MRCB rises on winning RM239m jobs

MALAYSIAN Resources Corp, a property developer and builder, rose to an 11-month high after RHB Research Institute Sdn Bhd said the company won two building contracts valued at RM239 million (US$68 million).

The shares advanced 3.3 per cent to RM1.25, the highest close since June 17. The stock has surged 78 per cent this year, making it the third best performer on the benchmark Composite Index.

“The key new jobs and internal work will underpin construction profits,” RHB said in a report today. RHB increased its target price on the stock to 86 sen from 69 sen, maintaining its “underperform” rating.

The contracts are the first building jobs the company has secured so far this year, increasing its order book to RM2 billion, RHB said.

It raised its profit forecast by 34 per cent for 2010 and 36 per cent for 2011 to reflect higher earnings from construction. Malaysian Resources reported a RM39.3 million loss in the fourth quarter of last year as sales slid.

One of the projects include upgrading a road network of Kuala Lumpur Sentral, which comes under the government’s stimulus package, RHB said. The government unveiled RM67 billion of stimulus measures to help revive economic growth.

Malaysian Resources is the builder of Kuala Lumpur Sentral, Malaysia’s biggest bus and rail transport hub, where it is also constructing offices and condominiums.

The other contract is the “rehabilitation” of a condominium project, the report said.

The company also secured a key tenant for its 40 per cent- owned 348 Sentral, a RM650 million office and serviced apartment project, RHB said. The foreign oil company took 80 per cent of the total office space there, the report said.

Malaysian Resources managing director Shahril Ridza Ridzuan didn’t answer calls to his mobile phone or immediately respond to a text message.

By Bloomberg

Developers in Negri Sembilan get lifeline

The Negri Sembilan government will be reviewing its bumiputera housing quota policy to assist developers sell unsold bumiputera housing units and shoplots.

Negri Sembilan Menteri Besar Datuk Seri Mohamad Hasan said the review would be restricted to a "one-time" offer and was aimed at helping housing developers survive the economic recession.

"The Real Estate and Housing Developers' Association (Rehda) had a discussion with us on this. One of the resolutions discussed was allowing them to sell housing units and shoplots reserved for bumiputeras to non-bumiputeras," he told reporters after the weekly state executive council meeting today.

However, he said it was conditional that houses and shoplots meant for non-bumiputeras must be sold off first.

The current policy requires housing developers to allocate 30 per cent of units built to be sold to bumiputeras at a discounted rate.

By Bernama

Home ownership fair expected to triple PKNS sales

The Selangor State Development Corp (PKNS) aims to triple its sales this year, by offering some 3,400 properties for sale this month and in August.

For the 12 months in 2008, PKNS sold RM220 million worth of properties.

"This year, even though the economy is slow, PKNS will be able to beat the RM500 million mark," said its deputy general manager for administration and development, Md Nasir Md Arshad.

Nasir said PKNS has achieved RM54 million sales for the first four months of the current year.

From May 8 to June 7, PKNS will run the home ownership fair themed Rumah Pilihanku@PKNS, where it will offer for sale 2,300 units of low-, medium- and high-end houses, and 60 units of commercial properties, worth RM456 million.

Nasir said 70 per cent of the properties are new launches in Shah Alam, Kota Damansara and Bangi. The rest are old stocks in Kota Puteri, Antara Gapi and Bernam Jaya, Selangor.

He added that PKNS is optimistic of achieving 65 per cent sales, or RM298 million, by the end of the campaign, and 80 per cent, by end-July.

To boost sales, PKNS is offering home buyers an attractive financial package, which includes RM500 downpayment for every property bought and zero entry cost.

Buyers will also get cash rebates of up to RM20,000, depending on the type of property and location.

Nasir said PKNS is giving away six units of apartments in Klang, worth RM280,000 in total as lucky draws and electronic and household goods.

"Our properties are 10 to 15 per cent cheaper than rivals and there is guarantee that the houses and shop offices will be completed. So we are optimistic of achieving our target for 2009," he said.

