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Saturday, April 7, 2012

Prices, rentals stabilising

Johor’s property market is expected to continue to perform well this year. Houses in areas within Nusajaya such as Taman Nusa Idaman and Horizon Hills record price increases of 6.4% to 9.1%, with prices ranging from RM392,000 to RM448,000.

Prices and rentals for residential properties in the Klang Valley should stabilise this year due to credit-tightening measures by banks and investors' cautious sentiment after prices of houses rose by 6.6% last year, according to property consultants.

However, they point out that property developments in selected locations, especially in areas where the proposed Klang Valley My Rapid Transit (MRT) and Light Rail Transit (LRT) stations are, would still perform well in terms of capital appreciation.

Property consultancy CB Richard Ellis (M) executive director Paul Khong says price increases in the Klang Valley residential market had slowed down slightly in the last two quarters.

“Property developers are offering more incentives and freebies to push sales, ranging from free SPA (sales and purchase agreement), stamp duty, free air-conditioners to even trips to Hong Kong,” he says.

Khong says that this year, buyers are more cautious as prices are currently toppish.

“Loans are now getting difficult to secure. Larger numbers of buyers especially investors, have now taken a more conservative stand.”

Some heat has been taken out of the speculative end of the property market in recent months, says property consultancy Khong and Jaafar managing director Elvin Fernandez.

“Speculation is an accepted and needed element in any market, excessive speculation is not,” says Fernandez.

One property research analyst says the residential property market is set to take a breather, and prices should be flat in 2012 and 2013.

“Last year was a sterling period when property prices went up a lot, especially for new development launches.

“So, we are coming off from a very high base set in 2011. Can the market maintain this kind of momentum?

“We do not think so as there are no major catalysts and banks are cooling down the residential property sector,” he says.

The property analyst also says a lot of residential properties launched in 2010 would be completed this year.

“Many owners will try to flip' their units. So, there will be affordability issues if prices keep going up.”

Tighter financing

According to data on Bank Negara's website, the number of loans applied for purchases of residential property increased by 17% year-on-year in the first two months of 2012 to RM26.7bil.

The amount of residential property loans approved during the period was RM12.25bil, which was 2.7% higher compared with a year earlier.

Meanwhile, the amount of loans applied for purchases of non-residential property increased by 15.3% year-on-year in the first two months of 2012 to RM13.83bil.

The amount of non-residential property loans approved during the period was RM6.83bil, which was 8.4% higher compared with a year earlier.

Another property research analyst says the central bank's data shows that credit-tightening measures are working to cool down the property sector. “This year to date, demand is still very strong, and has in fact increased substantially, especially for residential properties.

However, the amount of loans approved was not substantially higher compared with the same period last year,” he says.

Fernandez says there is evidence that the run-up in prices for the various “hot spots” of housing in the Klang Valley and in Penang, have been arrested due to cooling measures undertaken by Bank Negara and the tightening on housing loans by banks.

Effective this year, banks have started using net income instead of gross income to calculate the debt service ratio for loans.

Fernandez also points out that coming out of the holiday season this year, there was a distinct slowdown in enquiries for mortgage valuations and house purchases in the secondary market.

“The Government has said it was serious about preventing a property asset bubble. So, even if banks start to loosen the lending guidelines in the later part of the year, how much can property prices go up before measures such as increasing the real property gains tax (RPGT) are imposed?”

The 2011 property market report, compiled by the Finance Ministry's Valuation and Property Services Department, says the Malaysian All House Price Index had surged to 156.9 points in the fourth quarter of last year compared with 147.2 points a year earlier.

The report also says the demand for high-end units priced above RM500,000 had increased in the country, with 21,905 transactions last year (compared with 16,782 in 2010).

“This could be attributed to the increase in affordability level and supported by the ease in borrowing as well as attractive loan packages offered by the financial institutions,” says the report.

Khong says this is also largely due to the fact that there is a substantial increase in the number of units priced above RM500,000 in recent times within the Klang Valley.

“Many residential properties have gone beyond this price level. So, a lot of sales done would largely be in this category now.”

Khong points out that nowadays, it is virtually impossible to buy a landed property at RM500,000 or below in good locations in Petaling Jaya and Kuala Lumpur.

