SunCity still bullish on India

PETALING JAYA: Sunway City Bhd (SunCity), which is launching the RM1.5bil Sunway Opus Grand Residency in Hyderabad in November, does not see the downturn in the Indian property market affecting its venture.

The 35-acre project is a joint venture with Opus Developers & Builders Pvt Ltd and will comprise 3,400 condominium units in five phases when completed.

HSBC Bank plc, in a report last month, said house prices could fall by 25% to 30% across most Indian cities due to high inflation and slower growth.

The Reserve Bank of India, in its quarterly monetary policy review, had hiked the repo rate, which is the rate it lends to banks, by 25 basis points to 9% on July 29 in an effort to curb inflation, which has risen over 12% in recent times.

SunCity chief financial officer Koong Wai Seng said the company had never been “aggressive” in the pricing of its project in India, which is targeted at professionals.

“We’re not building homes in Mumbai or New Delhi where the level of speculation is high.

“No doubt there will be some impact but in Hyderabad, property speculation is minimal. So we don’t envisage taking a hit on profits due to a slowdown,” he told StarBiz yesterday.

Koong said despite the prevailing market conditions, the two private launches done in March and May for Sunway Opus had seen a total take-up rate of 30%.

“While this is not an indicator because the show units are not up yet, we’re confident that the take-up rate will be higher when the show units are opened for viewing in November,” he said. Units are priced at an average RM280 per sq ft.

Meanwhile, Koong said the RM380mil joint venture with MAK Projects Pvt Ltd for the development of 14 acres into a condominium project in Hyderabad was still at the design stage.

The project would feature units with an average built-up of 1,500 sq ft and with an average selling price of RM208 per sq ft.

By The Star (by Fintan Ng)

China may set up real estate investment trusts

BEIJING: China may introduce property trusts this year, giving developers a much needed new source of funding, according to a top industry association official who believes Beijing is easing its tough stance as the property market cools.

The move could come as part of a government change of tack to ease tight monetary policies, many of which have been aimed at the property industry, according to Nie Meisheng, president of the China Real Estate Chamber of Commerce.

Beijing intensified a campaign late last year to clamp down on bank loans to the property sector, asking for higher down payments from homebuyers, as part of a wider effort to curb inflation and rein in runaway growth.

The steps hit home sales - down 50 per cent in Beijing, Shanghai and Shenzhen in July from a year earlier - and prices in some areas of Guangdong province have fallen 25 per cent.

Nie said the measures were aimed at cutting the industry's dependence on bank loans, which account for half of developers' funding, but added that Beijing was keen to ensure the property market did not collapse and hurt the broader economy.

"When one door closes, others will open," she said.

China has given the green light to big developers, such as China Vanke, Poly Real Estate and China Merchant to issue corporate bonds or new shares to replace loans coming due and to fund further expansion this year.

Setting up real estate investment trusts (REITs) - securities that pay rent from their property as dividends - will provide developers with a new avenue for funding, allowing them to effectively sell finished commercial buildings to investors.

"There will be some breakthrough by the end of this year," Nie said, referring to the introduction of REITs in China.

She said China's central bank was soliciting opinions from different government departments but declined to give a timeframe for any launch of REITs, or give any other details.

Many analysts believe property trusts will catch on in China because insurers are keen for stable investments to match their long-term liabilities, especially at a time when their stock investments have been hit hard by rocky markets.

By Reuters

JPMorgan eyes property financing in Japan

TOKYO: JPMorgan Chase & Co said it expects Japan's beleaguered property market to rebound and will use staff gained from its acquisition of Bear Stearns to develop its real estate financing business.

"There is a lot of interest in buying real estate right now both from domestic real estate investors and foreign investors," said Gregory Guyett, chief executive of JPMorgan Securities Japan in an interview.

"And those investors will look for financing. That's a business we think can be attractive."

JPMorgan gained some 80 employees in Tokyo when it took over troubled Bear Stearns in May, which has led it to expand its small real estate securitisation team to about 25 people.

The group, headed by a former Bear Sterns employee Rosario Antoci, may expand further depending on market developments.

In the wake of the credit crunch, a number of banks in Japan have tightened lending to small and mid-sized property firms, leading to a string of bankruptcies. But large firms have been relatively unaffected and some like Orix Corp have seen the downturn as an opportunity to go bargain hunting.

Guyett named Fortress Investment Group, Blackstone Group and Mitsubishi Estate Co Ltd as active investors in Japan.

JPMorgan has also been hiring aggressively to develop its commodities and other businesses, and anticipates overall headcount to increase by about five per cent over the next year.

"You will see us in the early part of next year with a number of senior hires," Guyett said.

Recent hires include Hiroki Kazekami from Goldman Sachs Group Inc as head of its global commodities division in Japan.

"Even though commodity prices will fluctuate up and down, it's a major business that our corporate customers and investor customers are interested in," he said.

It has hired former senior finance ministry official Yoshiaki Kaneko as a senior adviser to strengthen government and regulatory relationships, and Christopher J. LaFleur as head of government relations and corporate responsibility.

LaFleur once served as US Ambassador to Malaysia.

By Reuters

UK takes steps to boost property mart

LONDON: With the British economy forecast to slip into recession, Prime Minister Gordon Brown's government unveiled a raft of measures to perk up the sluggish housing market - and its own flagging fortunes on Tuesday.

The Treasury said homes worth up to STG175,000 (STG1 = RM6.13) would be exempted from property sales tax, or stamp duty, for a year.

The government also laid out steps to help first-time buyers and to help homeowners at risk of repossession.

By AFP

Properties in Subang Jaya to stay hot

PETALING JAYA: Subang Jaya will continue to command good demand for its properties, especially lifestyle products priced below RM250,000.

An artist's impression of First Subang

Titijaya Sdn Bhd director Chairmaine Lim Puay Fung in making this observation said this had been proven during the first day of the preview of the company’s The Studio @ First Subang (Northern Tower) in SS15, Subang Jaya, where 50 units were sold within a few hours.

The Southern Tower at First Subang was launched last year.

“Most of the purchasers are repeat buyers, a fact that we are most proud of,,” she told StarBiz.

“At the same time, we have a responsibility to these loyal followers, to ensure that our mutually beneficial partnership continues to flourish and prosper.”

The Studio consists of flexible studio office suites, with en suite baths. Units range from 472 to 954 sq ft.

Lim said sales had been good with 45% of The Studio in the Northern Tower sold although it had not been officially launched.

“We have also achieved 80% sales for Southern Tower. We only soft-launched it towards the end of June,” she said, adding that construction started last year.

“To-date we have completed the piling works and are commencing on the building structural works.”

The gross development value for each tower is about RM120mil. First Subang also consists of three levels of shopping podium, which is only for lease.

Lim said the purpose was to control the tenant mix and thus enhance the its value. The pricing is from RM410 per sq ft.

She said The Studio’s flexible studio office suites were suitable for those wanting to have a modern and fun working unit with security features.

“The project is due for completion in 2009 and we are ahead of schedule,” she said.

On the rising construction costs and inflation, she said there would definitely be an increase in property prices but this increase had not been fully transferred to the consumer.

“Hence, it is a good time to purchase (property) now, as most developers are subsidising the cost, and lowering their profit margin in the process.

“Moreover, investment in property is the best way to hedge against inflation. With inflation, construction costs are bound to go up further,” she said, adding that demand for properties depended very much on the product and location.

By The Star (by S.C.Cheah)

CapitaLand may delay REIT launch in Malaysia

SINGAPORE: CapitaLand Ltd, Southeast Asia's largest real estate player, may delay the launch of its retail property trust in Malaysia if market condition worsens over the next few months.

The Singapore-based group plans to launch a real estate investment trust (REIT), worth in excess of RM2 billion, by the end of this year or early next year.

It will include Sg Wang Plaza in Kuala Lumpur, Gurney Plaza in Penang and Mines Shopping Fair in Seri Kembangan, Selangor.

President and chief executive officer Liew Mun Leong said it will "pull the trigger" when the market permits.