Nasir said the August launch will feature some 1,000 new houses worth RM300 million, a bulk of which, will be located in Alam Nusantra, Shah Alam.

PKNS expects to sell 80 per cent of the properties by end-December, he added.

By Business Times (by Sharen Kaur)

Dubai World to delay new developments

DUBAI: Dubai World said on Sunday it would complete all projects currently under construction but would delay any new developments, including a plan to build the world’s tallest tower, until market conditions improve.

Dubai World unit Nakheel, developer of Dubai’s palm-tree shaped islands, said in January it would halt work on a one kilometre tall tower for a year as the former boomtown suffers from a downturn in its property market.

By Reuters

Iskandar attracts strong interest at Abu Dhabi property expo

ISKANDAR Malaysia drew encouraging response from potential investors in the Middle East during the recent four-day Cityscape Abu Dhabi property exhibition, according to its developer Iskandar Investment Bhd (IIB).

IIB managing director Arlida Ariff said there were more than 1,500 visitors to its booth, which showcased the Medini Iskandar Malaysia and Iskandar Waterfront Development projects. The exhibition was held from April 19 to 22,

"We were overwhelmed at the response we received from investors, in spite of the current weak global economy," she said in a statement yesterday. "We will now work hard to translate this positive interest into real investments."

Arlida said Medini Iskandar Malaysia recorded interest from investors from Abu Dhabi, Dubai, South Korea, United States and Lebanon. The main areas of interest were in education, hotel and residential landbanks.

As for the Iskandar Waterfront Development project, the focus were the Iskandar Residences and A2 Villa projects which received interest mainly from UAE investors.

"Despite the global economic slowdown, the Middle East remains one of our main target markets for investment for Iskandar Malaysia," said Arlida.

Part of IIB's delegation at the exhibition was a Malaysia My Second Home (MM2H) agent, who received around 50 serious enquiries on the programme.

The MM2H is an international residency scheme promoted by the government to allow foreigners to live in the country on a long-stay visa of up to 10 years.

"The relevance of this programme to the development of Iskandar Malaysia is that we are not just looking for people to buy property but also need the population to build and sustain the development corridor."

More than 300 companies from over 30 countries took part in the property exhibition.

By Business Times (by Shahrum Sayuthi)

Penang allocates RM150m for halal park

The Penang state government has allocated RM150 million to set up the Penang Halal Park in Bukit Minyak in Seberang Prai, part of efforts to transform the state into an international halal hub.

State Domestic Trade and Consumer Affairs Committee chairman Abdul Malik Abdul Kassim said the state government has signed six memorandums of understanding (MOUs) with various parties to develop halal clusters, namely manufacturing, logistics, agro-based industry, finance and hospitality.

He said under the agreements with Asian Finance Bank from Qatar and Unicorn International Islamic Bank of Bahrain, Penang, via the Penang International Halal Hub (PIHH), will serve as a virtual centre to link halal firms and investors to both banks as the reference institutions for advisory and consultancy on syariah-compliant financing.

"Al-Jawhara Group of hotels from Dubai had also agreed to establish a link through PIHH, to the Penang hotel industries, to develop a syariah-compliant hotel industry," Abdul Malik said at a media briefing held in conjunction with the fourth World Halal Forum in Kuala Lumpur yesterday.

At the same event, Halagel (M) Sdn Bhd signed an MOU with Penang Development Corp to buy a large parcel of land at the Penang Halal Park to build Southeast Asia's first halal gelatin plant.

Penang Chief Minister Lim Guan Eng, also present, said investors will benefit from the comprehensive support linking Penang to the supply chain, from getting raw materials to final manufacturing and distribution to consumers worldwide.

By Business Times (by Azlan Abu Bakar)

ECM Libra: Too early to get bullish on property sector

ECM warns that the property sector would definitely take a beating if the influenza A reached Malaysia, similar to what happened during the SARS outbreak in 2003.

The number of property loans approved in March was higher than expected but it is still too early to turn bullish on the sector, analysts said.

Loans approved for residential properties turned positive that month for the first time in six months. It grew by 10.7 per cent from a year ago.

