housing prices

Soaring Chinese housing prices will rise further in 2010 and beyond as the nation develops and as local officials push property sales as a revenue source, the country's housing minister said Monday.

The bullish assessment by Minister Jiang Weixin appeared to cast doubt on government pledges to curb runaway prices that have fuelled fears of a real estate bubble and concerns that they were rising out of reach of many Chinese.

"I think this year the housing market will progress at a steady pace," Jiang told reporters at a briefing on the sidelines of the country's annual session of parliament.

"My prediction is that the upward pressure on housing prices will remain great for the next 20 years because demand will be huge due to rapid urbanisation and industrialisation and because our land is limited," he added. "Therefore we face huge price pressure."

Premier Wen Jiabao on Friday singled out the issue as a top government priority in an address to open parliament, saying Beijing would crack down on illegal practices aimed at driving up prices to ensure the "steady and sound development of the real estate market".

"We will resolutely curb the precipitous rise of housing prices in some cities and satisfy people's basic need for housing," Wen said.

Massive bank lending in 2009 has triggered fears that the cash flood has fed a spending spree by property speculators. Prices in 70 major cities rose 9.5 percent in January from the same month a year ago, the fastest pace since April 2008, the latest official data shows.

Jiang indicated the problem was being exacerbated by local governments for whom the property transfer fees are a significant source of revenue. "I think local governments are very happy to see housing prices rise because this means more fiscal revenue for them," he said. "So local governments have the obligation to fix this problem. This is a top priority in their work as instructed by the central government."

China's far-flung provincial, city and county level governments have a patchy record on following through with initiatives handed down by Beijing due to pressure to maintain economic growth in their areas. Beijing has been trying to cool the property sector by restricting lending, requiring buyers of second homes to put up a down payment of at least 40 percent and hiking interest rates on mortgage loans.

By AFP

HSL plans ambitious La Promenade project


An artist’s impression of a semi-detached house at The Leaf.

KUCHING: Riding on the robust sales of its newly-launched guarded and gated residential estate The Leaf, Hock Seng Lee Construction Sdn Bhd has set its next ambitious target to build 1,000 high-end homes in a major mixed-development project in Sungai Kuap, along the Kuching-Samarahan Expressway.

Named La Promenade, this single-biggest project ever undertaken by the property arm of Hock Seng Lee Bhd (HSL) will have a commercial centre of 200 shophouses, a shopping mall, two office blocks, a clubhouse and a man-made lake and recreational facilities.

These are in addition to the 1,000 high-end homes in the guarded and gated residential estate.

HSL plans to relocate its head office at Jalan Pending to La Promende in one of Sarawak’s fastest growing centres.


Yii Chee Sing (right) discussing the Leaf’s development with the company’s property development manager Benny Goh.

Executive director Yii Chee Sing said with a gross development value (GDV) of RM900mil, La Promenade would be launched in the second half of this year.

“Reclamation works for the project is already under way. The entire development spanning 80ha will be carried out in 10 phases over 10 years,” he told StarBiz.

Yii said the company’s confidence of a strong demand in high-end residential homes was boosted by the nearly sold-out The Leaf, which would provide lifestyle living, comprehensive security system and attractive landscaping.

He said more than 90% of the 54 luxurious contemporary duplex villas, semi-detached houses and double-storey linked houses at The Leaf, near Kuching International Airport, had been snapped up since its launch three months ago. The showhouses drew some 6,000 visitors on the opening day last November.

“All the 34 semi-detached units priced between RM700,000 and RM1mil have been sold,” he said, acknowledging the current glut in the sales of conventional semi-detached houses priced in the RM400,000-RM500,000 range in the state capital.

The Leaf boasts Sarawak’s first electrified perimeter fencing to deter and detect any intrusion. Its other security measures are vehicle access card entry, intercoms and panic alarms from each home to the guardhouse as well as round-the-clock patrols by trained guards.

“Housebuyers today are more sophisticated in choosing what they are going to invest in. Besides the house designs, they are particularly concerned about safety for a peaceful living,” said Yii.

