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Wednesday, September 5, 2012

Resilient property market expected

Developers optimistic of H2 but not sure about 2013

PETALING JAYA: The Real Estate and Housing Developers' Association Malaysia (Rehda) expects the housing and property market to plateau in the second half of 2012, but will remain resilient.

According to a survey Rehda conducted, property developers are optimistic of the second half and more respondents plan to launch projects.

The survey is based on a sample size of 180 companies, out of the 1,003 Rehda members.

Property developers are less optimistic of the first half of 2013 due to certain factors, including the outcomes of the 13th general elections and Budget 2013. The current global economic situation also contributes some uncertainty.

The results of the survey show that the property market in the first half of this year is still driven by the domestic market, despite beliefs that foreigners are buying more local properties. Last year, only 2% of total properties transacted were from foreigners.

Rehda president Datuk Seri Michael Yam said the Government should review building less low-cost homes. In 2011, 1.04 million units out if the total 4.51 million total residential stock were low-cost homes.

“As Malaysia moves towards striving to reach developed nation status by 2020, the Government should review if there is a need for so many low-cost homes,” Yam said.

Rehda national treasurer N.K. Tong said: “Perhaps the Government should consider implementing a limitation to low-cost homes like what Singapore has done with the HDB (Housing and Development Board) flats.”

HDB flat owners-to-be are not allowed to own any other properties in Singapore, or in any other part of the world. Tong said if such a plan was implemented in Malaysia, there would be less abuse of these properties, unfairness caused to developers and to a larger extent the people.

“I'm more concerned with the supply factor. It is moving downwards due to the shortage of prime land and rising building costs. Come 2015, if the Government is serious about implementing the build-and-sell plan, the supply (of houses) will reduce by about 80%,” Rehda past president Datuk Ng Seing Liong said.

His main concern if the plan was implemented was that property prices would continue to trend upwards due to the supply and demand equilibrium.

“In terms of the property sector, we must look at a long-term scenario,” he said in regards to future plan implementations.

Rehda public relations, communications and publication committee member Che King Tow said the Government usually owned the best-located properties.

He said it would benefit the public if the Government could consider releasing its land in high-density areas such as Jalan Duta and Selangor Golf Course in the upcoming budget.

“Those are suitable prime land for mass housing. They can cut down on ownership of cars, and use public transport instead,” he said.

Yam also urged the Government to establish an automatic-release mechanism to enable the release of unsold bumiputera units. Although Rehda has not complained about allocating a portion for bumiputera buyers, the unsold properties are affecting the developers.

“More projects are having unreleased unsold bumiputera lots which impact the developer's cash flow. An auto-release mechanism should be put in place to automatically release the unsold properties after a stipulated time to prevent this,” he said.

By The Star

Property developers optimistic of improved second half

REHDA'S OUTLOOK: There may be a bit of cautiouness in early 2013

DEVELOPERS are upbeat the local property industry will do better in the second half of this year due to positive market sentiments, but cautioned of setbacks in the early part of 2013.

"There is a bit of cautiousness out there because of negative news like a possible property bubble and concern over the general election. All these will affect the market in the first half of 2013, but minimally.

"If there is any bubble, it will only happen in one or two hotspots in Kuala Lumpur," said Real Estate and Housing Developers' Association of Malaysia (Rehda) president Datuk Seri Michael K.C. Yam.

Yam said another myth faced by the property industry is complaints of houses being overpriced because of higher foreign ownership and speculation.

But Yam said only less than two per cent of residential properties here are owned by foreigners, majority of which are located in the Kuala Lumpur city centre.

Yam said properties have become more expensive because of the hike in price of building materials and increasing labour and land cost.

He said Rehda is, in fact, encouraging foreign ownership of high-end properties in Malaysia to add to the vibrancy here.

"We should not worry as foreign buyers are not tampering the bread and butter properties here. There are ceiling prices where they can only buy properties of a certain range," Yam added.

Meanwhile, according to a recent property industry survey by Rehda, about 56 per cent of the 180 companies which has responded said they will launch new projects in the second half of this year compared with 46 per cent in the first six months of 2012.

More than half of the respondents said they expect their sales performance to be above 40 per cent for the next six months, from bigger scale projects.

The survey shows that majority of the developers will price their properties between RM250,000 and RM500,000, comprising a mix of single- and double-storey terrace houses and service apartments.

The market will be driven by domestic buyers, mainly for their own use.

"The loan tightening rule by Bank Negara Malaysia has left out an increasing number of potential buyers facing difficulties in obtaining loans. We hope the government will relax some rules," Yam said.

By Business Times

Call for review of low-cost home quota

PETALING JAYA: Property developers are asking the government to review the 30-year old low-cost housing quota and allow them to build affordable houses on public land.

