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Friday, May 13, 2011

Ensuring the success of affordable housing

News that affordable homes will soon be built through a partnership between the Government and private developers would certainly be welcomed by a growing number of Malaysians, particularly those struggling to buy their first house.

Details of the programme will be revealed in two months. One hopes that it would not only be implemented in the Klang Valley where the issue is most pressing, but also in other locations where home prices have risen beyond affordability levels.

Houses that fall under this category ought to be opened up to those in the middle income bracket as well (apart from the lower income group) while rules need to be in place to avoid them from becoming targets of excessive speculation.

The world over, there are various models of effective and successful affordable housing schemes that have worked for the benefit of the people. Closest to home is, of course, Singapore. With the mass rapid transit (MRT) project scheduled to start operations in 2017 in the Klang Valley, there is sufficient time for a partnership to identify the land suitable for affordable housing and to complete the project in parallel with the construction of the MRT.

But there needs to be one certainty - affordable houses must be built with quality in mind.

What the Government can do is to carve out a certain portion of land at identified areas for commercial purposes in the future;these pockets of land can be sold at market rates for commercial development and the money received could be used to cross-subsidise the residential component of the project.

The new dwellings should not be of low quality. If incomes are expected to rise in future, so will the demand for creature comforts. They would need the luxury of amenities provided by most of the apartments and condominiums in the Klang Valley, such as a swimming pool, gymnasium or even some tennis or badminton courts.

Maintaining such facilities should not be shirked and a monitoring agency should be set up oversee this matter.

The other thing the government should do ensure affordability in the greater housing market is to douse excessive speculation that has dramatically pushed up prices of homes.

A house is an asset class, not unlike equities. The difference is people can live without buying shares, but not if they can't afford a roof over their heads.

Therefore, more must be done to ensure the housing market reflects the fundamentals of actual demand and supply as close as possible.

One way may be to rein in certain liberties that foreigners currently enjoy in terms of buying houses.

Who hasn't heard of stories of tourists or foreigners in the country laden with bags of cash to buy houses or commercial properties at certain property launches?

These flexibilities largely benefit property developers and foreigners. Even so, they would be easier to accept if they didn't happen at the cost of Malaysians being able to afford homes. Of course, there are speculators among Malaysians as well. But where does it leave genuine house buyers?

There should also be a limit on the number of houses a person can own in the affordable segment and real property gains tax should be used to make flipping homes in the country less lucrative.

With Malaysians now able to buy just about any asset around the world as an investment, the freedom of making money will not be lost. They just have to look elsewhere to make a quick buck.

Deputy News Editor Jagdev Singh Sidhu wonders if it's a good idea to wear the new charcoal grey Liverpool away jersey during this current heatwave when he plays football this weekend.

By The Star (by Jagdev Singh Sidhu)

Hua Yang buys prime land in KL

KUALA LUMPUR: Hua Yang Bhd has acquired 1.55 acres of prime land in Desa Pandan Commercial Centre.

It plans to develop the land into a mixed serviced apartment and commercial centre with a gross development value of RM160mil.

“This is part of our strategy to expand our operations in the Klang Valley with our developments in Sungai Besi, Selayang and now, Kuala Lumpur City Centre,” said CEO Ho Wen Yan in a statement yesterday.

For developments in the Klang Valley, he said the company's strategy was to develop vertical communities in the form of high-rise apartments, complete with a retail space for the convenience of residents.

By Bernama

Prop Park buys land

HUA Yang Bhd’s wholly-owned unit Prop Park Sdn Bhd, has signed a conditional sale and purchase agreement with U Thant Square Sdn Bhd to buy leasehold land in Kuala Lumpur for RM32 million.

Hua Yang said it will build residential and commercial properties worth RM160 million on the land starting mid-2011.

It will be completed in three to four years.

By Business Times

IGB targets foreign acquisitions

Property developer IGB Corporation Bhd has allocated up to RM3 billion for various assets acquisitions overseas this year, said managing director, Robert C M Tan.

He said the acquisitions comprising mixed developments, including hotels in Europe and the United States, was in line with the company's expansion plan.

"We always look for deals and that's how we grow," he told reporters after the company's annual general meeting here today.

By Bernama

UOA gears up for IPO

KUALA LUMPUR: Soon-to-be listed property developer UOA Development Bhd signed a retail underwriting agreement with its underwriters, ahead of its initial public offering (IPO) on the Main Market of Bursa Malaysia next month.

The underwriters for the IPO were CIMB Investment Bank Bhd, RHB Investment Bank Bhd, OSK Investment Bank Bhd, HwangDBS Investment Bank Bhd and Hong Leong Investment Bank Bhd, it said in a statement.

UOA has received approval from the Securities Commission for the proposed listing of its entire enlarged issued and paid-up share capital of up to 1.2 billion 5 sen shares.

The IPO consists of an institutional offering of up to of 337 million shares to Malaysian and foreign institutional and selected investors (including bumiputra investors approved by the International Trade and Industry Ministry) and a retail offering of 70 million shares to the Malaysian public, eligible directors and employees of UOA Development, its subsidiaries and persons who have contributed to the success of UOA and its subsidiaries.

UOA Development through its subsidiaries and associated company is involved in property development, construction and property investment. Its development projects are in matured and prime locations, centralised within the Klang Valley.

As at Dec 31, 2010, UOA Development has a total saleable and lettable area of more than 300,000 sq m of properties under development with an estimated gross development value (GDV) of RM2bil to be completed over the next three years.

The company has a further total potential saleable and lettable area of more than 1.2 million sq m being held for future development projects with an estimated GDV in excess of RM8bil.

By The Star

Maju Assets to unveil RM4b Iskandar project

KUALA LUMPUR: Maju Assets Sdn Bhd, the property arm of Maju Holdings Sdn Bhd aims to launch a RM4 billion high-end project, primarily for the expatriate community in Iskandar Malaysia, Johor.

It is also planning a beach fronting expatriate village in Terengganu for RM200 million, its managing director Adam Radlan Adam Muhammad said.

For the 480-hectare project in Iskandar, it is in the planning stage and will be launched in two to three years, Radlan said.

Radlan said the the catalyst development will be a 18-hole golf course over 120ha.

He said what would make the development appealing are the specially-designed Spanish villas.

Radlan added that the pricing for the villas will start from US$300,000 (RM897,000).

"We are getting Emiliano Armani, a Spanish master planner to design the villas. He will oversee the master plan," Radlan said in an interview with Business Times recently.

The project, which has yet to be named and located in Ulu Tiram, will include semi-detached homes, link houses and a marina equestrian centre.

"The timing is right for this project. The government is pumping in money in Iskandar Malaysia and it has attracted foreign parties. Our immediate market will be Singaporeans," he said.

Three times the size of Singapore, Iskandar Malaysia spans 2,217 sq km and is a mixed use development planned for completion in 2025. The government is targeting investments of US$110 billion (RM329 billion).

For the project in Terenganu, Radlan said the company is targeting players in the oil and gas sector.

The gated community will have villas and serviced apartments, for long-term lease to foreigners.

Radlan said with the award of contracts by Petroliam Nasional Bhd, he expects more expats to live in Terengganu.

"We are talking to Esso, Talisman and Murphy Oil to lease the units when the project is ready," he said.

According to Radlan, this will be the first of its kind project in Malaysia.

The properties will feature modern living with a touch of traditional Malay architecture, preserving the heritage.

By Business Times