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Monday, May 17, 2010

China property sector curbs leave buyers in limbo

BEIJING: Accountant Jiao Yurong carefully organised her family's finances to put her son through university in the US.

Now that he has the coveted degree, she has been saving to buy him a flat.

But soaring property prices in China - and a series of moves by the government to rein them in - are throwing a spanner in the 50-year-old mother's plans, and she admits she does not know how to proceed.

"Just when we had saved enough for a down payment, prices surged," Jiao, a Beijing resident, said. "The policy is so unstable... I'm so confused."
Jiao is not alone. Prospective home buyers are reeling from a series of measures put in place by the Chinese government to curb rocketing prices amid persistent fears about a ballooning bubble in the real estate sector.

Authorities have tightened restrictions nationwide on advance sales of new property developments, introduced new curbs on loans for third home purchases and raised minimum down payments for second homes.

The Beijing city government has gone even further, limiting families to one new apartment purchase and barring people who have not paid taxes or made social security contributions in the city for one year from getting home loans.

"Sellers have started to lower the prices," said Hu Jinghui, vice general manager of 5i5j, a real estate agency chain that has around 600 outlets in eight cities across China. "But the buyers are still waiting."

At the Beijing Real Estate Expo last month, the average price of a new apartment in the city was around 21,164 yuan (1 yuan = RM0.47) per sq m, double that of last year, state media said.

That means a 90 sq m apartment in Beijing would cost 1.9 million yuan, compared with the average per capita income of 26,738 yuan in 2009.

Since the capital put in place the austerity measures on April 30, prices have dropped an average 10-15 per cent, with the number of home purchases slumping by 50 per cent, according to Hu.

In 2008, China also introduced a range of policies to dampen the market frenzy, but a government stimulus package to prop up the economy during the financial crisis quickly negated any progress made.

The new measures so far seemed to have had a limited effect, as official data showed last Tuesday that prices in major Chinese cities rose 12.8 per cent in April, a double-digit rise for the third straight month.

Experts also said the rules contained apparent loopholes that could be exploited by speculators.

China lacks a nationwide database on property sales, which means banks have no way of checking if mortgage applicants already own apartments in other cities.

And higher down payments will have little impact on speculators who mostly pay the full value of properties in cash.


Iskandar to tender out RM250m deals

ISKANDAR Investment Bhd (IIB), a government company tasked to build catalytic projects in Iskandar Malaysia in Johor, will tender out another six packages of contracts worth a combined RM250 million by the end of this month.

The contracts include jobs to build two schools, a stadium and college buildings. It was earlier reported that IIB will give out RM2 billion worth of contracts this year.

President and chief executive officer Arlida Ariff said the company has awarded over RM3 billion worth of construction jobs since its inception four years ago and is continuously stepping up the development pace at Iskandar Malaysia.

"We will announce the contracts by the end of the month. We have moved past the earthwork phase and into construction. Our team is now working on the tender," she told Business Times in an interview.
IIB is also expected to sign with its Dutch counterpart to establish a world-class Maritime University in Iskandar Malaysia soon. It is also in talks with two other universities to set up engineering and hospitality schools in EduCity, the 120ha education enclave in Nusajaya.

Three institutes that have confirmed their presence to establish a school here are UK's Newcastle University of Medicine, British boarding school Marlborough Overseas Ltd and Singapore-group Raffles Education Corp.

"We seriously view education as a key pillar of growth for the region and IIB's long-term objective is to create a global education hub in Iskandar Malaysia," said Arlinda.

The Legoland theme park, which is among the main attractions at Iskandar Malaysia, is on track to be opened in 2012.

Earthworks are underway and IIB has also awarded contracts to rides operators. Construction of the building will start in the third quarter this year.

The RM750 million Legoland Malaysia is the fifth Legoland in the world after the US, Denmark, Germany and Britain. Spanning 28.32ha, the theme park is some 20 minutes from the Second Link and within Medini in Nusajaya, one of five flagship zones of Iskandar Malaysia.

There will also be a four-star business hotel and a resort hotel around Legoland.

Arlinda said the infrastructure at Medini is already on the way and is about 24 per cent completed. The infrastructure works completed include roads, street lighting, traffic lights, sewer, water reticulation and electricity.

Medini is a 920ha international mixed-use urban development, located on prime greenfield land in the heart of Nusajaya. The development is expected to bring in gross development value in excess RM69.6 billion over 15-20 years.

By Business Times