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Monday, March 29, 2010

Developers have strong presence in Johor

JOHOR BARU: 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.

Chang Khim Wah ... ‘Iskandar Malaysia is a big boost for Johor’s property sector.’

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.

Samuel Tan Wee Cheng ... ‘The Federal Government should review the new ruling.’

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.

Ku Hwa Seng ... ‘We are looking for more land especially in Iskandar for future development

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.

By The Star

SP Setia buys land in Melbourne for RM92m

SP Setia Bhd's wholly-owned subsidiary, Setia International Ltd, has purchased a 46,715 sq ft of land in Melbourne for RM92.4 million.

In a filing to Bursa Malaysia, the company said Setia International has formally exchanged a conditional contract of sale with S.L.Nominees Pty Ltd and Jonquil Pty Ltd.

It said the proposed acquisition is expected to be completed in the financial year ending October 31, 2010.

SP Setia's president and chief executive officer Tan Sri Liew Kee Sin in a statement said this new venture is in line with the group's strategy since 2007 to expand its reach beyond its well known township developments, to include integrated commercial, high-rise residential as well as international expansion.
Liew said along with international expansion, the group will also continue to focus on acquiring new landbanks in Malaysia for growth and re-investment, given the many opportunities which still exist at home.

He said the acquisition will give the group a rare and valuable opportunity to enter the matured, high-income and robust Melbourne property market, to credibly, further establish its credentials and boost the profile as an international property developer.

By Bernama

Foreign buyers inflating property market in Australia

MELBOURNE: Foreign buyers are a factor in rising house prices, said Reserve Bank of Australia governor Glenn Stevens.

He said the bank was monitoring how much the Australian government’s decision last March to relax its rules on foreigners owning property had contributed to surging prices for housing. “The role of foreign purchases was an important one and it’s one we’re giving some attention to,” he said.

Australia’s Treasurer Wayne Swan eased restrictions for those on temporary visas, such as business owners and foreign students, to allow them to buy any home to live in, land to build on or new dwelling for investment purposes.

Real estate agency Marshall White said buyers from mainland China and Hong Kong kick-started Melbourne’s prestige property market last year and still accounted for a third of its sales. Malaysian-born agent Julie Wai Leng Karl said it was becoming important to have multilingual agents in the housing business.

By Bernama

Mah Sing receives its second Brand Laureate Award for Best Brand in Property

Mah Sing's Group Managing Director cum Group Chief Executive receiving the Best Brand in Property Award from Datuk Seri Idris Jala, Minister in Prime Minister’s Department.

For the second consecutive year, Mah Sing Group Berhad was awarded The Brand Laureate Award for the Best Brand in Property. The award was presented to the group’s managing director Tan Sri Dato’ Sri Leong Hoy Kum at a ceremony at a hotel in Kuala Lumpur last Friday, March 26.

“I am very honoured that our group is nominated for this award for the second year running as it is recognition of our unwavering commitment to deliver our brand promises made to our stakeholders. We will continue to enhance our brand position while contributing to branding Malaysia globally,” Leong said.

The Mah Sing Group believes that a strong brand identity will be able to enhance a company’s position in both good and challenging times.

Leong said, “A brand promise is made to our stakeholders and these promises must be founded on trust. Trust, reliability and respect will create strong relationships and strong branding. We believe the delivery of this brand promise is what resulted in our strong sales of RM516million for the first 3 months of the year. This is three times the RM170million sales achieved in the same period in 2009, hence we are confident of achieving our sales target of RM1billion for 2010.”

By The Star

Moody's maintains stable outlook for China property developers

HONG KONG: Moody's Investors Service is maintaining its stable outlook for China property developers over the next 12 months and says that while prices will decline, the market is not overly inflated.

Moody's vice president and senior credit officer Peter Choy said on Monday, March 29 that currently, numerous factors -- many at opposing ends of the spectrum -- are at play on the China real estate landscape, leading to a market which shows restrained short-term weakness, but robust long-term fundamentals.

"Moreover, the ability of developers to manage through the situation is much stronger than 18 months ago," he said. "And while we do not subscribe to the view that China's real estate market is grossly inflated -- attracting terms such as "an asset bubble" -- we do expect a 10% year-on-year decline in contracted sales in the country's first-tier cities."

Choy said in 2010, the performances of developers -- with sustainable business models and which focus on owner occupiers rather than investors -- will be less volatile.

"One of the key aims of the regulatory interventions has been curbing activity by property speculators, who will scale back their activities," he said on the release of a new Moody's outlook -- which he authored -- on Chinese property developers.

The report looks at key trends and their rating implications, demand and supply, how the authorities have used regulatory measures to cool the market -- buoyed partly by the government's stimulus packages and the easy available of credit -- and the financial fundamentals of Moody's 14 rated developers.

"In view of the market's improved fundamentals and the timeliness of recent regulatory interventions, the residential property market is unlikely to see a repeat of the slump of 2H2008," he said.

"Moreover, developers are under less pressure to reduce prices, given strong sales in 2H2009 and the resultant strengthening in their liquidity positions."

"And while Moody's rated developers may not achieve their ambitious sales targets in the next 12 months, there is unlikely to be any material impact on their ratings during this time frame. Furthermore, developers need more funding for their larger scale developments, but progress can be adjusted according to levels of funding availability," he said.

By The EDGE Malaysia

China orders tighter property lending

BEIJING: China's banking regulator ordered lenders to take more care when making real-estate loans, widening efforts to prevent property speculators from causing asset bubbles and bad debt.

Banks should not lend to developers found by state agencies to have held land without building houses, the government said in a statement posted online yesterday evening. They should also stop approving new lines of credit to 78 government-controlled companies whose core business isn't property development if they use collateral other than construction projects already in progress, the statement said.

China's property prices rose 10.7 per cent last month, the fastest pace in almost two years, fueling concern that record lending and inflows of capital from abroad are creating asset bubbles in the world's third-biggest economy. The government this month raised deposit requirements for buyers at land auctions to 20 per cent of the minimum price to raise costs for developers. It also lifted banks' reserve requirements twice this year and re-imposed a tax on home sales.

"We have to closely monitor China's asset bubbles," Liu Mingkang, chairman of the China Banking Regulatory Commission, said yesterday at a conference in Beijing. Property prices have changed "quite a lot in the past five years," he said.
Former Federal Reserve chairman Alan Greenspan yesterday said there are "bubbles" in China, without indicating whether they were in property and stocks.

"There are significant bubbles in Shanghai and along the coastal provinces, but there's some of that going back into the hinterlands as well," Greenspan said in an interview on Bloomberg Television.

The regulator's latest order underlines concerns that banks may be at risk from companies that are speculatively raising capital backed by property investments. Banks must carry out "serious" examinations of developers that are repeatedly using the same pieces of land as collateral for loans, the regulator said in the statement.

"These measures are intended to urge developers with land to build houses and sell them quickly to increase market supply," said Zhao Qingming, a Beijing-based senior analyst at China Construction Bank Corp, the nation's second largest lender. "It may curb fast growth in housing prices, but more measures are needed to tackle the root issue, including controls on land prices and speculative house-purchase investments."

"We ask banks to check the qualifications of the developers and they must have a face-to-face check," the CBRC's Liu said on Friday.

By Bloomberg