"Despite the positive news, it is still too early to be bullish. While conditions are favourable for property ownership, sentiment - which is a major factor in buying decision - remains below neutral level.

"It is still too early to tell whether buying activities could be sustained for the remaining months of the year," ECM Libra Investment Research said in a note to clients recently.

It would take a convincing bottoming of the global economic contraction to boost sentiments, it added.

There was a 49.1 per cent increase in approved residential property loans and a 31.1 per cent increase in non-residential loans in March compared with a month earlier.

"While we expected aggressive sales promotions by developers since late January 2009 to have positive impact on property sales and loan approvals, (this is) much stronger than our expectation," ECM remarked.

The higher loan approvals may also have been driven by consumers refinancing their existing mortgages.

ECM noted that incentives to buy property are more compelling now as the average lending rate is at a record low of 5.16 per cent.

Also, developers and banks are absorbing significant amounts of upfront costs such as legal fees, stamp duties and interest costs during the construction period.

Sales declined in the previous months mainly because prospective buyers had taken a "wait-and see" approach given the high inflationary environment and deteriorating economic outlook.

ECM kept a "neutral" stance on the property sector, saying that unless there is a full-blown swine flu outbreak in Malaysia, most bad news have already been factored in.

It said the property sector would definitely take a beating if the flu reached local shores, similar to what happened during the SARS outbreak in 2003.

Its top stock picks are Sunway City and Sunrise.

By Business Times

Penang sees drop in retail occupancy

The occupancy rate of retail space in Penang has dropped to 67%, compared with about 70% a year ago, while the occupancy rate of office space has remained at 75.5%, more or less the same as in 2008.

Henry Butcher Retail managing director Tan Hai Hsin said Penang currently had about 14 million sq ft of retail space, of which 33% is vacant.

“There is higher vacancy because of the poor occupancy rates at old shopping centres that have yet to be revived as well as new shopping centres that are not able to achieve full occupancy after opening,” Tan told StarBiz.

Tan said poorly occupied shopping centres in Penang were still unable to overcome their problems such as lower shopping traffic, reduced customer spending, existing tenants unable to keep their businesses, and the inability of landlords to retain tenants.

“New shopping centres opened during the last few years are still working hard to fill up their retail lots,” he said.

Retail rentals have so far remained stable, despite the economic crisis.

Depending on the location and condition of the shopping mall, rentals for the ground floor ranged from RM2 to RM29 per sq ft.

For the first floor, the rentals ranged from RM2 to RM18 psf, depending on the location and shopping mall’s condition.

“No average figure can be derived for the expected fall in rental rates for shopping centres in the northern region.

“This is because the impact varies among shopping centres. For popular and successful shopping centres, they may not be lowering their rental rates,” he said.

“If any, it will be in the form of rental rebate and discount. The discount may range from 5% to 10% only, which is not given to all tenants in the shopping centres, and depends on the bargaining power of the retailers.”

He said the poor-performing shopping centres might have to give discounts (5%-30%) to retain tenants. “Again, this depends on the bargaining power of the tenants.”

For new shopping centres, he said, they might have to give temporary discount and longer rent-free period to attract new retailers. “Once again, this depends on the bargaining power of the tenants and the landlords.”

The retail market in the country was expected to turn negative in the second quarter, he said, adding that by the third quarter, retail sales would improve and climb slowly back to positive zone.

“For the whole year, retail sales for the whole country should record a 3% growth rate,” he added.

Tan said popular shopping centres in Penang would not suffer a large decline in shopping traffic.

“Newly-opened shopping centres during the last few years will have to work hard to draw in more retailers and shoppers.

“Shopping centres targeting for opening in the next two years will face difficulties attracting retailers.

“Retailers are holding back their expansion plans even though some of them may not be affected severely,” he said.

On office space, Henry Butcher Malaysia (Penang) director Dr Teoh Poh Huat said the present occupancy rate of about 75.5% for a total office space of around one million sq m was about the same as last year. “There is an overhang of 258,112 sq m,” he said, adding that the occupancy rate in 2007 was 74.4%.