"Real estate is a function of economic growth. Right now, we are targeting to get approval for the REIT by the fourth quarter of 2008. If the market weakens, we may delay the launch," he said at a media briefing in Singapore yesterday.

In addition, CapitaLand will invest the proceeds from the sale of its 30 per cent stake in Menara Citibank in Kuala Lumpur by buying more properties in Malaysia.

It may also build new malls and buildings, but Liew declined to say if the properties will be injected into the REIT later.

"We have asset allocation plan which is to invest now. So when we sell Menara Citibank, we will invest in new projects in Malaysia," he said.

Liew said CapitaLand will look for properties within its five strategic business units - residential; commercial; retail/financial; integrated leisure, entertainment and conventions; and The Ascott Group.

"When we build our retail portfolio and have promising returns, we will inject into the REIT. We will rejuvenate existing malls for higher yields so the REIT could absorb it," he said.

By New Straits Times (by Sharen Kaur)

CapitaLand to seize potential in real estate market

SINGAPORE: CapitaLand Ltd sees potential to expand its foothold in Malaysia’s real estate market in line with long-term plans to build its portfolio in the commercial and residential property sectors, group president and chief executive officer Liew Mun Leong said.


Liew Mun Leong

“Malaysia, which is expected to record a gross domestic product growth of 5% to 6% this year, offers good potential in both the residential and commercial property sectors.

“Through our equity stake in United Malayan Land Bhd, Quill Capita Management Sdn Bhd and Malaysia Commercial Development Fund (MCDF), we have exposure in both the residential and commercial property sectors,” Liew told Malay-sian journalists at CapitaLand’s head office yesterday.

CapitaLand is one of the largest foreign investors in Malaysia’s real estate market. Through its real estate private equity funds, Mezzo Capital Fund worth US$30.5mil and MCDF US$270mil, undertaken jointly with the Malayan Banking Bhd group, it is involved in real estate development projects in Kuala Lumpur and the Klang Valley.

Quill Capita Management, which manages the main board-listed Quill Capita Trust, is 40% owned by CapitaLand Financial Ltd through wholly owned unit CapitaLand RECM Pte Ltd, while Quill Resources Holding Sdn Bhd and Coast Capital Sdn Bhd each has a 30% stake.

In service residences, CapitaLand’s The Ascott Group owns and manages seven properties with a total of 814 units in Kuala Lumpur and Kuching.

The company plans to list its RM2bil real estate investment trust on Bursa Malaysia and hopes to receive the go-ahead from the authorities by the fourth quarter.

According to CapitaLand Retail Ltd and CapitaMall Trust Management Ltd chief executive officer Pua Seck Guan, CapitaLand is also looking to expand in Malaysia’s retail mall sector through asset acquisitions and new developments.

“We have created a strong franchise and asset management capability that will allow us to enlarge our presence in the retail malls sector in the regional and international markets.

“Malaysia’s relatively fragmented and untapped retail property sector offer much potential for CapitaLand to grow from our present three assets in Malaysia. We certainly want to grow our asset size to become one of the leading retail mall operators in Malaysia,” he said.

On the international front, Liew said CapitaLand had embarked on building integrated developments in gateway cities under the branded name Raffles City.

“We’d love to build more Raffles City integrated developments but the location must have heavy human traffic flow and a network of subways that ensures people movement.”

These integrated commercial projects incur high investment outlay or S$1bil each and the present gross development value of the six Raffles City products – four in China and one each in Singapore and Bahrain – is estimated at S$5bil.

By The Star (by Angie Ng)

CapitaLand plans integrated developments

SINGAPORE: CapitaLand Ltd plans to build integrated developments internationally, including in Malaysia, as the returns are higher.

In Malaysia, it plans to do this through its 21 per cent unit, United Malayan Land Bhd which has ample land, president and chief executive officer Liew Mun Leong said.

"Integrated development is a new idea which we are promoting. Not many countries have done such developments on large scale," he told Malaysian journalists in Singapore yesterday.

CapitaLand is currently developing six such projects comprising cover hotels, serviced apartments, retail and commercial buildings in Singapore, China and Bahrain under the "Raffles City" brand, worth a combined US$5 billion (RM17.1 billion).

Liew said it wants to build another Raffles City in gateway cities like Mumbai, India and Moscow, Russia, while not ruling out Malaysia.

"There is good demand for the properties if there is a suitable location, but there must be mass traffic flow of people as it involves huge investments," Liew said.

Meanwhile, Liew said CapitaLand hopes to meet its internal net profit and revenue target for its current financial year ending December 31 2008 through new product launches and sales from existing developments.

Last year, CapitaLand posted a net profit of S$2.8 billion (RM6.72 billion) on the back of S$3.8 billion (RM9.12 billion) revenue largely because of capital gain.

"It was a bumpy year last year. We were the best performing group on the Singapore Stock Exchange in terms of net profit. While we remain optimistic for 2008, it will be a tough year as the global economic is down," he said.

"Demand is there but whether profitability is, is another case. But because we have diversification into other markets, it mitigates the situation of rising cost, inflation and a gloomy economy," he added.

By New Straits Times

Brown unveils support plan for housing market

LONDON: Britain’s Prime Minister Gordon Brown yesterday cut an unpopular tax on home purchases as part of a package to boost the country’s slumping housing market and lift his flagging political fortunes.

Brown’s government said properties worth less than £175,000 would be exempt from the tax, known as stamp duty, for one year, up from a £125,000 threshold now.

The step was accompanied by a £1bil package to help first-time home buyers and people struggling to keep up with mortgage payments.

“The stamp-duty holiday may provide the domestic housing market with a marginal stimulus but we doubt it will have a major effect in getting the housing market moving again,” said Philip Shaw, chief economist at Investec.

The treasury said the rise in the threshold would cost it an additional £600mil and that half of home transactions would now be exempt from duty.

House prices in Britain are sliding and home repossession orders in England and Wales have risen to their highest level since the housing market crash of the early 1990s.

By Reuters

Ireka unit wins RM195m job

KUALA LUMPUR: Ireka Corp Bhd unit Ireka Engineering & Construction Sdn Bhd has secured a contract worth RM195mil from ICSD Ventures Sdn Bhd.

The contract is for the proposed construction of a 26-storey commercial building, including five-storey shopping complex, four-storey convention centre and 12-storey hotel in Sandakan, Sabah, on a design-and-build basis, the company said in a statement.

Works are expected to be completed on Nov 30, 2010.

By Bernama

New investment wave to hit Malaysia

Deals with overseas investors believed to be for land acquisitions in growth corridors



UP TO RM4 billion of foreign direct investment (FDI) is expected to flow into the country over the next six months as more investors see Malaysia as a good investment destination amid concern over a global economic slowdown.

Its transparent laws on land matters, wide use of the English language and value-for-money destination make the country attractive, an industry observer said.

Business Times understands that the inflow of FDI will come from the Middle East, South Korea, Hong Kong, China and Taiwan, and is for land acquisitions in the growth corridors, including the Klang Valley.

The deals are believed to be brokered by a local property firm with international interest.

"These new foreign investments could translate into a gross development value (GDV) exceeding RM15 billion," a source close to the deals told Business Times.

It is learnt that a Korean developer has acquired 0.4ha in Jalan Kia Peng, Kuala Lumpur, for RM2,500 per sq ft to build a luxury one-block residence for around RM1 billion.

"The land was acquired at a record price. The residences will be a stunning landmark within the Kuala Lumpur City Centre enclave and may break the record for prices of high-end products.

"The developer aims to sell the units to Koreans and locals," the source said.

The Iskandar Malaysia growth corridor in Johor, which has attracted RM33 billion in investments, or 70 per cent of the Johor state government's target of RM47 billion to date, is also experiencing a new wave of investments.

The source said that more investments were expected to come from the United Arab Emirates, Qatar and Bahrain as investors look for prime properties like condominiums and offices in south Johor and in KLCC and Mont' Kiara, Kuala Lumpur.

Companies from the Middle East - such as Kuwait Finance House, Aldar Properties, Mubadala Development Co, Millennium Development Co,Damac Properties and Limitless Dubai - are already investing in Iskandar Malaysia.

