Malaysia Property News is a free resource website sharing Daily Property News & information about Property in Malaysia, which related to, Property Market, Property Investment, Commercial Property , Hot Properties Malaysia, Real Estate, Retail Shop, Business Park, Condominium Malaysia, Terraces & Apartment Malaysia, Houses, Residence, Resort and many more.

Wednesday, August 29, 2012

No property bubble in M'sia; Sunway chairman says local prices affordable

Great stuff: (From left) Land & General Bhd MD Low Gay Teck, PKNS GM Othman Omar, Asli CEO Tan Sri Michael Yeoh, Housing and Local Government Minister Datuk Seri Chor Chee Heung and Cheah looking at a project model.

PETALING JAYA: The local property industry continues to face many obstacles despite signs of steady economic growth, which was announced recently for the second quarter and the first-half, underpinned among other factors by a jump in construction activity as well as healthy consumption.

Among the challenges the industry faces, according to Asian Strategy & Leadership Institute chairman Tan Sri Jeffrey Cheah, is the market perception that the industry is heading towards a property bubble, which is not backed by reasonable evidence.

“As a developer I'm convinced as of now that we shall not be experiencing any such property bubble, as our property prices are still affordable compared with some of our neighbouring cities in the region,” Cheah, also Sunway Bhd chairman, said at an address during the launch of the 15th National Housing and Property Summit.

He cited Bank Negara's second-quarter gross domestic product data which indicated a 5.4% year-on-year growth despite external challenges as signs that private consumption remained steady. Central bank data showed the construction sector, which includes housing and civil infrastructure activity, surging 22%.

Cheah said it was also untrue that property prices were being driven up due to foreigners' purchases in the country as transactions by foreigners had historically hovered at 3% compared with 20% in Singapore.

He added that 54% of total residential transactions in 2011 were below the RM150,000 range.

Cheah said the other challenge the industry faced was the lack of skilled workers, which caused delays in the completion of projects. He said it was important for the Construction Industry Development Board to continue engaging with both industry players and non-governmental organisations to address this issue in order to improve the quality of finished projects.

Cheah said there needed to be combined efforts by the Govern-ment and industry players to address these issues as well as come up with strategies to overcome them.

He urged the Government not to take “too drastic measures” to cool the property market as this “can kill market sentiment and slow supply of housing further.”

“The Government should not in-crease the real property gains tax. I also hope it will not further restrict lending to the property sector or introduce new measures that will make it more difficult for house buyers to purchase properties,” Cheah said.

He also stressed the sustainability of the industry, which would be important to ensure continued buoyant economic growth and resilience.

Meanwhile, Housing and Local Government Minister Datuk Seri Chor Chee Heung said new fiscal policies might be introduced in Budget 2013, as current measures taken to control house prices had not been very effective.

Despite the Government's measures to curb the rise in house prices, such as the increase in RPGT and a restriction on loan-to-value ratios on third properties and above, there were feelings that the Government has not done enough.

“I will be recommending a review of fiscal policies in the next budget,” Chor said.

Cheah's remarks on the property bubble continue to divide analysts who closely follow the industry with Kenanga Investment Bank research head Chan Ken Yew pointing out that a bubble might exist to a certain extant as prices continued to be above what younger workers were able to afford.

“This is because their salary can't catch up with the current house prices. This problem is not only evident in Malaysia but also in Hong Kong and Singapore,” he said.

Increasing the Employees Provident Fund's (EPF) withdrawal rate to be utilised for the down payment of a member's first home could solve this problem, he added. Currently, the EPF allows for a 30% withdrawal from Account 2. “If the Government allows for a 50% withdrawal, this would help to lower the burden,” he said.

By The Star

Property industry likely to consolidate via M&As, says IOI

PETALING JAYA: IOI Group's chief says the property development landscape in Malaysia will undergo massive changes and there is a high possibility of the industry consolidating through mergers and acquisitions (M&A).

IOI Group executive director Datuk Lee Yeow Chor says there will be a major shift to commercial development and more retirement and nursing homes, private community centres, and performing arts theatres will come on stream.

"Property development will become more and more a property redevelopment business with a lot of old buildings being replaced with new towers. There will be a lot more old buildings undergoing refurbishment.

"We have seen army camps being converted to housing projects and schools turning to malls like The Pavilion," he said yesterday at the 15th National Housing and Property Summit 2012.

Lee said the embassies and high commissions in Kuala Lumpur are also expected to be demolished to make way for new developments, creating more vibrancy in the market place.

One such case is the British High Commission, which will be demolished to make room for a new urban development.

"Overseas, we have seen the Wharf around River Thames in London being converted into an integrated development. Now there is the SP Setia-Sime Darby consortium planning to redevelop the Battersea Power Station in London.

"IOI is also converting an army camp in Singapore into an integrated development known as the South Beach Centre. I believe this will be the way forward for developers worldwide," Lee said.

Meanwhile, on the consolidation of the property sector here, Lee expects some developers to fade away and be replaced with smaller players who will have big ideas through M&A.

The M&A trend started in 2009 with the merger of Pelangi Sdn Bhd, Petaling Garden Sdn Bhd and Island & Peninsular Sdn Bhd to create I&P Group.

In 2010, UEM Land Bhd acquired Sunrise Bhd, creating the biggest property group in Malaysia with a market capitalisation of over RM9 billion.

By Business Times

Confidence in IGB REIT

Tight price range for institutional tranche of IPO is good indication

KUALA LUMPUR: IGB Real Estate Investment Trust has set a tight price range for the institutional tranche of its up to US$266mil (RM823mil) initial public offering (IPO), according to a term sheet seen by Reuters, indicating confidence in demand for the offer.

The IPO, potentially the fourth largest in the South-East Asian country this year, will be offered to institutions at a price range of RM1.15 to RM1.25 per unit, the term sheet showed. IGB REIT launched its retail offer on Monday at a maximum price of RM1.25 per unit.

A wide indicative price range for an IPO would show that the sponsors are testing the strength of demand for the offering, while a narrow range shows they are reasonably certain about the take-up.

The unit of property firm IGB Corp Bhd is offering up to 670 million units in the IPO, comprising 469 million units for sale to institutional investors and another 201 million to employees and the public. Listing is set for Sept 21.

The bookbuilding range translates to a forecast 2013 yield of 5.4% to 5.8%, according to the term sheet. The book opened yesterday and closes no later than Sept 6.

Based on the top end of the IPO price, IGB REIT would have a post-IPO market capitalisation of RM4.25bil, the largest in Malaysia ahead of Pavilion Real Estate Investment Trust's RM4.05bil.

The property trust, which owns two Kuala Lumpur shopping malls the Mid Valley Megamall and the Gardens Mall expects to use the IPO proceeds for future expansion.

It has hired CIMB Investment Bank and Hong Leong Investment Bank as the principal advisers and joint managing underwriters for the IPO.

CIMB, Credit Suisse and Hong Leong are the joint global coordinators, while CIMB, Citigroup, Credit Suisse, DBS, Deutsche Bank, Goldman Sachs, Hong Leong, HSBC, JPMorgan and Maybank are the joint book runners. Joint underwriters are AmInvestment, CIMB, Hong Leong and Maybank.

By Reuters