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Saturday, August 14, 2010

There’s a price to pay for convenience

Rising house prices show that residential properties have become the “hottest” pick for investors who are flushed with cash and believe investing in a tangible asset is a good investment choice.

Although it may seem that the property market is on a “wholesale revaluation exercise” with prices climbing across-the-board, it is actually not so.

A check in the newspapers’ classified pages under the “houses for sale” column show that the price hikes are location centric. There is always a price to pay for convenience and living close to mature neighbourhoods with good basic amenities and infrastructure.

If one cares to check around, there are still many affordably priced (RM300,000 to RM400,000) new or second-hand houses out there, but one must be prepared to stay further away from the “conveniences”.

I believe there are various reasons why people invest in property over other investment instruments. The property market’s tenacity in withstanding the global financial crisis must have converted many sceptics to build up their investment portfolio with property assets.

Malaysians’ penchant to save has translated into lots of liquidity available for investment. Savvy investors will invest their money in instruments that will offer good returns over cost and risk.

The prevailing low savings interest rate and the under performing equity market are some of the “push” factors that are promoting property investment.

While these financial instruments are still affected by the external uncertainties in the US and Europe, property investments are very much locally-driven and has proven to be a reliable asset class.

The value of Malaysian properties, both houses and shop lots in good locations, have sustained very well so far and there have been more upsides than downsides.

The quick rebound of the property market in Singapore and Hong Kong may also have contributed to a resurgence in property buying here.

There is also pent-up demand for properties as some people who have procrastinated on signing on the dotted line previously have decided to do so now after seeing the market’s ability to withstand the tough times.

Supply has been slow to catch up after widespread project deferments by developers in 2008. New project launches have just resumed towards the later part of last year.

The high demand over supply has naturally resulted in housing prices escalating in various parts of Kuala Lumpur and the Klang Valley. Penang is also another hot property market where prices have come close to Kuala Lumpur levels and still climbing.

This is a good opportunity for less well known developers with reasonably sized land bank to build affordably priced homes to woo buyers.

One way developers can do this is to come up with products that allow buyers the flexibility to decide their own house built-up and layout plan, just like in the “Sims” computer game.

Instead of the “one-size-fits-all” model that is the norm now, it will be a value added service to buyers if there are various sizes and layout plans to choose from.

Some families have elderly folks and it would be more practical to have at least one or two bedrooms downstairs for a double-storey house.

I have heard mothers of teenage children staying in 2½-storey to three-storey houses complaining that they are “cut off” from what their children are up to these days. They yearn for “the closeness” of their single-storey or double-storey houses.

Large central parks would be another huge selling point as residents would like to unwind and relax in the open environment.

At the end of the day, all stakeholders must do their part to ensure the property market continues to be sustainable.

Developers should be more pro-active and ensure they take the necessary steps to “tune in” to their customers’ needs and ensure more timely launches to meet rising demand.

Buyers also have the responsibility to be prudent and not to over-commit themselves or default on their loans.

Deputy news editor Angie Ng thinks it is a good idea for relatives or friends, who want to stay close to each other, to pool their resources to buy a nice piece of land and turn it into a nice housing enclave.

By The Star (by Angie Ng)

CapitaLand’s Malaysian success

Last month, Prime Minister Datuk Seri Najib Tun Razak told Johor Umno branch leaders not to be emotional or parochial about Singapore investments.

For years, there has been this unhappiness about Singapore’s presence in the state, from the day tourists to corporate investors.

The fact remains that Johor – and the country – need the dollars, be it US or Singapore dollars, or any other foreign currency, for that matter.

Singapore’s business involvement in Malaysia can best be seen in the sprawling interest of CapitaLand Ltd, Southeast Asia’s largest property developer.

The company is also part of Temasek Holdings, the investment arm of the Singapore government. While CapitaLand is most bullish about its investments in China, it also upbeat about the region.

CapitaLand’s presence in Malaysia has been significant over the last 10 years.

In this relatively short time, CapitaLand has successfully branded itself in the Malaysia property scene.