Sabah, which is experiencing a mini-boom after the launch of the Sabah Development Corridor earlier this year, is attracting investors from South Korea, Hong Kong and Taiwan.

Some RM500 million worth of investment is expected to be made by the first quarter of next year for resort and the broader property development," the source added.

By New Straits Times (by Sharen Kaur)

Mah Sing eyes more en-bloc sales for Southbay, Southgate

Mah Sing Group Bhd, a medium- to high-end property developer, says it is looking at more en-bloc sales opportunities for its Southbay City and Southgate commercial projects in Penang and Kuala Lumpur, respectively.


LEONG: GROUP is already in talks with interested parties from the Middle East, Singapore and other neighbouring countries.

"En-bloc sales provide good cashflow as well as good branding, so we do look forward to more en-bloc sales for our commercial projects," managing director Datuk Seri Leong Hoy Kum told Business Times in a recent interview.

Southbay City in Penang, which has a gross development value of RM911 million, is slated for launch next year.

The project is still under planning but is expected to be an integrated commercial hub comprising hotels, serviced residences, offices and restaurants.

"We can sell the offices en-bloc, even the serviced residences and hotel," Leong said.

Meanwhile, for the RM380 million Southgate project, the en-bloc portion comprises the corporate block with about 230,000 square feet and the Apex block with about 90,000 sq feet of net lettable space.

Southgate, located in Sungai Besi, is Mah Sing's third commercial project in Kuala Lumpur.

Leong said the group is already in talks with interested parties from the Middle East, Singapore and other neighbouring countries for en-bloc sales in Southgate.

He hopes to be able to conclude the sale of at least one block there before year-end.

"We have a good track record in our en-bloc sales as the investors are both local and foreign institutional investors. This speaks well of our design concept and our products," he remarked.

Besides en-bloc sales, Mah Sing has also been making good sales for its commercial projects on a strata basis, he said.

For Southgate, the group has launched three blocks on a strata basis - Vox, Vivo and Vertex - which offer office suites at an average of RM500 per sq ft and retails units at an average of RM1,000 per sq ft.

"We have closed close to RM108 million in sales since our initial launch in March till June. More than 80 per cent of Vivo and more than 50 per cent of Vertex have been taken up," he said.

Demolition works at the Southgate development site are nearly finished and the group expects to start on the earthworks soon.

Leong expects the development to be completed by 2011, as scheduled.

Mah Sing, which has a sales target of RM560 million for this year, had already achieved sales of RM263 million in the first six months from all its property launches.

For next year, Leong said, the group is targeting sales to increase by up to 20 per cent from the anticipated RM560 million this year.

By New Straits Times (by Adeline Paul Raja)

We know the property price too, say expats

GEORGE TOWN: “Don’t try to cheat us into paying higher price for a property simply because we are foreigners,” says Australian Pat Jones.

Pat and her husband, Alan, who are currently living in Penang under the Malaysia My Second Home (MM2H) programme, said real estate agents tended to sell more expensively to foreigners.

From left: Pat and Alan Jones, 65 and 66 respectively, enjoying their cuppa during their free time in Gurney Plaza, Penang, recently

“We’re not stupid and we did our research for market price before deciding on buying a property.

“There are several occasions where I’ve asked my local friends to check out property prices for us but once the owner found out that we are the actual buyer, they immediately try to raise the price. So we just walked away,” Pat, 65, said.

The couple, currently living in a restored pre-war house in Muntri Street, said many people tried to “sell” apartments or condominiums to them but it was not what they wanted.

“We are here for what we don’t have in our country, such as the culture, heritage and these beautifully structured houses,” she said.

The couple had visited other places in the country but had decided to settle down on the island as they found it to be different from other states.

“There are never-ending cultural activities in Penang. Now that the Hungry Ghost Festival is over, the Nine Emperor Gods festival is next and then the many new years, Thaipusam and so on. We just love them all!” she said.

During their free time, they would provide advice regarding MM2H to interested party as well as help property owners restore their pre-war houses by giving advice.

Another Australian, Andrew Faron, 62, who is currently living in Penang under the MM2H programme, said he preferred Penang because of its people and its heritage listing.

“When I first moved here, George Town was not listed yet but I’ve always been intrigued by its historical sites.

“Now I’ve lived in Penang for a year under the programme and I just feel so privileged to be here. I didn’t know anyone when I first got here but I’ve made so many local friends,” he said.

Faron would read and visit his friends during his free time.

“And I eat out quite a lot too. I cook half of the time but other times I’m tempted to try out new restaurants,” he said, adding that his favourite was nyonya food.

He related his experience of obtaining a house when he was first in Penang. He said he was shocked to find out that he had to assemble the kitchen, bathroom, living room and bedroom himself.

“This is very different from Australia as everything is made ready for you to move in and live while over here it’s either you buy an old house and renovate it or a new one that you have to put everything in yourself,” he said.

Barbara Janssen, 63, from Germany, who had been living in Penang for three years under the MM2H programme, found that the locals were very helpful, one thing that she never expected.

“I’ve never seen so many smiles and it’s the people that has made me chose this place as my retirement home,” she said.

Janssen said she fell in love with the island more than 10 years ago during her first visit.

“I really enjoy the lifestyle here. People are friendly and the food is delicious too. What better place to be other than here in Penang?” she said, adding that she was able to visit her mother who currently lived in Indonesia.

She sold her apartment and is living in a rented house in Tanjung Bungah, as the former did not allow her to keep pets.

She also said it took a longer time to buy a property here than in Germany.

“I remember I had to wait seven months for all the paper work to clear while it only took a week back home (Germany),” she said.

By The Star (by Winnie Yeoh)

Mideast's Damac mulls mega resort venture

DAMAC Properties LLC, the largest private property developer in the Middle East, is considering building a multi-billion-ringgit integrated resort development in the East Coast Economic Region (ECER), sources said.

It is understood that Damac is in discussions with the ECER implementation authority for approval of the plan.

"It has expressed interest to further invest in Malaysia and has indicated its intention to move into the ECER," a source familiar with the matter said.

If the deal were to materialise, it would be Damac's second investment in the country after the one in Iskandar Malaysia, Johor, where it is pumping RM397 million to develop commercial and residential properties and a private marina.

The ECER, managed by state-owned Petroliam Nasional Bhd, encompasses Pahang, Kelantan and Terengganu. It is associated with oil, gas and petrochemicals; tourism; manufacturing; agriculture; and education.

It is also learnt that the ECER has attracted Chinese investors who want to build resorts because of the region's proximity to South China.

"There is a Chinese group which wants to cultivate about 10,000ha of padi in the ECER, and is currently in discussions with the implementation authority," the source said.

The development period for the ECER will stretch till 2020. Total investment planned is estimated at RM112 billion.

Under the master plan, 227 projects will be implemented. Most will come from the federal government (39 per cent), followed by private finance initiatives (27 per cent), private sector (20 per cent) and government-linked companies (14 per cent).

By New Straits Times (by Sharen Kaur)

Four Seasons project set for early 2009 launch

Venus Assets Sdn Bhd, a firm controlled by Singapore property tycoon Ong Beng Seng, is set to launch the Four Seasons Hotel and Condominium project in Kuala Lumpur worth over RM2 billion by early next year.

The hotel rooms and condominium units will be contained in a 60-storey building, which is being upgraded to 65 floors, pending approval from Kuala Lumpur City Hall.

The building will be constructed on a 1.O4ha site between Menara Maxis and Wisma Central, which used to house an open air carpark.

Venus Assets had acquired the land from Intan Sdn Bhd, a privately-held company controlled by the family of the late billionaire Tan Sri Khoo Teck Puat, for RM90 million in cash in October 2003.

Based on an earlier plan, the Four Seasons Hotel with 60 floors was to be developed jointly with KLCC Holdings Bhd on a 0.64ha site adjacent to Menara Maxis owned by the latter, while the 1.O4ha site owned by Venus Assets was reserved for a 30-storey serviced apartment block.

But the plan was aborted last year due to unforeseen circumstances, sources said.

Venus Assets has completed piling works on the 1.O4ha site it owns to prepare for the development based on new plans submitted to City Hall.