Teoh said the rental rates for office space had remained flat since last year, ranging from RM2 to RM3.50 psf.

“According to a Henry Butcher survey, office rental rates in the country are expected to drop amid an economic slowdown. It is hard to quantify the decline, as there are still many tenants whose tenancies won’t expire for another two to three years,” he said.

“For those tenants whose tenancies are going to expire, the rental rates they get depend on their bargaining strength.

“It is now a tenant’s market. Landlords are ready to offer more concessions on rentals to blue-chip tenants.”

Teoh said there was no significant supply of new office space expected in the market.

“Most of the offices in the traditional financial district of George Town are old except for Wisma Great Eastern in Lebuh Light, which is about 60,000 sq ft.

“The occupancy rate for Wisma Great Eastern is about 80%. The rental for ground floor is RM4.30 psf, while the rental for the upper floor ranged from RM2.30 to RM2.80, depending on the units sea-view,” he said.

Teoh said the trend in demand nowadays was towards offices with layout plans that maximised space usage.

“Newer and better design office suites with fewer columns and greater space layout can help a company save on operation costs,” he said.

Meanwhile, C.A. Lim & Co proprietor Lim Chien Aun said the overhang of office space in Penang was partially caused by competition from buildings in non-commercial zones.

“Such buildings include pre-war and post-war houses that are converted for commercial use. These properties, with easy accessibility and main road frontage, tend to snatch potential clients of office buildings,” he said.

“Further more, such pre-war and post-war houses do not have maintenance and service charges.”

As for retail space, Lim said the current trend was for retail properties to be located away from George Town, where there was a strong catchment of population in areas such as Bayan Baru, Air Itam and Pulau Tikus.

By The Star (by David Tan)

The CEO much in demand

The office units of Ideal Home Properties Sdn Bhd’s RM110mil The CEO in Penang has appreciated by about 20% since the launch in late 2007.

“Due to consistent demand, those who purchased the units in The CEO will find the value of their properties has appreciated by some 20% since they signed the sale and purchase agreement with us,” Ideal Homes business development manager Adrian Tan told StarBiz.

An office unit in The CEO with a 500 sq ft built-up area is now selling for about RM98,000, while a 2,500-sq-ft unit is now priced at RM750,000, representing a 20% increase from the original selling price.

The CEO, the latest modern office building on the island, is 70% sold. The project is scheduled for completion in late 2009 and is expected to obtain the certificate of fitness in the first quarter of 2010.

Tan said that there was still demand for modern office building space.

“While there may be a general overhang of office space on the island, there is however a shortage of modern office building space equipped with broadband IT and other modern facilities, especially in the Bayan Baru vicinity, where The CEO is located.

“This is what we learnt when we conducted the feasibility study for The CEO two years ago before launching the project,” Tan said, adding that The CEO office units were likely to fetch between RM2 and RM2.50 per sq ft in rentals upon completion.

The building provides some 350,000 sq ft of gross commercial area and over 400 office units.

“The building has a specially-designed level to accommodate facilities such as a gymnasium, pool, restaurant and meeting rooms,” Tan said.

By The Star

Major construction projects awaiting government decision

THERE is urgency for a heightened pace of construction works flowing to keep at least one economic component pumping hard. With a new Cabinet line-up and by-elections (almost) out-of-the-way, we anticipate a refocus on development priorities.

Of the RM7bil first fiscal stimulus unveiled in November, only RM2.4bil worth of projects was awarded as at April 17.

Of this, RM350mil has been spent; the balance is still “work-in-progress”.

Plans are for a total RM5.2bil worth of projects to be awarded by June, and a full roll-out of RM7bil (38,000 projects) by August.

As for the RM60bil mini-Budget unveiled in March, RM15bil is fiscal allocation (RM10bil development, RM5bil operating), direct from the government’s coffers.

Of the RM7bil first fiscal stimulus, we estimate the construction component to be RM4.6bil.

The RM60bil mini-Budget offers RM11bil worth of works; the largest being the RM2bil LCCT, KLIA.

The 9MP, too, is not forgotten.