He said The Leaf’s entire development would provide an attractive environment with covered drains, leafy landscaping and, most notably, concealed utility services. There will be lush lawns, trees and shrubs in keeping with the estate name – The Leaf.

Other shared facilities for the house owners are a recreational park with a playground and a discovery fruit orchard for children.

Yii said the La Promenade community would be modelled after The Leaf as there was a rising demand for lifestyle concept living that emphasised on security, landscape and recreational facilities.

He said HSL Construction had built some 1,000 houses in the state capital in the past five years, including in the top-selling Samariang Aman project in Bandar Baru Samariang (GDV of RM110mil). All the 642 units priced between RM160,000 and RM220,000 in this ongoing residential development have been taken up.

Yii said an innovative design introduced for the single-storey terrace houses in Semariang Aman was an internal countyard to bring extra light and ventilation to the centre of the home. This private garden space not only enhances the ambience of the house but also the quality of life of its occupants.

On the drawing board is the proposed Samariang Aman II project – a mixed commercial and residential development with over 220 shops, a hypermarket and a seven-storey office block.

The company has just launched Vista Aman in Samarahan which involves the development of 60 houses. Its other residential developments are Highfields in Batu Kawa (175 units), Lavender Hills along Kuching-Serian Road (64 units) and Vista Parade in Sibu (38 units).

HSL Construction has a landbank of some 285ha with good development potentials in both Kuching and Bintulu, with a total GDV of RM1.9bil.

The size of the landbank is expected to increase as more construction contracts are secured by parent company HSL whereby payment is by way of cash and land. Most of the land it owns now was secured over the years as part-payment for state-funded infrastructure projects.

“The property arm now contributes about 15% to the HSL group revenue, and between RM8mil and RM9mil a year to group profits,” said Yii.

By The Star (by Jack Wong)

Developers, analysts unperturbed by interest rate hike

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.


»We see it as a normalisation of rates, given the improved economic outlook this year« TAN SRI LIEW KEE SIN

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.

By The Star (by Angie Ng)

Sime unit looks to Vision Valley for growth

Sime Darby Property Bhd's chief is looking to the RM30 billion Sime Darby Vision Valley (SDVV) to be its future growth driver.

The 32,000ha development is expected to enhance the value of its landbank and the company is optimistic of an earnings margin of no less than 15 per cent.

It expects to secure approval for the project soon and for work to start in September, managing director Datuk Tunku Putra Badlishah told Business Times in an interview.

The SDVV, scheduled to be completed by 2025, targets housing more than 4.5 million people.

It will encompass anchor projects Selangor Vision City (SVC) - covering the Guthrie Corridor, Subang Jaya, Carey Island, Ampar Tenang and Sepang Estate - and Negeri Sembilan Vision City (NSVC).
The NSVC will include Labu and Tanah Merah Estates and a new model of affordable housing community that will be developed as the first project in the country to cater for the housing needs of workers in the SDVV, Tunku Badlishah said.

Some 14,800ha will emerge as the main driving clusters for the overall master plan with its sports, healthcare and wellness; education; aviation and maintenance, repair and overhaul; leisure, tourism and entertainment; and Green Experimental Cluster components.

Tunku Badlishah said that key to the SDVV, a regional development, will be to attract foreign

direct investment (FDI) from the Asia-Pacific, the US, Europe and the Middle East.

“Geographically, we are right smack in Asia-Pacific. So, location-wise, we have the edge. Malaysia Airports Holdings Bhd is committed to building the new low-cost carrier terminal (LCCT) in Sepang. When the new LCCT is completed, Malaysia will become a stronger transportation hub for the region.”

Sime Darby Property is talking to local and foreign
conglomerates to invest in the development.

The SDVV will complement the Iskandar Malaysia development in Johor.

Sime Darby Property will work with Iskandar Investment Bhd and the Iskandar Regional Development Authority for the development of both Iskandar Malaysia and the SDVV, Tunku Badlishah said.

By Business Times