NEW LANDMARK:Syed Ysof and the Sultan of Selangor have interest in the RM2 billion project.

The project, in which Tan Sri Syed Yusof Tun Syed Nasir and the Sultan of Selangor, Sultan Sharafuddin Idris Shah, have interest, is designed by Connecticut’s Pickard Chilton Architects Inc.

It will feature 240 hotel rooms, 150 condominium units, six levels for parking and four retail floors, developed over four years or by mid-2013.

The project is seen as the crème de la crème and will set a new benchmark price in the city.

“The condominium units may be pegged from around RM3,000 per sq ft (psf) while the hotel rooms will cost more than RM750 a night, making the development the most expensive within the Kuala Lumpur City Centre (KLCC) enclave,” the source said.

“Looking at projects in Kuala Lumpur where transaction prices have doubled since the launch, Venus Assets is confident of sales and is targeting buyers from around the world,” the source added.

Kuala Lumpur’s current most expensive project is The Binjai by KLCC Holdings, which sits along the intersection of Persiaran KLCC and Jalan Binjai.

The indicative selling price is believed to be around RM2,800 to RM3,000 per sq ft.

Troika, a project by Bandar Raya Development Bhd, located at Jalan Binjai, has seen transaction price exceeding RM2,500 per sq ft, from its launch price of RM1,000 per sq ft.

Prices of Datuk Chua Ma Yu’s One KL, launched in 2005 at about RM1,000 per sq ft, have also almost doubled.

By New Straits Times (by Sharen Kaur)

Rekindling Penang’s appeal

From left: MAS district manager (northern region) Wan Mohd Ebrahem; Ideal Property Intelligence Sdn Bhd CEO Datuk Alex Ooi; KPMG Public Accountants Sdn Bhd partner Ooi Kok Seng; Tropical Resort Lifestyle MD Ishihara Shotaro; Joint Business Council Malaysia chairman Datuk Haji Faudzi Naim; Farlim Group Bhd executive director Ng Bock Tye; Star Business deputy news editor Angie Ng; Henry Butcher Malaysia (Penang) director Dr Teoh Poh Huat; Penang Development Corp GM Datuk Rosli Jaafar; Invest-in-Penang Bhd board of director Datuk Wong Siew Hai; Zaid Ibrahim & Co senior associate Kho Kheng Kia; Bda Architects Sdn Bhd chairman Syed Ahmad Fauzi; and Asian Public Intellectuals senior fellow Dr. Lim Mah Hui.

Starbiz: What are the strategies that can be employed to make Penang a destination of choice for second home and property investment?

Ishihara Shotaro: The developers in Penang should really look into building apartments with built-up areas ranging between 900 and 1,300 sq ft that come with two bedrooms, priced between RM400,000 and RM600,000.

The Japanese buying properties in Penang are usually retired old couples and they are not looking looking for units that are very large size, for example, like a super-condominium.

Developers should also look into providing professional management services for foreign buyers.

Penang is losing out as a second home destination to Australia and Hawaii, where professional management services for high-rise properties are available.

Some 85% of the Japanese staying in Penang rent their homes. There are about 300 Japanese couples staying in Penang.

Penang also has to stop advertising and promoting itself as an island resort with nice beaches.

The beaches and waters here are dirty and this has adversely affected tourist arrivals from Japan and South Korea.

Singapore and Hong Kong don’t promote themselves as island with nice beaches so tourists also do not have such expectation when they visit Singapore or Hong Kong.

Datuk Alex Ooi: There’s a need to upgrade the state’s transportation system, hygiene, environment and traffic management in order to attract Malaysia My Second Home (MM2H) programme participants.

I recently bumped into several Japanese and their main complaint is the transportation system in Penang.

Previously, there were Penang maps everywhere. However, I can hardly find any now, even at the airport. When I travel abroad, I usually bring a bunch of them to distribute overseas.

To attract foreign investors, we also need more international schools. Some foreigners are complaining that there are not enough of such schools.

Datuk Wong Siew Hai: There must be improvements made in the security of Penang, where burglaries are prevalent. This is the reason why gated projects are popular, as house owners want to avoid thefts.

Properties here are still cheap in comparison with the properties in Kuala Lumpur and Singapore.

Our property prices are about 15% of the same range of properties in Singapore. The prices in Penang are between 40% and 50% of the Kuala Lumpur selling price.

Datuk Rosli Jaafar: For Penang Development Corp, we don’t have much experience with the MM2H programme.

One thing I’d like to understand from the Japanese is whether they want to stay within their own community or they don’t mind being apart of the local community. This factor will have a bearing on our architectural designs.

There should also be more varied pricing and not just either focus on the high end, the middle cost and the low end pricing.

In addition, there are a lot of restrictions on our designs caused by the bylaws. If you look at the bylaws, there are certain requirements involving the height, ventilation and staircase of the projects which we have to abide.

Datuk Faudzi Naim: Our second home programme is currently attracting investors from north Sumatra.

These investors are impressed with Penang’s positioning as a hub for education and medical services.

Last year I promoted Penang properties in Medan.

It generated much interest among the potential investors who the came to Penang later to buy some RM30mil and RM40mil worth of properties.

These investors always compare Penang and Singapore as a choice destination for second homes.

Thus I believe that the property prices in Penang will hit between RM750 and RM1,000 per sq ft by 2010.

We must, of course, work towards providing the foreign investors with what they are looking for such as high quality professional management services for the high-rise properties, raising the security standards, and improving the garbage collection system and traffic conditions in the state.

Wan Mohd Ebrahem: Malaysia Airlines is the first airline to have signed an agreement with Henry Butcher to conduct special tours for foreigners to view Penang’s properties. Critics have said, “How can an airline and real estate surveyor get married?” This is to create awareness on what kind of properties are available in Penang.

This could be my last forum because I’m leaving Penang. My boss is sending me to India.

StarBiz: What are the factors that could be considered to increase domestic demand for properties?

Faudzi: To increase domestic demand for properties, the state government must play a role to bring down the costs of properties.

The selling prices of properties are being driven up because developers have to cross-subsidise low-cost housing from other projects.

Thus the state government must stop requiring the developers to fulfil low-cost housing obligation. There must be a different policy to provide low-cost housing to the lower income group.

The state government should look into redeveloping certain districts in the mainland as growth centres and as an area for affordable housing.

Wong: Penang must be able to attract the young people to come over. It is not able to attract the younger generation because Penang is not known to be a happening place.

I have friends who can go to a different restaurant in Kuala Lumpur every day for 365 days. But in Penang, there isn’t much to do.

If Penang can transform itself into a happening place, then it can attract the younger generation to stay and work in Penang.

These people can then drive the demand for property here.

Dr Lim Mah Hui: If you look at Japan at the height of its stock and property market in 1989, the value of land around the Imperial Palace was worth more than all the land in California. Its urban land price index increased to more than 100. It has dropped over the years to 60 now.

I encouraged developers and real estate surveyors to collect statistics and make them public. When developers sell their units, they must have the buyers’ profile, which includes details like their nationality and income, to create a data bank. This is important for developers to know how much more to build.

One more thing I want to say. I disagree that Penang is underdeveloped. If you live in a town like Kyoto, you will see it’s a wonderful town. It has stringent laws on their development. Its authorities used to allow buildings to be as high as 10 storeys, but now this has been reduced to eight storeys.

There are too many condominiums in Penang and they have horrible quality. I don’t understand how the MPPP (Penang Municipal Council) and developers can allow this to happen. It’s better to go for quality than for quantity. I think they should be torn down and rebuilt.

StarBiz: Is there a perceived oversupply of residential properties?

Ooi: For the past three to five years, many people invested in properties due to the low interest rates and a sluggish capital market.

Housing loans are very attractive as they are 0% to 2% below the base lending rate (BLR) which is about 6%.

As there is likelihood that Bank Negara may increase the BLR to curb inflation, the property market may be negatively impacted, as there would be forced selling of properties.

Rosli: Once you have reached an optimised level, any further development may cause chaos. We can’t simply continue to develop and develop.

Certain areas that have reached an optimised development level should be redeveloped instead.