“A terrace house in Taman Sri Hartamas is already above RM1mil and even one in SS2, Petaling Jaya or Bandar Setia Alam, Shah Alam has also moved up above this RM500,000 range.”

The report noted that last year, prices of houses continued to consolidate, with landed housing in general on an upward trend.

Across the board, terraced houses in Kuala Lumpur recorded price increase of 8% to 13%.

For example, the prices of single-storey terraced houses in Lucky Garden, Taynton View and Salak South Garden rose by 8.1% to 11.9% while double-storey terraced houses in Bandar Tasek Selatan saw price increases of 11.7%.

However, the prices of high-rise developments in Kuala Lumpur showed mixed trends.

Low-cost flats in Taman Batu Permai recorded price increases of 11% due to strong demand while the prices of low-cost flats in Bandar Baru Sri Petaling dropped by 5% due to competition from other stratified buildings in the area.

Apart from that, the prices of condominiums at Casa Kiara II and Mont Kiara Pines rose by 12.8% and 13.3% respectively.

Residential housing prices in Selangor were also influenced by projects such as the MRT and Light Rail Transit, with single and double-storey terraced houses in locations such as Petaling Jaya, Subang Jaya and Bandar Utama registering double-digit increases of 14% to 34.3%.

In the high-rise segment, it is noted that apartment units in Bandar Puchong Jaya and Taman Puteri Impian recorded price increases of 3.3% and 21.5% respectively.

Meanwhile, in Putrajaya, prices of residential properties also recorded strong growth.

Prices of double-storey terraced units in Precinct 11 increased by 18%, with the highest price registering at RM430,000 (against RM370,000 in 2010) while prices of low-cost flats in Precinct 9 rose by 10%.

The report also points out that the 55km Sungai Buloh-Kajang MRT alignment, which is expected to be completed in 2017, could result in an appreciation in property values within the areas served by the project such as Taman Tun Dr Ismail and Phoenix Plaza.

“Those who have parcels of developed or undeveloped land along the alignment are poised to enjoy the spillover effects of the rise in property values.”

Residential rentals

Across the board in the country, the rental rate of both landed and stratified residential properties is stable.

However, there are exceptions particularly in the Klang Valley.

In Bandar Utama, Selangor, rental of two and two-and-a-half storey terrace houses grew by 30% and 36.4% respectively with rental ranging from RM1,900 to RM2,900 per month.

Rentals for single-storey medium cost terrace houses at Bandar Sri Damansara increased strongly by 35%.

Meanwhile, in Kajang, single-storey terrace houses in Taman Cheras Jaya and Taman Bukit Mewah showed rental growth of 9.1% and 5.3% respectively due to their strategic location near the exit to SILK Highway.

Increases in rentals are also seen in low-cost flats and apartments in Damansara Damai, Bandar Puchong Jaya and Taman Kinrara.

Double-digit rental growth is seen in condominiums at Bandar Baru Ampang, Taman Pandan Mewah, One Ampang Avenue and Pelangi Damansara.

In Kuala Lumpur, rental increase of 4% to 13% is seen for single and double-storey terrace houses in Danau Kota, Happy Garden, OUG and Salak South Garden.

Rental of apartment units were generally stable, except for certain high-rise developments in Kuala Lumpur, the Petaling district and Ampang which increased by 5.5% to 18.2%.

However, Fernandez says rental yields for ubiquitous two-storey terrace houses in selected areas in the Klang Valley are getting lower.

“The trend has been towards lower returns, slipping below the critical 3% benchmark. Below 3% is a cause for concern as houses should return between 3% and 6% (all risks net return) depending on house type, and whether it is landed or strata.”

One property analyst also says it is getting tougher for residential property buyers to obtain decent rental yields.

“Rentals will always be area specific. But generally, how many people in the Klang Valley can afford to pay rental of RM2,000 a month with the exception of foreigners. Typically, young professionals and couples are paying rentals in the range of RM1,000 to RM1,500 a month.”

Boom for shops

In Kuala Lumpur as well as the Petaling and Batu districts, prices of shops increased by 2.9% to 21.4%.

Those in Taman Alam Damai (Damai Niaga) recorded the highest average price change, from a range of RM895,000 to RM910,000 in 2010 to a range of RM1.1mil to RM1.2mil last year.

Notable price increases for shops are also seen in Happy Garden (8%) and Salak South Garden (11%).