Of the RM230bil 9MP allocation for development for 2006-2010, only RM119bil has been spent as at end-2008, implying a potential RM111bil spending over 2009-2010 assuming the RM230bil is maintained.

For 2009, government’s gross development spending was projected at RM56.7bil (2008: RM42.8bil) before imputing the stimulus allocations.

Including the second fiscal stimulus package, this would reach RM60bil in 2010.

We expect a heightened pace of construction tenders and awards from mid-2009.

Major projects awaiting decisions are the Pahang-Selangor water transfer and Klang Valley LRT system.

The government has clearly no problem in fund raising, without the distraction of a banking crisis, as in 1998.

Year-to-date, RM30.5bil worth of MGS-GIS has been issued, out of a total RM95bil estimated for 2009.

Of the RM95bil, RM42bil is for refinancing while the balance RM53bil is new financing.

The RM30.5bil issued is already more than half of the official projected budget deficit of RM53.8bil for 2009.

This should be sufficient for the immediate roll-out of construction packages.

More focus on east Malaysia

Higher allocations under the 9MP and second fiscal stimulus, and the new Cabinet line-up imply “urgency” for more infrastructure development in Sabah and Sarawak.

Of the RM10bil development allocation under the RM60bil mini-Budget, Sarawak has the highest allocation of RM1.2bil while Sabah’s allocation was the sixth largest.

Sarawak Corridor of Renewable Energy (Score) and Sabah Development Corridor remain very relevant and we expect more construction works in Sabah and Sarawak.

We expect more positive news flow benefiting construction by mid-2009, with more mid-sized contracts of less than RM500mil each to lead the momentum for construction.

Top on the list of potential beneficiaries are contractors with long experience, excellent delivery track records and strong balance sheets to carry the weight of a turnkey contractor.

Our top picks for contractors of mid-sized projects are WCT and IJM Corp, which we upgraded to “buy” last week.

Increasing momentum of works at Sarawak should benefit home-grown contractors like Hock Seng Lee (HSL) and Naim Cendera.

We expect HSL, (outstanding order book of RM1.27bil), to record strong earnings growth in 2009 (+>20% year-on-year), while further job wins should sustain earnings into 2010.

We upgrade HSL to a “buy”.

We also expect Loh & Loh to gain from water- and energy-related works under Score.

WCT and IJM Corp, which have built up good track records, could benefit in Sabah.

Gamuda remains known for its construction ability in mega projects – SSP3 in 1999 and SMART in 2002 - and we think Gamuda may play a lead role in the Klang Valley LRT works.

However, it is a little early to review our “hold” call on the stock.

Our TP is raised after removing a 20% discount to our unchanged RNAV of RM2.50/sh.

By The Star

Sarawak emerges as a powerhouse

The long-unsettled Bakun hydro-electric dam project, for undersea transmission of electricity to the peninsula or be grid-guided within Sabah and Sarawak only, was recently decided on by the newly formed Cabinet.

Electricity will be transmitted to the peninsula from Bakun in Sarawak through cables on the sea bed as well as to Sabah, according to Energy, Green Technology and Water Minister Peter Chin Fah Kui.

The project will create considerable construction activity in Sarawak. While civil works are ongoing in the dam area, the upcoming submarine cable project is estimated to cost about RM9bil.

In a report last week, OSK Research noted that the decision meant the land-based transmission network would also proceed, a RM3bil project for which Malaysian Resources Corp Bhd (MRCB) could be a leading contender. The group is reputedly one of two major power transmission players in the country.

It is noted that MRCB is forecast to be valued at a price/earnings ratio of 160 times this year’s estimated earnings and 63 times next year’s at its share price of RM1.03. That also valued the group, which is developing Kuala Lumpur Sentral, at a price-to-book ratio of 1.5 times.

The Bakun undersea transmission project also revives the prospects for Leader Universal Holdings Bhd’s joint-venture company, UCS Holdings Sdn Bhd.

Leader said in December that it had exchanged its shares in Universal Cable (Sarawak) Sdn Bhd for shares in UCS which is being prepared for an initial public offering.