Gated communities are not actually catered for in the existing bylaws. I was told there’s still much confusion on them.

Looking at low cost and low medium-cost projects, it’s sad to say that many foreign workers are occupying them. When they leave one day, who’s going to occupy them?

There are also many houses in the mainland, which are sold but not occupied. The owners could have been speculating when they bought them. We often hear of low cost houses being auctioned off below the market price. Developers are building these houses not because they want to but because they have to. Even in my area, 8% of the units are sold but are unoccupied.

Ng Bock Tye: Penang is underdeveloped. However, we must be careful in the type of development we plan to do. Penang should go for high-density development, especially along Penang Outer Ring Road.

StarBiz: What can be done to improve the livability?

Syed Ahmad Fauzi: Penang still got historical charm and is till today a melting pot of diverse cultures.

Firstly, the red tape should be reduced in the state and local government machinery.

The concentration of executive power on the above hinders the implementation of projects that can raise the quality of life and the livability of Penang.

We also need to set up a fund to restore Gurney Drive, which is a nostalgic place, and the beaches.

We also need more car parking space and good marketing efforts to promote Penang.

Wong: The manufacturing sector contributes about 40% of the state gross domesticproduct.

It is important to keep this sector healthy so that it can in return provide support for the property sector.

Penang now lacks the ingredients of a happening place, which is essential to attract a younger generation of house buyers to move over.

Ooi: Penang has got the natural environment and historical culture.

To make it livable, you would need to have a bigger population with the spending power, as money is crucial to drive growth.

Thus we need a bigger population and to do that Penang has to become a happening place.

Local entrepreneurs must also explore blue ocean strategies and fresh areas of business opportunities to create spill over economic effects.

StarBiz: On financing and house purchases, what strategies can be employed to ensure adequate financing for the housing market?

Lim: I’m not a developer but I can speak from the economic and social point of view.

Speaking as an ex-banker and looking at the bigger picture, I don’t think it’s actually wise to encourage a higher loan margin.

For 20 years, I’ve been a banker in the overseas - New York, Tokyo, Singapore, Hong Kong.

I want to share what are the factors which usually precede a banking and financial crisis.

There’s too much money flowing into the system either from foreign investors or due to the central bank’s policy being too loose.

This invariably leads to two types of bubble. The first is the property bubble while the other concerns the stock. It has happened in the past and it’s happening today. The cost of cleaning up a banking crisis is enormous. Developers should not just build and build to make more money.

Thus it’s okay to take into account that we should not overdevelop. The current loan margin of 70% is fine. If one does not have money, the one shouldn’t be buying.

I lived in Manila for six years and I also lived in Jakarta. I think gated communities are not desirable because they’re too exclusive. I can’t pass from one town to another because they are all gated. I have to go round and round and use a longer route. We should not cater to every whim and fancy of the foreigners.

I had been away for over 25 years and when I came back to Penang a year ago, I found that it’s overdeveloped. I can’t understand how people can afford to buy properties worth millions of ringgit. I was recently informed that only 5% of the total households in Malaysia earned RM10,000 or more monthly.

I also didn’t know that foreigners could buy houses here. They can’t do that in Thailand, Indonesia and Singapore. By allowing them to do it here, it will push up the property prices. Where are the local people going to go? This is a very crucial issue for developers to consider.

StarBiz: Will mega transportation projects solve Penang’s traffic woes?

Ng: When the second Penang bridge is completed, we will need an outer ring road to complement it.

So the government must build one or else there’s no way of dispersing traffic.

Lastly, I would like to say that a high-density project does not mean that it generate a poor environment. It can be a good one if there’s proper planning.

Lim: I don’t think another outer ring road is the answer. We should go the same route as Singapore where one has to pay through his nose to have a car. Higher parking rates and taxes on cars should be imposed.

Rosli: There are two issues which need to be addressed: transportation and security. I share the view that there’s inadequacy in the transportation system. Monorails and building more roads may not be the best way.

There are already a lot of roads here. The problem is the buses here don’t stop at the right time and right place.

More roads and bridges will result in more cars. We should reverse the scenario by making it inconvenient to use cars. In some parts of the world, the number of roads was reduced.

In one place 20 years ago, there was a busy road. Today, it’s parkland. The road is gone.

On the security aspect, if you are rich, of course you can pay anything to be well guarded. But for the poor, they can rely on a good design, which promotes security surveillance.

By The Star -Starbiz - (Transcribed by David Tan and Ng Su Ann)

Damper for property

PENANG: The property market in the country may not be sustainable for long due to the possibility of an increase in the base lending interest rates.

KPMG partner Ooi Kok Seng said the low interest rates had been maintained for the past five years for housing loans, which were very attractive as they were 0% to 2% below the base lending rate, which was about 6%.


Ooi Kok Seng

“Since the capital market has been sluggish and bank interest low, many people have invested in properties instead.

“Thus, any adjustment in the interest rates by Bank Negara to curb inflation may negatively impact the property market as there would be forced selling of properties,” he told StarBiz.

Ooi was giving his views at The Star Property and Home Fair Penang 2008 roundtable discussion in Penang recently. The three-day exhibition from Sept 5 will be held at the Penang International Sports Arena.

Another participant at the roundtable discussion, Dr Lim Mah Hui, said the factors preceding a banking and financial crisis usually involved too much money flowing into the system either from foreign investors or due to the central bank’s policy of being too loose.

“This invariably leads to two types of bubble. The first is the property bubble while the other concerns the stock. It has happened in the past and it’s happening today. The cost of cleaning up a banking crisis is enormous. Developers should not just build and build to make more money.

“Thus, it’s okay to take into account that we should not overdevelop. The current loan margin of 70% is fine. If one does not have money, then one shouldn’t be buying property,” he said.

Lim is a senior fellow attached to the Asian Public Intellectuals fellowship.

Meanwhile, Joint Business Council Malaysia chairman Datuk Faudzi Naim was more optimistic.

“I believe property prices in Penang will hit RM750 to RM1,000 per sq ft by 2010. This is because there are foreign investors who are interested in Penang due to its positioning as a hub for education and medical services.

“Last year I helped out in promoting Penang properties in Medan. Within a year, investors from northern Sumatra came over and bought properties worth RM30mil to RM40mil.

“These investors always compare Penang with Singapore as a choice destination for second homes,” he said.

However, Faudzi said developers must now also provide high quality professional management services for high-rise properties.

“Foreign house buyers want professional management services to look after their investments when they are away. The Government must also, of course, beef up the local security situation, and improve on the hygiene and traffic conditions,” he said.

Faudzi also said the state government should stop making developers build affordable housing.

“When developers fulfill their affordable housing obligation, they have to cross-subsidise from their other projects. This inevitably leads to the high selling prices of the properties in the non-affordable category.”

He sad the state government should look into redeveloping certain districts on the mainland as growth centres and as an area for affordable housing.

Another participant Tropical Resort Lifestyle Sdn Bhd managing director Ishihara Shotaro said Penang had to stop advertising and promoting itself as an island resort with nice beaches.

“The waters are dirty. This has started to have an impact on tourist arrivals from Japan and Korea.

“Singapore and Hong Kong don’t promote themselves as island with nice beaches, so tourists also do not have such expectation when they visit Singapore or Hong Kong,” he said.

“But Penang does and this leaves the tourists going home disappointed.”

By The Star (by David Tan)

Next growth plan for Penang property sector

Panellists at The Star Property and Home Fair 2008 Roundtable discussion in Penang.
(From left) Hunza Properties Bhd executive chairman Datuk Khor Teng Tong, Ivory Properties Group executive director Datuk Seri Nazir Ariff, Ho Chin Soon Research Sdn Bhd managing director Ho Chin Soon, Rehda Penang chairman Datuk Jerry Chan, Star Publications (M) Bhd deputy news editor (business) Angie Ng and executive director Datuk Seri Kamal Hashim, Penang Town and Country Planning and Housing Committee chairman Wong Hon Wai, Henry Butcher Malaysia (Penang) director Dr Teoh Poh Huat, IJM Corp Bhd deputy managing director Teh Kean Ming, SP Setia Bhd executive director Datuk Voon Tin Yow and Mah Sing Group Bhd executive director Lim Kiu Hock.