In Selangor, shop prices increased by 18% and 42.4% in the central town prime areas in Subang Jaya and Kota Damansara respectively as positive expectation from the proposed MRT and LRT projects spurred the commercial segments.

Meanwhile, rentals for commercial shops showed optimistic performance last year.

Rental of ground floor shops in Jalan Masjid India, Kuala Lumpur continued to be the highest at RM20,000 to RM25,000 per month.

Ground floor shops rental that showed double-digit increases include Kuchai Entrepreneurs Park and Taman Connaught at 16.6% and 11% respectively.

For Selangor, good areas in Petaling Jaya recorded rental increases of 13.3%.

Khong says shop rentals will continue to escalate slightly this year, reflecting the high prices that investors paid for such shops.

“In areas where commercial activities are bustling, rents will be good as well. Rents may not fairly match the capital values in many cases.”

However, he points out that shophouse rents will depend largely on the actual commercial performance of the individual centre.

One property analyst says shop owners in new housing projects where there is population growth will benefit.

“Remember, there are limited supply of shop lots. And, those who buy shop lots tend to have holding power, so they can afford to wait for better times.”

Other states doing well

Johor's property market performed well last year, with 52,946 transactions worth RM17.1bil.

Compared with 2010, Johor's property market volume and value increased by 9.1% and 44.6% respectively.

The report says Johor's residential property prices are generally stable with instances of mixed performance.

Single-storey terraced houses within areas in Johor such as Taman Puteri Wangsa, Taman Ungku Tun Aminah, Taman Bukit Indah and Taman Perling see price increases of 2.9% to 11.1%, with prices ranging from RM125,000 to RM220,000.

Houses in areas within Nusajaya such as Taman Nusa Idaman and Horizon Hills record price increases of 6.4% to 9.1%, with prices ranging from RM392,000 to RM448,000.

In Johor's high-rise residential segment, developments such as Straits View Condominium in Bandar Baru Permas Jaya saw price increases of 5.2%, with transactions done at RM470,000 to RM570,000 while Taman Perling Apartments registered the highest price increase of 23.3%, with transactions done at around RM220,000.

However, prices in Tanjung Puteri Apartment declined by 12.6%.

Property analysts are confident that the property sector in the Iskandar Malaysia economic growth corridor will perform well.

“The boom area will be Iskandar Malaysia. Lately, many major property developers have made forays there.

This is what happened with areas like Cyberjaya and Puchong, Selangor in the past,” they say.

Meanwhile, Penang's property market had an outstanding year with 39,415 transactions worth RM13.1bil, thus registering growth of 51.7% and 39.5% respectively compared with 2010.

It is noted that Penang's residential property prices are also on an upward trend, due to the scarcity of land on the island.

For example, double-storey terrace and semi-detached houses at Island Park see price increases of 13.4% to 30.8%, as the area is buttressed by neighbourhood developments such as Tesco hypermarket, Queensbay Mall, hospitals and schools.

As for Sabah, the property market improved slightly last year, with 10,321 transactions worth RM4.43bil, thus registering growths of 1.4% and 12.8% respectively compared with 2010.

In Sabah, prices of residential properties were generally unchanged, with a few exceptions.

For example, double-storey terrace houses in Seri Millenium Kingfisher, Kota Kinabalu are transacted at higher prices of RM400,000 to RM450,000 due to the area's proximity to the city centre.

In Sandakan, similar property in Taman Indah Jaya and Taman Fajar witnessed 20% and 14.6% price increases respectively.

The high-rise segment in the state also recorded price increases, and highlights included condominium units in Grace Ville and One Borneo Tower A in Kota Kinabalu, where prices increased by 17.9% and 10.8% respectively.

By The Star

RM1b boost for i-City

I-BERHAD, an integrated ICT urban centre developer, is adding RM1 billion worth of new products at i-City, increasing the project's gross development value (GDV) to RM4 billion.

The company is adding a riverfront development called Clarke Quay@i-City and a 500,000 sq ft data centre complex to the project, said its chief executive officer Datuk Eu Hong Chew.

The data centre will be built on a 3.3ha site owned by the company directly opposite the 41ha i-City project off the Federal Highway.