UCS’ principal business is in the manufacture of electrical wires and cables and the sub-contract of power and transmission-related works. It is believed that UCS was set up with the Bakun transmission project as its objective.

While the ongoing Bakun project is a boost for construction activity in Sarawak, it is expected that there will be a lot more works in the coming months.

In the past couple of months, at least three local brokerages reported they expected an acceleration in the award of construction jobs as the Government seeks to offset the current weakness in other sectors.

In a report last week, Maybank Investment Bank said it expected “a synchronised upturn” of fiscal stimulus programmes and Ninth Malaysia Plan spending. The funds are now available as RM30bil of Malaysian Government Securities have been issued to date.

Maybank Investment Bank also observed that among the states, Sarawak had the largest allocation under the second fiscal stimulus. Political analysts noted that Sabah and Sarawak had become politically important states.

The rollout of projects in these two states will provide opportunities for home-grown contractors such as Cahya Mata Sarawak Bhd, Naim Holdings Bhd and Hock Seng Lee Bhd. They have an advantage in being more familiar with the local landscape and people.

HLG Research said in a report that they would benefit from higher funding allocation and restricted tender policies adopted by these states.

Notwithstanding that, it is noted that contractors based in the peninsula have also been able to secure sizeable jobs in Sabah and Sarawak, and these players include WCT Bhd, Muhibbah Engineering Bhd and TRC Synergy Bhd.

Construction is a constantly cyclical industry as the weak domestic sector showed in recent years. Over the next two years, however, this will be a busy period for contractors in their home market.

By The Star (by C.S Tan)

Tan adds shine to KK shopping scene

The buzz around town may be talk of a recession and the global economic crisis, but none of it fazes businessman Humphrey Tan Koon Yee.

While others are postponing and pulling back on big projects and investments, the 57-year-old Tan is embarking on his life-long dream - and the biggest project he has yet to achieve - an ambitious RM330 million shopping centre in the heart of the Kota Kinabalu central business district.

The industrial engineer by training, who is now managing director of Makamewah Sdn Bhd, got an early insight into the business world, thanks to his father, who was one of Sabah's pioneer timber tycoons.

With his knowledge and values passed on from his father, he began his first foray into the business world with a small-time "Shop and Save" supermarket in his hometown of Sandakan in 1982, when neighbourhood sundry stores were the order of the day.

Since then he has ventured into the property business, opening up another "Shop and Save", a fashion outlet, a hotel, a hypermarket which was bought over by Giant, as well as the construction of Wisma Bandaraya, and a few oil palm plantations.

"Against this background, I had a dream to marry my years of experience in retailing, property development and financing to create the finest shopping complex in Sabah," Tan said.

He said that his confidence came from doing his analysis and knowing he had the best site in the city and the best team of consultants, anchor tenants and configuration for a shopping complex.

The shopping complex, Suria Sabah, is 700,000 sq ft of purely retail space for 250 outlets, in the centre of Kota Kinabalu's central business district and by the waterfront.

The mall will feature 70 per cent retail space for fashion and consumer durables, while the balance is for food and beverage and entertainment outlets. A four-star hotel with 80 per cent of sea-view rooms is also in the planning.

The eight-level shopping centre also has Metrojaya Department Store and Golden Screen Cinemas as its anchor tenants, who officially sealed the deal in a handover ceremony on Tuesday, which was witnessed by mayor Datuk Iliyas Ibrahim.

The mall was designed as a single lane mall, and 85 per cent ownership to be retained by the developer for maximum tenant control.

Tan said that so far, 30 per cent of its lots have been occupied, with many more waiting for confirmation.

The mall is expected to be completed by July, and operational by October this year.

By Business Times (by Julia Chan)

Making homes affordable

Mah Sing is offering homes at Aman Perdana at affordable prices.

While developers are offering a plethora of innovative packages for home ownership, buyers need to carefully consider their financial standing before signing on the dotted line.

AS we enter the middle of the year, more developers appear to be offering easy home ownership campaigns.