Penang’s property landscape is undergoing rapid transformation with the people’s changing lifestyles and evolving market dynamics. The recent declaration of George Town as a UNESCO World Heritage Site has given a new drive and inspiration to the state government and property developers to further uplift Penang’s image as a real estate destination. StarBiz deputy news editor ANGIE NG recently met up with key property players at The Star Property and Home Fair 2008 roundtable discussion in Penang to gauge the state’s market prospects and challenges ahead.

The panellists were Penang Town and Country Planning and Housing Committee chairman Wong Hon Wai, IJM Corp Bhd deputy managing director Teh Kean Ming, SP Setia Bhd executive director and chief operating officer Datuk Voon Tin Yow, Real Estate and Housing Developers’ Association Penang chairman Datuk Jerry Chan, Mah Sing Group Bhd executive director Lim Kiu Hock, Ivory Properties Group executive director Datuk Seri Nazir Ariff, Henry Butcher Malaysia (Penang) Sdn Bhd director Dr Teoh Poh Huat, Hunza Properties Bhd executive chairman Datuk Khor Teng Tong and Ho Chin Soon Research Sdn Bhd managing director Ho Chin Soon.

StarBiz: What is the state government’s blueprint for Penang’s development and how is it meeting the needs for conservation, especially with UNESCO’s recent declaration of George Town as a World Heritage Site?

Wong: We have formed an advisory panel comprising of heritage architects and non-governmental organisations. They are providing us input on how to improve our heritage plans. When we talk about heritage conservation, it’s not only for tourism but for an organic community as well. It’s pointless to have buildings without occupants.


Teh Kean Ming

Teh: The state government should take advantage of its heritage city status to promote local properties. This is why it is necessary to raise the standard of the properties in Penang so that they are on par with international standards. Tourists visiting Penang for heritage tours can also take the opportunity to view the livable sites of the island. If they find our properties in line with their requirements, they will invest. Penang must retain its uniqueness, and should not be made into another Hong Kong and Singapore.

Chan: We need to reaffirm and rejuvenate Penang. Some 200 years ago and even 50 years ago, Penang was still a reputable commercial centre. That was why well-known international banks chose to set up in Penang. We have our 7 ‘Cs’ that can be further strengthened to attract tourism.

They include cuisine, culture, care, choice, community, and connectivity.

We have diversity in food; heritage and history in culture; hospitals, beach, hills; quality properties and education system; and an international airport and port.

We also need to create a new industrial estate in Seberang Prai to capitalise on the development of the second Penang bridge, and look into transforming Batu Kawan as a Seberang Jaya.

Lim: The heritage areas should be turned into pedestrian only areas so that they are more tourist friendly, as well as conservation friendly. A good example is Venice, Italy.

It is considered the greatest pedestrian city in the world because of its large pedestrian street network completely free of cars. The city is quite dense, yet is one of the most relaxing and pleasant cities in the world.

Another case in point is Copenhagen, where the main street was transformed into a pedestrian thoroughfare 40 years ago. In line with the transformation, city planners have taken numerous small steps to transform the city from a car-oriented place to a people-friendly one.

Their research shows that these initiatives have created four times more public life. Creating more public life would add value to Unesco’s declaration of George Town as a World Heritage Site, as more people would be able to enjoy the area whilst at the same time, conserve the heritage.

Whilst Penang is renowned as an international manufacturing hub, there needs to be more commercial and tourism projects to complement the island’s growth.

For example, 5-star hotels, service apartments, lifestyle malls and offices would breathe new life to the island, especially in the new growth corridor in the south.


Datuk Seri Nazir Ariff

Nazir: More can and should be done such as working closely with housing developers if they want to implement their plans. The World Heritage listing is a great branding tool and those who love old buildings and culture would want to settle down here.

The state government’s recently set up Heritage Steering Committee must work hand in hand with the local government to enforce the heritage guidelines.

We should take advantage of the listing and get the pre-war house owners to maintain their properties based on the established guidelines and standards. Owners should be given tax exemptions if they invest in the restoration of their properties. For those who cannot afford it, soft loans should be made available to them.

The state government should be strict in enforcing the heritage guidelines or else, George Town will lose the UNESCO recognition.

Starbiz: What are the state’s plans and initiatives to further lift the living environment and property landscape in Penang?

Wong: There are certain aspects of the state development plans, which are currently under scrutiny. Not everything is cast in stone.

If we need to amend the plans in order to meet the people’s expectations, we will do so.

Our guiding principle is CAT which stands for competency, accountability and transparency. We’ll call on the industry players to get their feedback.

Penang has a vibrant civil society. The government has to balance the interests of the community at large and the future generation. We are currently formulating and regulating the housing policy. Our goal is to have quality and affordable housing.

We are also looking at five to six initiatives to relocate the squatters in several areas including Tanjung Tokong, Jelutong, Mak Mandin and Tasek Gelugor.

We have also initiated changes in the land policy. The processing of land applications is now faster than it used to be.

Of course there are bad apples among the developers. There are 26 abandoned projects in Penang. We are hoping that a white knight will come to the rescue.

For developments above 250ft above sea level, they have to go through the State Planning Committee, which will handle them on a case-by-case basis.


Ho Chin Soon

Starbiz: What is the outlook for Penang’s property market in the next few years from the perspective of supply and demand, price trends and growth projections?

Ho: The state’s property outlook is good and the state government should allow more high-density projects, as land on the island is scarce. More people can then own homes and these projects do not take up much land if compared to building rows and rows of terrace houses.

Imagine a situation where for the same density and plot ratio, we can have multi-storey buildings and at the same time, we can have open spaces and fields.

The state’s property has the second highest capital gain in the country after Kuala Lumpur and is ahead of Selangor. But in order to make the state more attractive to property investors, the transportation problem has to be solved and the building of Light Rapid Transit (LRT) could be the answer.

The state has so much to offer homeowners but is restricted by outdated guidelines, which they should be comprehensively reviewed.


Datuk Voon Tin Yow

Voon: The country’s economic fundamentals are strong. Politically, Malaysia is still considered stable compared to some others in the region. The lack of land bank in Penang will continue to push demand for landed properties to go up. Some good condominium projects in selected locations will still do well despite the fear of an economic downturn. The property market still looks good in the next one to two years.

Lim: We need more innovative developments with better designs and concepts to value-add to the property and lifestyle of the people. We are seeing more of these projects by developers from Penang and Klang Valley.

Penang has a clear advantage because it has the second highest urbanization rate in Malaysia, the second highest average monthly household income which is higher than the national average as well as being a tourist attraction for foreign investors.

The outlook is still healthy for the next few years but developers have to work harder to develop good concepts and products, and work harder to ensure good take-up.

StarBiz: What are some of Penang’s strengths and shortcomings in its effort to become a top real estate destination?

Chan: The new state government has initiated needed reforms on land matters, and the Chief Minister is now in charge of land matters. This has not happened for a very long time.

He has removed unnecessary ad hoc committees to bring about faster approvals, and initiated reforms such as allowing for leasehold land to be converted to freehold status.

To foster development in Penang, however, one must look beyond faster approval for layout plans and land matters. We still see impediments stalling the approval of engineering plans. We need to allow commencement of work to kick off without unnecessary delays. Assignment of approvals must also be allowed to practice in Penang, as in other councils and in other states.

This means that those developers who have taken over other people’s projects should not have to apply for approval of the building and layout plans all over again.

The state government needs to work closely with the private sector to drive economic growth.

It must also be bold to take up the right decisions, which may not always be popular. Popular decisions, however, may not always be right.

Lim: Preliminary work on the project site should be allowed without approvals. Preliminary work such as land clearing activities and erecting a show house now have to wait for months for approval.

The Chief Minister should also use his discretionary power to fast track the approval of beneficiary projects, which can generate earnings from foreign exchange and spur the development of satellite towns.

The state government should also look into giving approvals for development on hill land where the soil and terrains are right.