Clarke Quay@i-City will be developed on a 1km stretch on the 7km Sungai Rasa, which is being upgraded by the state government under a flood mitigation development programme for Shah Alam.

"We expect construction on Clarke Quay@i-City and the data centre to commence by next year and in 2014, respectively," Eu said at the progress review update on the i-City development yesterday.

Present were Selangor Mentri Besar Tan Sri Abdul Khalid Ibrahim, Shah Alam mayor Datuk Mohd Jaafar Mohd Atan and I-Berhad founder Tan Sri Lim Kim Hong.

Eu said the project's GDV will exceed the RM4 billion mark as more products are added during the 10-year development period.

"Currently, the theme parks are located on undeveloped land. They will be relocated to the one million sq ft mall which we are building. That would give us more land to build other stuff," Eu said. So far, 20 per cent of the 41ha has been developed.

I-Berhad has another 12ha for landscaping and leisure activities, which was awarded by the state government in 2011 under a 21-year concession.

Eu said i-City is one of the key contributors to the economic growth of Selangor, creating new businesses and promoting foreign direct investments.

"When i-City is completed in 10 years, it will have a population of 25,000, and 50,000 knowledge workers. Now we get up to four million visitors a year and we are planning to triple that in 10 years," Eu said.

By Business Times

The unfair advantage

Foreigners, with their higher currency exchange, are competing with the locals in the landed housing market.

The hike in property prices of the last two years should be a good enough reason to pull out all the plugs that have stifled home ownership among the people.

House prices in the property hot spots of Kuala Lumpur, Petaling Jaya and Penang have way surpassed the affordability level of the average Malaysians and more proactive measures are needed to extend a helping hand to them.

The latest statistics contained in the Property Market Report 2011 by the National Property Information Centre showed that average house prices climbed 6.6% in the fourth quarter of 2011.

Deputy Finance Minister Datuk Donald Lim rightly pointed out that the Government was worried of the emergence of a real estate bubble and did not want a United States sub-prime mortgage crisis in Malaysia.

The situation has to be addressed urgently before the high property prices cause more hardship to the people. Any further hike in housing prices will aggravate the climbing cost of living and derail efforts to promote home ownership.

Bank Negara's measures to rein in rising property prices and deter speculative property buying, including a maximum loan-to-value ratio of 70% for third-time mortgage borrowers and using net personal income calculation instead of gross income to decide on the quantum of loan approved, are showing results.

Banks should be prudent in their lending practices and if the speculative buying persist, tighter lending measures, like a further lowering of the LVR for multiple mortgage borrowers, should be implemented to nip property speculation in the bud.

However, first-time house buyers should be made a priority sector and they should be granted full financing if they met the lending conditions.

To ensure the home ownership programme will be a success, the efforts have to be undertaken holistically with the ultimate objective of making it easy and affordable for all households to own at least a home each.

The programme needs a masterplan that looks into the overall supply and demand scenario in the property market, and should not be undertaken on a piecemeal basis.

Given the importance of the family unit to the well-being of the country's social fabric, ensuring that every household has at least a house of their own will have many spillover benefits for the overall good of the country.

To address the supply side, sufficient land should be allocated to be developed into affordable housing townships that offer well-planned housing units priced between RM200,000 and RM400,000.

Instead of having different authorities or agencies, a dedicated umbrella body in the like of a National Housing Board should be responsible for all the Government's affordable housing initiatives to plan and execute projects for the 1Malaysia Housing Scheme and My First Home Scheme.

A closer scrutiny on the demand side points to the fact that besides strong buying interest by local purchasers, there has been an influx of foreign buyers, including from the Middle East and China, who have been snapping up local properties, thus contributing to the sharp spike in prices.

The situation is further compounded by the market cooling measures undertaken by governments in Singapore, China and Hong Kong to stem price hikes in their property markets.

Besides making it difficult and costly for their own nationals to buy multiple properties, strict conditions have been meted out on foreign buyers.

Last December, Singapore imposed a 10% stamp duty on foreign buyers to control the high number of foreign purchases.

The aim is to prevent property prices from boiling over which may lead to mayhem in the market should a property bubble happen.

Having seen the effect of the spiralling property prices in raising the cost of living,

I believe the holistic measures to contain property prices in our country should include some form of curbs on purchases by foreigners.