Among its first condominium projects in Malaysia was Suasana Sentral, a 400-unit project built in partnership with Malaysian Resources Corp Bhd in 2001, when the Malaysian government was promoting Brickfields as a transport hub.

Since then, there have been various other projects. Says property consultancy Knight Frank MD Eric Ooi: “It was between 2002 and 2007 that the group became very aggressive in the Malaysian property scene. Its foray into the vicinity of the Petronas Twin Towers started with Marc Residences in 2002. It was already working on its branding then.”

Marc Residences was the third project to be launched after Stonor Park and Dua.

“They entered the high-end condominium segment because they saw pent-up demand for these condominiums. From their experience in Singapore, they saw the potential of that location and the demand for such high-end modern living, which Kuala Lumpur had never seen before,” says Ooi.

CapitaLand has since gone into quite a number of residential developments.

Among them Hamsphire Residences (with Zelan Bhd), Kiaraville and Tiffany by i-Zen (Ireka Corp Bhd) and Zehn Bukit Pantai (a joint venture with the landowners), to name a few. All of them are high-rise residentials. Its latest project is Seni Mont’Kiara (also with Ireka).

Successful branding

CapitaLand also has interest in UM Land Bhd, which is involved in township development in Johor.

Says Paul Khong, executive director of Richard Ellis Sdn Bhd: “CapitaLand has successfully branded itself in Malaysia, which is why other developers are keen to co-brand with them today.

“The name CapitaLand comes with a premium, and many Malaysians understand that,” says Khong.

CapitaLand’s presence in the commercial sector in Malaysia is through Quill Capita Trust (QCT), a real estate investment trust listed on the Main Market of Bursa Malaysia.

Currently, QCT has assets totalling about RM788.4mil, comprising 10 commercial properties in Cyberjaya, Kuala Lumpur, Shah Alam, Petaling Jaya and Penang.

CapitaLand is also involved in serviced residences through The Ascott Ltd, one of the world’s largest international serviced residence owner-operator, with more than 26,000 serviced residence units in key cities of Asia-Pacific, Europe and the Gulf region.

The company operates three brands – Ascott, Somerset and Citadines, and its portfolio spans 71 cities in over 20 countries.

In Malaysia, Ascott is the largest international serviced residence owner-operator, with nine properties offering close to 1,200 units.

Ascott manages seven properties in Kuala Lumpur – Ascott Kuala Lumpur, Ascott Sentral Kuala Lumpur (opening in 2013), Somerset Seri Bukit Ceylon, Somerset Ampang (opening in 2010) and three properties for corporate leasing.

In Kuching, Ascott operates Somerset Gateway and Citadines Kuching Uplands (opening 2012).

Says a CapitaLand spokesman: “CapitaLand has the experience and expertise along the entire real estate value chain. Exporting real estate expertise overseas has been CapitaLand’s forte. The group is an investor, developer, operator and manager, and provides financial solutions across sectors and geographies.

“Today, the group has nine listed entities, the latest being CapitaMalls Malaysia Trust, with a total market capitalisation of about S$40bil. It manages about S$50bil worth of real estate assets in more than 110 cities in over 20 countries.”

CapitaLand has no choice but to go overseas. With Singapore being just 700 sq km, it does not have much of an option other than to go offshore in search of opportunities.

After all, the whole of Singapore can only absorb 15,000 apartments a year, but in Shanghai alone, the same number of units can be sold within a week.

By The Star

Property buyers wary of govt move

SOME 40 per cent of property buyers planned on expected increase in property prices as the government phases out subsidies, a recent study revealed.

Another 38 per cent preferred to wait before making any purchases because they believe subsidies will not be phased out.

The remainder expressed indecisiveness and intended to sell their assets, noted.

By Business Times

HK moves to curb property bubble

HONG KONG: Hong Kong’s government said yesterday it will increase land supply to avoid a property bubble, warning that prices of some flats are approaching historic highs.

John Tsang, the city’s financial secretary, said prices in June were 8 per cent up from the end of 2009, despite a series of measures the government introduced in April to cool the overheating market.

By Business Times