The are also proposing for an auto release mechanism for unsold Bumiputera properties as it is affecting their cash flow.

Real Estate and Housing Developers' Association of Malaysia (Rehda) president Datuk Seri Michael K.C. Yam said developers are suffering as the houses built on subsidies are eating into their profit margins.

The government, in 1982, imposed the 30 per cent low-cost housing quota on private sector developers as a social obligation. Developers have been building low-, low-medium and medium-cost houses, at prices that have been maintained at between RM42,000 and RM99,000 each.

"The government should do research as to how many units are really required. We think there is more than enough low-cost houses here. We understand some are not even occupied, while others own two to three units that are on rental.

"It shows the lower income group have the purchasing power and can afford better homes. For the hardcore poor, we suggest the government take on the role to do social housing and let developers focus on building medium to high-end houses," Yam said at a media briefing here yesterday.

He said the country's housing stock as at end-2011 was around 4.5 million units, comprising 1.04 million low-cost houses. Bungalows and semi-detached homes accounted for 402,000 and 296,000 units respectively.

Rehda is also requesting the government to establish an auto release mechanism for unsold Bumiputera properties, where the unsold units can be sold to other buyers six months after a project receives Certificate of Fitness.

"If we continue to hold the Bumiputera units, the burden falls on the developer and is passed on to other buyers through higher property prices," he said.

Yam said Rehda has presented the idea to the Ministry of Finance as one of its proposals to be included in the 2013 Budget.

The annual Budget is scheduled to be tabled in Parliament by Prime Minister Datuk Seri Najib Razak on September 28.

Meanwhile, Malaysian Resources Corp Bhd director Che King Tow is suggesting that the government offer incentives to developers to build affordable houses.

"Since the government is giving incentives to foreign companies to come here, why not give developers some tax free incentives to build affordable houses on public land. Developers can build 150 to 200 units," Che said.

"The best located properties are usually government-owned. The government has prime land along Jalan Duta and in Sungai Buloh. These locations are good for mass affordable housing. It is a political decision but it matters a lot to us," he said.

By Business Times

BRDB in JV residential project, GDV of RM600m

KUALA LUMPUR: Bandar Raya Developments Bhd (BRDB) is teaming up with landowner Garuda Mega Sdn Bhd to undertake a residential development project in Sungai Long, Selangor.

BRDB said on Wednesday its unit Raintree Forest Sdn Bhd had inked a JV agreement with Garuda Mega for the project with a gross development value of RM600mil.

The agreement is to build bungalows, semi detached houses and apartments on Garuda Mega's land, measuring 25.97ha. Phase one is targeted to be launched in the second quarter of 2014.

The landowner's entitlement would be 23% of the net development value and it could opt for either cash or units or both.

The directors of Garuda are Datuk Chee Hong Leong and Chee Chik Eng.

By The Star

EPF not selling stake in MRCB

DISPOSAL TALK QUASHED: Fund is holding on to the (42.2pc) equity for now, says an official

The Employees Provident Fund (EPF) has dismissed talk that it is planning to sell its entire stake in Malaysian Resources Corp Bhd (MRCB), a property and infrastructure developer.

"It is not true that we are selling our stake in MRCB. We are still holding it for now," an official familiar with the matter told Business Times.

Speculation has been rife that EPF is looking to dispose of its stake in MRCB, the reason being the company has not won any major government projects since a year ago.

MRCB is the developer of KL Sentral, an integrated transport hub with a gross development value of over RM8 billion. The project is slated to finish in 2016.

KL Sentral is the only current development for MRCB, which is 42.2 per cent owned by the EPF.

Analysts say MRCB will be in troubled waters if it does not win any job soon, given that the earnings from the project will be recognised in about three to four years.

The last big win for MRCB was in August 2011 when it won a RM1.33 billion contract for the Ampang light rail transit (LRT) extension project.

Business Times reported two months ago that MRCB is expected to win a RM1 billion job for the Sungai Buloh-Kajang MY Rapid Transit (MRT) line.

But project owner Mass Rapid Transit Corp Sdn Bhd (MRT Corp) said the award of the contract to build viaduct guideways between the Taman Mesra and Kajang stations is subject to government approval.

It was also reported that MRCB has emerged as the frontrunner to develop a prime 8.09ha site on Jalan Bangsar in Kuala Lumpur where the Unilever headquarters and factory once sat.

However, an MRCB official said it will not be landing the job, declining to elaborate.

"We believe there is something going on in MRCB - from its chief resigning to not winning major jobs. The only good thing is that the government is taking over its expressway project," the analysts said.