In view of the strong interest for landed housing units and sharp price hikes in this product segment, foreign purchasers should be disallowed from buying landed residential properties, except the super high-end ones.

Like in Singapore, landed housing projects, except the super high-end projects on Sentosa island, is made a critical sector that is only exclusive to the local buyers.

Foreigners should only be allowed to buy high-rise properties that are priced at more than RM1mil and multi million ringgit landed housing.

With these measures, the foreigners with their higher foreign exchange advantage will not be competing with the locals in the high demand landed housing sector which is one of the reasons driving prices to the current high levels today.

Deputy news editor Angie Ng subscribes to the age-old wisdom of “charity begins at home” and hopes all Malaysians will live as a big happy and supportive family.

By The Star (by Angie Ng)

Tambun Indah developing five Penang projects valued at RM571m

GEORGE TOWN: Tambun Indah Land Bhd is undertaking five development projects in Penang with a combined gross development value (GDV) of around RM571.5mil this year.

The projects are the RM131.3mil Pearl Indah and RM180mil Pearl Residence 1 in Simpang Ampat; RM39.3mil BM Residence in Bukit Mertajam; RM41mil Carissa Villas in Bagan Lallang; and RM180mil Straits Garden in Jelutong on the island.

Group managing director Teh Kiak Seng told StarBizWeek after an EGM that with the exception of the Straits Garden project in Jelutong that would be launched in the third quarter of 2012, the construction for the other four projects had started.

“Both Pearl Indah and Pearl Residence 1 are in the RM2bil Pearl City project, where we plan to build some 5,600 landed residential properties and 1,400 commercial properties.

“The first two phases of the Pearl City project the Pearl Garden and Pearl Villas are 90% and 80% sold respectively. Some 41% and 28% of the purchasers for Pearl Villas and Pearl Garden respectively are from the island,” he said.

The funding of the projects would be through the issuance of 88.4 million rights issues of new shares that would raise RM44.2mil for the group.

The two-for-five rights issues, which were approved at the EGM and expected to be completed in June, would effectively increase Tambun Indah's share capital to RM154.7mil, comprising 309.4 million shares.

“We have a landbank of 625 acres, which has a GDV of RM2.8bil. We are constantly on the lookout for more land in Penang. We are also exploring land outside of Penang,” he said.

Teh said the Penang property market was expected to chart commendable growth in the coming years, as it had been identified as one of the world's top 10 most dynamic industrial clusters and contributed 28% or RM17.7bil of Malaysia's total foreign direct investment in 2010-2011.

“In addition, the Malaysia My Second Home initiatives over the past years have resulted in a spill-over benefit for Penang's property market,” he said.

“As for properties in Seberang Prai, we believe the prices will be well sustained, due to the completion of the second link in 2013, which will have a positive effect on properties in Batu Kawan and Simpang Ampat.”

The rising prices on the island were prompting many young families to explore properties in Seberang Prai for quality lifestyle at affordable prices, Teh added.

By The Star

Ireka to complete hospital project in Vietnam by year-end

KUALA LUMPUR: The City International Hospital managed by Ireka Corp Bhd unit, Ireka Development Management Sdn Bhd, is slated to complete by the end of 2012.

“Along with economic growth, social healthcare is one of the major concerns in Vietnam.

“Given the increasing demand for quality overseas medical treatment, the park will be the first integrated healthcare development in Vietnam which will provide a comprehensive healthcare environment from facilities, hi-tech medical equipment to professional medical staff,” said president and chief executive officer Lai Voon Hon in a statement yesterday.

The hospital is the first general hospital to be completed within the “Medical City” located in Vietnam's largest medical hub, the International Hi-Tech Healthcare Park. The hospital is developed by Hoa Lam-Shangri-La Healthcare Ltd Liability Company.

It will eventually have other facilities such as laboratories, medical suites, a staff residential area, medical exhibition centre & shopping mall, service apartments, international schools and a residents' clubhouse.

Ireka's associate company, Aseana Properties Ltd, holds a majority stake in Hoa Lam-Shangri-La Healthcare Ltd Liability Company.

Currently, the hospital is more than 50% completed, with the bulk of the brick works completed.

Plaster works, mechanical and electrical services and the selection of architectural finishes are ongoing, whilst the selection and purchase of major medical equipment for the hospital were completed recently.

By Bernama