Datuk Khor Teng Tong

Khor: The state must also seriously look into allowing development on hillside land, which is above the 75m limit. Hong Kong has successfully developed hillside land and the government there has a Geology Technology (Geotech) Unit to study such land for development. Penang should have a similar unit, as the terrain of Penang and Hong Kong are very similar.

Nazir: The state government’s strength is its Competence, Accountability and Transparency (CAT) governance philosophy that will make Penang cleaner, less congested and more livable.

Shortcomings include the endless red tape that developers have to go through just to get approval and the time they take for an application to be approved.

A developer should be able to know the status of its application in three months. We need practical guidelines conducive for sustainable development.

Local and structure plans need to take into account the views and aspirations of everyone, developers included.

I know that the state government cannot be held responsible for this state of affairs but they should work closely with us to understand our problems.

More importantly, most developers also live here and the problems here are also our problems.

Voon: Penang’s properties are generally a lot more expensive that those in Kuala Lumpur.

The reason is the shortage of land and the reason behind the high prices is not because people here are rich.

On top of that, a development above 250ft above sea level is a no-no. In Hong Kong, hillside developments are allowed. In relation to height, we should also look at the slope.

If the development is on high ground but the slope is gentle, the plan should be given due consideration. This will help solve the land scarcity problem.

Driving around, I also see a lot of squatters. This problem has been there for years but there’s no solution because politicians don’t deem it as their problem.

Another shortcoming is the transportation system in the state.

Although the monorail and Penang Outer Ring Road (PORR) projects have been deferred, there are other options that we can look at, like the viability of a tram system.

Penang used to have trams as a means of transportation in the early days. If we can introduce this again, we can bring back the glory days of Penang as an attractive tourist destination, besides solving road congestion problems in the state.

Also, one way of attracting foreign investors is to increase the rental property market.

It is difficult to calculate the market value of a property. It’s better to give value in terms of rental value.

The state government can also consider rezoning and relocating the existing industrial zone on the island to the mainland. By providing attractive incentives, I’m sure the multinational corporations will agree to move.

Starbiz: What is Penang’s potential for developers and real state investors - what are the property trends to meet the new lifestyles of the people and where are the new growth corridors?

Voon: The state definitely has potential. It has low unemployment rate, and steady gross domestic product coupled with balanced and equitable national economic development that point to greater opportunities for property development and the investment market.

The trend at the moment is housing developments with lifestyle concepts. Conventional designs are a thing of the past.

Developers today are required to provide more such as quality finishings, services like gated and guarded living, extended warranty etc. These features are what locals and foreigners are looking for. Developers must also address security issues nowadays as it is becoming increasingly important all over the country.

Lim: Penang is the third largest growth corridor after the Klang Valley and Johor.



Due to the limited supply of land in the north, housing development has shifted to th e south, for example to Batu Maung and Balik Pulau. This is the new growth corridor for Penang.

The trend has shifted to luxurious developments with a resort feel, and most newly launched projects are gated and guarded.


Gated and guarded projects with good concepts and security systems are appealing as people want some privacy and security, within a close and friendly neighbourhood.

Some of these properties include three generation homes, which have three-storeys, large-built-up areas, and many rooms.

To market these products at a premium, developers would have to provide more facilities and supplementary services as the customers now have higher expectations.

Like Singapore, Penang attracts tourists who make this a stop-over base for them to explore other areas be they in Malaysia or around the region.

One more trend that’s increasingly evident is the inflow of foreign purchasers under the Malaysia My Second Home (MM2H) programme. Since it was launched in 2001, MM2H participants have increased from 313 in 2001 to over 1,500 in 2007 and to-date, there are more than 10,000 expatriates living in Malaysia under this programme.



Interestingly, Penang has the highest number of MM2H participants in Malaysia.

Teoh: The residential market is the biggest component, contributing between 60% and 70% of the total volume of transactions over the years in the real estate industry.

At night, we don’t see lights in many homes, which could mean they are unoccupied.

This shows that Penangites may have more than one home.

Globalisation is here and we have no choice but to meet it head on.

Penang has all the allure of a good place to live - the beaches, the hill and the people. It’d be a shame not to capitalise on all these factors.

Starbiz: How is the quality and project type available in the market now and what should be done to raise the state’s real estate potential and profile internationally?

Khor: Penang properties should be marketed in tandem as a resort destination and World Heritage site to potential Malaysia My Second Home (MM2H) owners.

Currently, Koreans come to Penang to learn English and Mandarin. Industry players should exploit this situation to our advantage and get them to stay here.

Pre-war house owners must be given a free hand to do what they want with their properties. They can turn their properties into shops, homes or SOHOs (small office home office) in accordance with the heritage guidelines.

The state government should seriously consider sending people out to study cities like Milan, an Italian heritage city, and Shanghai, to learn from them. These are hugely successful heritage cities.

Penang has many good housing projects like those in Gurney Drive and Tanjung Bungah but most of them are owned by foreigners. Many of these projects costing millions are beyond the reach of locals.

Teoh: We can bring in the overseas market with the help of the private sector and through government support efforts. There are still a lot of things that need to be done.

There is no such thing as one size that fits all. We need to understand who are the potential MM2H applicants and why they are choosing Penang. Then only can we cater to their needs.

Most of their household sizes are between one and two people. They don’t want to buy a 700 sq ft unit nor do they want a 4,000 sq ft home. There are hardly many properties, which provide a suitable size for their requirement. Thus, I urge the government to be more market driven rather than regulatory driven.

The property market is going through several challenges such as inflation and weakening demand. When we look at the challenges, some can be controlled, some need the help of the authorities while others can’t be controlled as they are caused by world events.

Voon: The availability of quality products are still far and few, while the product range is still very limited, mainly restricted to the standard two-storey mass housing, apartments and recently luxury high-risers termed super-condominiums.

The government should look into land and immigration laws to raise the state’s real estate potential and profile internationally.

Our MM2H programme offers a 10-year visa, which is not attractive to some foreigners.

They are not comfortable with this because the policy may change anytime the government deems fit. It is not so concrete compared to other countries like Australia and New Zealand where investors with a certain amount of investment get permanent residence status.

Perhaps we should look at something like this for foreign investors if we want to attract high net worth and high skilled investors.

By The Star

KSL stamping its mark in Iskandar Malaysia

KSL City, which is KSL Holdings Bhd’s latest mixed development in the Iskandar Malaysia growth corridor, is set to be a new landmark in Johor Baru when it is completed in two years.

Touted as the biggest commercial complex in the whole of Johor, the project consists of a four-storey podium block of retail complex, two blocks of 26-storey hotel tower with a total of 950 rooms and 355 apartments on two blocks of 33-storey tower.

The podium complex, with floor area of 500,000 sq ft, will comprise retail outlets, a department store, cineplexes and car parks.

The RM500mil project is located within the matured Century Gardens just opposite Holiday Plaza shopping complex near Jalan Datuk Suleiman.


Ku Hwa Seng (left) and Khoo Soon Lee Realty Sdn Bhd general manager Ku Keng Leong with the model of shop offices to be developed at the company's Taman Nusa Bestari project.

“The location of KSL City augurs well for the company and it is the last remaining piece of land in the city for such a project,’’ said KSL Holdings executive director Ku Hwa Seng.

KSL City is located just about two kilometers from the Johor Baru central business district (CBD) and the new Johor Baru Custom, Immigration and Quarantine (CIQ) complex.

Ku said the five-star hotel would be known as the KSL Resorts Hotel and would be managed by a local hospitality management company.

The podium block and the hotel towers are expected to be completed towards the end of next year and the apartment blocks in mid-2010.

The apartment blocks will have separate entrances and car parking bays from the hotel towers. Every apartment will have an individual private lift.

“This is the first such development in Johor that combines retail, hospitality and high-rise residential living like those in Kuala Lumpur and Singapore,’’ he said.

Ku said the company was confident the hotel would do well, considering that most hotels in the Johor Baru CBD were recording almost 90% occupancy rate.

“Johor will also benefit from the two integrated resort projects (IR) coming up in Singapore in two years.

“Malaysians and foreign tourists planning to visit the resorts in Singapore would probably stay in Johor Baru as the hotel rates in Singapire are too costly for the average visitors,” Ku said.