MRCB chief executive officer Datuk Mohamed Razeek Hussain tendered his resignation in July. MRCB has yet to announce the appointment of a new CEO.

Last Thursday, the government said it will take over the Eastern Dispersal Link built by MRCB at a cost of RM1.4 billion, to settle the issue on toll charges.

MRCB's share price closed unchanged yesterday at RM1.75, with 4.48 million shares traded. The stock has been trading between RM1.60 and RM1.79 the past one month.

"We think MRCB should move into the private sector to survive, whether or not the EPF sells its stake in the company," said one analyst.

The company is studying a proposal by private developer Nusa Gapurna Development Sdn Bhd to buy into a project the latter owns, in exchange for a 20 per cent stake in MRCB.

Nusa Gapurna's prime asset is the 16ha land behind PJ Hilton in Petaling Jaya, where the construction of PJ Sentral Garden City, a multi-billion ringgit project, will start next year.

By Business Times

EPF unit Kwasa Land invites partners to develop RRI land

KUALA LUMPUR: The Employees Provident Fund unit Kwasa Land Sdn Bhd will invite partners to develop the Rubber Research Institute (RRI) land in Sungai Buloh into a township.

Kwasa Land said on Wednesday, as the master developer, it would undertake the first step by conducting a pre-qualification exercise to get the right partners to undertake the Kwasa Damansara township.

The township project will cover 2,330 acres (943 ha) of prime land and Kwasa Land's emphasis is to ensure it obtains the "right developers with the required track record and expertise to undertake its massive parcels of mixed development projects".

Of the total land area of 3,155 acres, it said 2,330 acres was acquired by Kwasa Land for the proposed Kwasa Damansara development. Separately, the government has acquired 290 acres for the MRT while the Rubber Research Institute has retained 535 acres.

The township is a mix of residential, commercial, recreational, institutional and educational facilities which when ready, will serve a target population of 150,000.

The designated township is surrounded by a huge and matured Damansara suburb; served by no less than five traversing highways, and the setting up of two MRT stations that will make public transportation a breeze for those seeking accessibility and connectivity.

Of the total land area of 3,155 acres, 2,330 acres is acquired by Kwasa Land for the proposed Kwasa Damansara development. Separately, the government has acquired 290 acres for the MRT while the Rubber Research Institute has retained 535 acres.

Developers are invited to visit the Kwasa Land corporate website at to download the form for the Pre-Qualification exercise. The closing date for all submissions is noon, Sept 26, 2012.

By The Star

Wooing first-home buyers

FOR EASIER OWNERSHIP: MBSB calls for more perks such as stamp duty waiver and tax breaks

The government should introduce fiscal measures such as stamp duty waiver on first-home scheme and certain tax breaks for the developers in order to encourage more first-home buyers, says Malaysia Building Society Bhd (MBSB) chief.

"First-time house buyers are an important area, and the government should look at how to encourage first-time house owners.

"How you encourage developers to provide a certain portion of the scheme to be affordable for first-time house owners is also important," MBSB president and chief executive officer Datuk Ahmad Zaini Othman said after launching MBSB Cheeky Savings Club's "Over the Top" programme here yesterday.

MBSB expects to rope in 50,000 new Cheeky Savings accountholders in a year from about 16,000 presently.

The savings club targets young savers to open a savings account with MBSB, enjoy good returns and be part of a club membership that offers activities and benefits.

"With a minimum of RM50, our young customers can open an account at any of our 35 branches nationwide and earn 2.5 per cent profit rate per annum," Zaini said.

He said it is important to educate the next generation on savings from a very young age as the latest statistics shows that gross savings in Malaysia have decreased from its highest point of 40 per cent to the gross domestic product in 1998 to around 30 per cent in 2010. Besides, adolescents (between 10 and 19 years old) make up 19 per cent of the country's population.

MBSB, in collaboration with Island Talk Asia Sdn Bhd, has also developed a reality television programme called "Over The Top".

"Over the Top is a one-of-a-kind children reality television show which aims to challenge a contestant's physical strengths, money management skills and ability to make important decisions in urgent situations," said Ahmad Zaini during the launch.

Chief executive officer and acting executive producer of Island Talk Asia Sasidharan Chandran said "Over The Top" was conceptualised based on MBSB Cheeky Savings Club's aspiration to foster a healthy financial future among the youths.

The grand prize for the winning team will be an all-expenses paid trip to Warner Bros Movie World in Gold Coast, Australia, as well as RM30,000 prize money (RM10,000 per team member deposited into their MBSB Cheeky Savings Account).

By Business Times

MBSB proposes measures

PETALING JAYA: There are measures that the Government can implement such as waiving stamp duty for first home scheme and certain income tax for developers from that portfolio, says Malaysia Building Society Bhd (MBSB) president and chief executive officer Datuk Ahmad Zaini Othman.

