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Wednesday, September 8, 2010

Bina Puri to develop Medini project in 2011

BINA Puri Holdings Bhd will develop its flagship commercial project worth RM500 million in Medini North in Iskandar Malaysia, Johor, from early next year.

The construction group yesterday inked a deal with Medini Land Sdn Bhd, a unit of Iskandar Investment Bhd (IIB), to jointly develop the 2.8ha project, known as Medini Square, via Medini Square Sdn Bhd.

Bina Puri holds 80 per cent of Medini Square, which will build retail, shop-offices and two 23-storey towers, each comprising small office/home office (SOHO) and office units.

Medini Square will have 1.05 million square feet of gross floor area, Bina Puri chairman Datuk Wong Foon Meng said after the signing ceremony in Kuala Lumpur yesterday.
"This is a strategic move for Bina Puri and we hope to be the catalytic developer and mover to attract other investors into Medini North," he said.

Bina Puri, which has RM2.5 billion worth of ongoing construction works, is eyeing several infrastructure projects, including in Iskandar Malaysia.

It has bid for projects worth RM4 billion here, in the Middle East, Pakistan, Brunei and Thailand and it expects a 10 per cent success rate.

Meanwhile, IIB president and chief executive officer Arlida Ariff said Medini Square will spur new developments in Medini North.

It will also complement the RM1.7 billion worth of ongoing projects in Medini North, namely Legoland Malaysia and 1Medini, a residential project by WCT Bhd and IIB, she said.

IIB is in talks with several local and foreign investors to build a three-star resort hotel, a four-star business hotel, a retail mall and a high-rise tower in Medini North worth RM1 billion.

By Business Times

Hot property market still grabbing attention

PROPERTY, especially the hot housing market, has become a favourite topic these days. Malaysians are generally quite savvy investors and their penchant for viable investment instruments have contributed to the current run-up in the housing market.

The availability of easy housing facilities, including the 5:95 and 10:90 packages, is also fuelling the strong buying interest.

According to the National Property Information Centre in its latest property market report, average house prices have risen 19% to RM273,000 in the first half of this year, from RM220,000 in the same period last year.

In Kuala Lumpur, prices rose about 35% to more than RM700,000 in the first half of the year, up from RM523,000 last year.

The strong jump in house prices in the past six months in some parts of the Klang Valley and Penang have raised concerns that unchecked speculative buying may cause overheating and result in a property bubble.

Bank Negara is keeping a close watch on the market and is engaging with banks on possible measures to curb excessive speculation on properties. It may consider imposing a 80% loan-to-value ratio (LVR) cap for mortgages to avert the risk of a potential property bubble.

The news have caused concern among industry and consumer groups over its dampening effect on affordability level and buying sentiment.

They worry that if the loan limit is brought down to 80%, many first-time house buyers, including those who have just joined the work force and the lower income group, may not be able to fork out the 20% downpayment for a house.

Their contention is that the proposed mortgage loan limit should not be imposed across the board and should give due consideration and flexibility to first-time buyers and those buying lower priced units priced below RM500,000.

Bank sources said Bank Negara’s aim of imposing the 80% mortgage loan cap was to reign in on speculative buying by certain quarters and the measure would be targeted at the high-end and non-owner occupied houses.

A blanket LVR cap will unlikely be imposed given the differing level of speculation in the various housing segments.

Given that houses of less than RM500,000 still constitute the bulk of transactions, accounting for 94% of the total number of units sold and 68% of sales value last year, the mass housing market may be spared. First-time house buyers may also be exempted from the proposed measure.

Should the proposed LVR cap materialise, houses priced from RM500,000 may be affected the most.

The mortgage loans market is now quite liberalised as the central bank does not impose any standard policy on mortgage loans but leaves it to the banks to manage.

Most banks have traditionally provided loans of up to 90% of the value of the property until about two years ago when market sentiment was impacted by the global financial crisis.

To stem the weak property sales, developers and their panel of bankers came out with different variants of housing loan packages that allow buyers to sign up for a house with just a 5% downpayment of the property value. Some even go as far as doing away with any downpayment and eligible buyers are granted the maximum 100% loan.

Although it has been almost two years since the introduction of these easy financing facilities to raise the affordability level for house buyers, these packages are still around in various forms today.

In fact, banks are still flushed with liquidity and are competing to get a bigger slice of the mortgage loan market. The stiff competition among banks has resulted in a mortgage price war with lending rates dropping to as low as base lending rate minus 2.3%.

But things have changed substantially in the past six months or so, and it should be time to review these housing packages.

If house buyers are made to pay higher downpayments for their purchases, the risk of their loans turning bad will be lower compared with if they have paid lower or zero downpayments.

We must not forget that the massive sub-prime housing debts in the United States that turned bad had triggered the global financial crisis two years ago and the world is still paying a heavy price for it today.

Although the LVR cap could dampen property market, demand for quality products in prime locations is expected to remain strong although buyers will be more selective.

Ultimately, if the proposed mortgage cap succeeds in cooling off the rapid rise in prices, especially for landed upper medium to high end residences, it should ensure a more sustainable and resilient property market.

By The Star

Proposal to cap housing loan won't dampen mart: Minister

The proposal to impose a 80 per cent loan-to-value ratio (LVR) for mortgages will not dampen the property market in the long run, said Minister of Housing and Local Government, Datuk Wira Chor Chee Heung.

Nevertheless, Chor said, there is a need for a certain structure to ensure it will not be a burden for the lower-income group to own a house.

"To enable the lower-income group to purchase house, perhaps there could be some kind structures where buyers who want to buy RM500,000 house and below, can still get 90 per cent loans while those who want to buy a house exceeding RM500,000, they can be given a 80 per cent loan," he told reporters after visiting Zephyr Point, an example of a build-then-sell project, in Kuala Lumpur yesterday.

"I leave it to Bank Negara Malaysia to decide the best course, but, in the long run, I don't think the 20:80 per cent will dampen the property market as such because, today, a large percentage of the purchases is made by genuine buyers. They need a home. That is why they are buying," he said.

Chor was responding to a question as to whether the proposal to impose an 80 per cent loan cap would dampen the property market. The move is expected to be implemented to avert risk of a property bubble.

Recently, Bank Negara was reported to be in discussions with banks on possible moves to curb speculation on property prices.

It was reported that the possible measures, which would likely include the 80 per cent LVR for mortgages, were being targeted at the high-end and non-owner-occupied purchases.

Chor also said that the ministry was seriously looking for partners to revive 47 abandoned housing projects as soon as possible.

By Bernama