Presently, Singapore is facing a shortage of hotel rooms and the average room rates at S$280 could further increase to S$500 by the time the KSL hotel is completed.

“We plan to have a tie-up with the two Singapore casino operators to provide shuttle bus services from KSL City to the two resorts,’’ he said.

Ku said the Singapore Tourism Board has projected that some 17 million tourists would visit the island state next year.

As for the apartments, KSL would be looking at Malaysian professionals and expatriates working in the republic as potential buyers.

“Similar apartments like what we are building would carry a price tag of over S$500, 000. The price advantage will be the main reason for the people to stay in Johor Baru and work in Singapore.

“It is a well known fact that Johor and Singapore have been complementing each other economically for long,’’ he said.

Ku does not discount the possibility that the KSL City project could be a stepping stone for the company to further expand into the retail and hospitality sector.

By The Star

KSL plans to expand landbank in Iskandar Malaysia

KSL Holdings Bhd sees strong growth prospects in the Iskandar Malaysia growth corridor and is looking to expand its exposure and landbank there.

The Johor Baru-based company currently has four ongoing integrated developments located in the corridor – Taman Nusa Bestari on 91.9ha, Taman Bestari Indah Ulu Tiram (283.3ha), Taman Kempas Indah (95.9ha) and KSL City (2.73ha).

Upon completion in eight to 10 years, there will be 18,300 mixed residential and commercial properties worth a total gross development value of RM3.7bil.

“These projects will contribute up to 70% of group revenue and earnings in the current financial year ending Dec 31.

“Despite the sceptical views by certain quarters on the progress and benefits of Iskandar Malaysia, we are confident that the corridor has great potential, going forward,” executive director Ku Hwa Seng told StarBiz.

Iskandar Malaysia, formerly known as Iskandar Development Region before the name change in April, would be two years old in November.

The growth corridor covers 2,216.3 sq km within the southern-most part of Johor covering Johor Baru city centre, Nusajaya, Pontian-Gelang Patah, Senai-Kulai-Skudai and Pasir Gudang-Tanjung Langsat.

Ku commended Khazanah Nasional Bhd for having done a good job in promoting the growth corridor locally and internationally.

Iskandar Region Development Authority has secured RM33bil investment, representing 70% of the total investment target of RM47bil for the period between 2006 and 2010.

“KSL’s projects will be one of the main beneficiaries of the spillover effect of Iskandar Malaysia and Singapore,” he noted.

He said KSL would benefit from Iskandar Malaysia in view of the company’s niche market and strong brand in the Johor property scene.

As of last December, KSL has over 809.371ha of landbank in Johor Baru, Batu Pahat, Kluang, Segamat, Mersing and Muar. Of the total landbank, 60% are located within Iskandar Malaysia.

Ku said the land’s close proximity to the Senai Airport, the Port of Tanjung Pelepas, North-South Expressway and the Senai-Desaru Highway was a boon for the company.

The airport, the port and the highways are touted to be interlinked and will be developed into part of the transportation hub in Iskandar Malaysia.

About 80% of the land are available for immediate development as they have been granted approval for subdivision.

Together with the Maharani Riviera in Muar, the company’s projects in Johor have a combined gross development value of RM4.4bil, which will keep it busy for the next eight to 10 years.

Taman Nusa Bestari benefits the most, as the scheme is located just a few kilometers from Nusajaya where the Johor State New Administrative Centre is being built.

Nusajaya and its nearby areas are in for a boom as many development projects are being built and new ones in the pipeline.

Ku said when the company launched its three-storey shop offices in Taman Nusa Bestari in 2002, they were priced around RM300,000.

“Now, we are selling a similar unit at RM800,000 to RM1mil while the bigger units are priced at more than RM2mil,” he said.

Besides its traditional market in Johor, KSL is also looking to expand into the Klang Valley with the recent purchase of two parcels of land totalling 180.6ha in Klang, Selangor, for RM156mil.

The land is located along Jalan Klang-Banting within the Blackwater Estate about 15km from Klang town centre.

Ku said the company planned to develop its land in Klang into a mixed project with a gross development value of RM1.5bil. The project is targeted for launch early next year and will take eight years to complete.

Ku said the acquisition served as a platform for the company to tap into the Klang Valley property market.

“Our land in Johor and Selangor will help us sustain our medium to long-term growth and profitability,”he said.

On how KSL, being a Johor-based developer, could convince house buyers in the Klang Valley, Ku said: “Regardless where they are, purchasers are more or less the same.

“If you give them better quality products and good facilities, they will consider buying from you,” he said.

By The Star - StarBiz - (by Zazali Musa)

Developers look abroad

GOING international and attracting foreign property investors will be gaining momentum among developers as they look to tap the vast offshore market for their properties.

Industry players are realising that they have to widen their target market to beyond Malaysia’s shores to make up for the slowdown in local demand following rising inflationary pressures and prevailing cautious sentiment among potential property buyers.

Property developers who participated at The Star Property and Home Fair Penang 2008 roundtable discussion in Penang recently concurred that the foreign factor was the much needed link to promote greater buying interest in a more sustainable market for Malaysia’s real estate.

The three-day exhibition from Sept 5 will be held at the Penang International Sports Arena.

They also voiced their apprehensions over the state’s restrictive development guidelines, including the low plot ratio and restrictions on development at more than 250 feet above sea level.

To overcome a shortage of development land in land-scarce Penang, SP Setia Bhd executive director and chief operating officer Datuk Voon Tin Yow suggested more mixed use integrated developments with residential, commercial and leisure components be allowed.

This is because such projects would free up more land for better use, including landscaping and greening purposes.

He also said development plans on land above 250 feet should be given due consideration if the slope of the land is gentle.

The panellists also voiced the need for clearer guidelines for development in inner city George Town, especially around the buffer zones, to ensure a more optimum balance between restoration and development efforts.

They opined that a more efficient public delivery system with progressive and transparent guidelines and processes would contribute greatly as speed and timing are important attributes for projects to succeed.

According to Ivory Properties Group executive director Datuk Sri Nazir Ariff, it would be easier to formulate financial plans and projections if industry players could be assured of transparent governance.

Penang Town and Country Planning and Housing Committee chairman Wong Hon Wai, who also took part in the roundtable discussion, assured the developers that the new Penang state government would adopt the kaizen or continuous improvement approach in its civil service in line with its competence, accountability and transparency (CAT) governance.

“Where property development is concerned, we want to ensure Penang does not turn into a concrete jungle but will grow as an organic city with a soul,” Wong said.

In welcoming Wong’s assurance, Nazir said: “A competent, accountable and transparent government will make Penang cleaner, less congested and more liveable. That will help re-define the property market into a quality market.”

Real Estate and Housing Developers Association (Rehda) Penang chairman Datuk Jerry Chan said more needed to be done to promote Penang’s many attributes to the world, including building up a strong branding as an international real estate destination.

“There is also a need to rejuvenate the inner city of George Town to its old glory as a lively and liveable city,” he said.

Nazir said the declaration of George Town as a United Nations Heritage Site in July was a great branding opportunity for Penang and more cohesive efforts were needed between developers and the state government to leverage on the state’s unique charms.

He urged the state government’s Heritage Steering Committee to work hand-in-hand with the local government and developers when enforcing and implementing the heritage guidelines.

IJM Corp Bhd deputy managing director Teh Kean Ming said while Penang’s property market offered much potential for developers and investors, the onus was on industry players to work with the authorities to elevate the state’s profile in the international real estate arena.

“There is a need for more world-class products and infrastructure, such as waterfront developments, that appeal to savvy high-net worth foreign buyers,” Teh said.

Concurring with Teh, Henry Butcher Penang director Dr Teoh Poh Huat said current thinking seemed to focus on leveraging on foreign demand as a panacea for the more challenging domestic market.

“Making Malaysia a destination of choice for property investment and a second home is now the sine qua non.

“As this sector of the market is relatively less understood, it is imperative to conduct research to understand both the demographic and psychographic elements of the foreign market on the country’s real estate,” Teoh said.

By The Star (by Angie Ng)