“First-time house buyers are an important area and the Government should look at how to encourage first-time houseowners.

“How you encourage developers to provide a certain portion of the scheme to be affordable for first-time houseowners is also important,” he said after launching MBSB Cheeky Savings Club’s “Over the Top”, a reality TV programme for children.

MBSB Cheeky Savings Club, launched in April 2011, aims to increase its account holders to 50,000 in one year from close to 20,000 to-date.

By Bernama

Battersea site bought for RM2bil

Two of the four iconic smokestacks of the former Battersea Power Station, which is to be redeveloped into retail units and housing by a Malaysian consortium, are seen in London, September 5, 2012. REUTERS

LONDON: The Malaysian consortium comprising property developers S P Setia Bhd, Sime Darby Bhd and the Employees Provident Fund becomes the official owner of the 39.5-acre Battersea Power Station site after paying £400mil (RM1.99bil) on Tuesday with a £300mil bridging loan from CIMB, said S P Setia president and CEO Tan Sri Liew Kee Sin.

The remaining £100mil was paid as per the equity stake of each of the three consortium partners, with both S P Setia and Sime Darby forking out 40% each and EPF the remaining 20%.

This will be the first and the largest property development for both Sime Darby and S P Setia in Britain with a gross development value of £8bil (RM39.8bil).

The completion of the purchase saw the boards of Sime Darby and S P Setia and a team from EPF descending on London along with analysts and the press.

Minister in the Prime Minister's Department Datuk Seri Idris Jala and London mayor Boris Johnson gave speeches to mark the official cocktail held on Wednesday evening.

At an earlier press interview on Tuesday morning British time, Liew said “although the consortium may not have the experience in this side of the world, we have the British technical team to see to it while we provide the concept and the funding.”

A newly-minted British company Battersea Power Station Development Co Ltd has been formed “a few days ago” with a logo of the Battersea Power Station and its four chimneys. This team from Battersea Power Station Development Co comprises the technical, management and financial team from those previously involved in the Battersea Power Station when it was owned by Irish firm Real Estate Opportunities (REO) before the site was placed under administration last year.

The newly-formed company's chief executive officer Robert Tincknell, who has been employed by REO for the last 10 years will manage the project.

“Now that the project is fully paid, the next step is to work out the financing structure, whether it will be in Sterling pounds, whether it will be issuing of sukuk and seeking the best rates among banks,” said Liew.

The financing team headed by Battersea Power Station Development Co chief financial officer Simon Murphy and those in Kuala Lumpur “will find the best structure going forward for the long term,” said Liew.

“We will enhance the value of the site,” he said.

What was important at this juncture was that the site was purchased clean of liabilities and that the site already comes with an approved planning consent with the master plan being done by renowned award-winning architect Rafael Vinoly.

That master plan is to feature 3,400 new homes, 160,000 sq m of new office space, 56,000 sq m of retail and 9 ha of public parks and spaces.

Besides the long-term financing structure, the next step is to plan the development of phase one.

This will comprise the development of the residential units next to the power station and the refurbishment of the power station itself.

The units will be officially launched next year with construction to begin in April.

On comments that the deal hinges on contributions to British infrastructures, Liew said that other than the purchase price of £400mil, the consortium had to contribute £211mil over the duration of the 10- to 15-year project for infrastructure works.

“This is to be paid on a staggered basis as we go along,” he said, The first portion of £38mil will be paid in two equal portions of £19mil each in 2014 and 2015.

A major portion of £203mil will be for the extension of the Northern Lines, which involves the development of two stations with one of them at the power station site itself and the remaining £8mil for other infrastructural works.

He said this contribution towards infrastructure works was not due only from the Malaysian consortium but from other developers whose projects would benefit from the extension of the Northern Line calculated at a certain rate in proportion to the land they own and planned for development.

Liew said the fact that planning consent was already given by the British authorities and that there were already plans to extend the Northern Line close to the power station by the local authorities were huge plus factors.

Other features which add premium to the site are the nearby 200-acre Battersea Park, River Thames frontage and Chelsea and Sloan Square located on the other side of the Chelsea Bridge.

The site is also part of Vauxhall Nine Elms' largest urban regeneration project in central London.

Sime Darby president and group chief executive Datuk Mohd Bakke Salleh said the support given by the British government was tremendous.

“The British are very keen to develop and regenerate the site and this support will work for all parties concerned,” he said.

On who would be the target purchasers, Bakke said the project would be sold to everybody.

“London has a huge global market. The fact that the eurozone is facing some challenges at the moment has also enhanced the safe haven aspect of British properties,” he said.

By The Star