While some have started as early as last year, others are working with their banking partners to offer these schemes this year and are now rolling out their “goodies”. Going forward, there may be more of such schemes entering the market.

Datin Alicia Tiah with promotional materials for Idaman Residence, which is in the KLCC vicinity, and Idaman Villas, in Petaling Jaya.

Some developers are doing it to clear old stock; others may do so to avoid being left out, particularly in these very challenging times. As one developer puts it: “If I don’t offer an easy payment scheme, somebody else will and I will be disadvantaged.”

Be it old stock or new launches, developers essentially have to sell to generate revenue. If they own the land they are building on, and it is loan free, they are in a better position. If the land comes with a loan, it has a holding cost. If a developer is targeting local buyers, he will be in a better position than the one building for foreigners. If it is a landed project, it will be in a better position than say, a condominium development. So there are different scenarios and the list goes on.

Now, let’s take a look at the banks. Whether banks enter into these various easy payment schemes with developers depends on several factors. Essentially, what is the credit standing of the developer? Where and what is the project about? Is it residential or commercial, high-rise or landed?

The residential segment of the property market remains the most dominant in 2008, accounting for 64% of the total volume and 47% of the total value of transactions.

The local property market recorded 340,240 transactions valued at RM88.34bil last year. Even if a developer has good financial standing, and the project is a winner, the next question to be asked is the credit worthiness of the buyer.

Before signing on the dotted line, a buyer must bear in mind that a property is a long-term commitment.

While it is true that there are savings to be made if one were to buy today – what with the free legal loan documentation and stamp duty and other freebies – one must think carefully of one’s financial standing and cash flow.

Developers in today’s market scenario will dish out innovative packages because they want to sell. It is up to the buyer to think carefully of his/her financial standing and if he/she prefers to use the resources for something else.

Says TA Enterprise Bhd group MD and CEO Datin Alicia Tiah: “In this current market, every developer will have to come up with innovative ideas to make it easier for buyers. We will only lose out if we don’t.”

She adds that TA’s easy payment scheme for its semi-detached, bungalows and condominium developments in KLCC is not necessarily meant for just about anyone.

“Yes, we want to sell, but not just to anyone. The banks too, will have to see if buyers have the capabilities. It does not mean that with the easy payment scheme, everybody can buy something. The acid test is there,” she says.

Developers like TA, Glomac Bhd, IJM Land Bhd and Mah Sing Bhd have entered into such arrangements to boost sales.

Tiah says buyers stand to save nearly RM200,000 in terms of free legal fees and stamp duty, waiver on maintenance fees for the first year and free air-conditioning units for its semi-detached units in Idaman Villas in Petaling Jaya. Says Tiah: “Either the developers pay or the banks finance you.”

For its bungalow project Damansara Idaman, also in Petaling Jaya, buyers can save more than RM200,000 for the remaining five bungalows under the third phase. Buyers are required to fork out RM30,000 for the semi-detached units and RM50,000 for bungalows as an initial payment.

The fourth phase of Damansara Idaman, comprising 27 bungalow units, is yet to be launched but will not come under the scheme. It also has a third package for its Idaman Residence condominium in the KLCC vicinity.

TA is offering a 7% guaranteed rental return for that project which is currently 95% sold. There are 20 units left including seven penthouses. The scheme involves a downpayment of about RM50,000 to gain possession of a unit which is then leased back to developer for two years. The 7% may be used to offset the initial 10% of the cost of the RM2mil condominium.

IJM Land is offering homebuyers a 95% loan under its My Space Plan, which runs from April to June 30. The plan includes no interest payment during construction period, free legal fees on the sale and purchase agreement, free legal fees on loan, and free stamp duty upon transfer.

Its corporate communication manager Juliet Choong says the plan covers residential projects ranging from landed properties to high end condominiums in all regions from Penang, the Klang Valley, Seremban and Johor to Sandakan and Kuching in East Malaysia.

“We are targeting sales of RM250mil from this home ownership plan,” she says. IJM Land plans to launch about 10 projects with properties worth around RM700mil throughout the country.

It is particularly excited about the initial phase of one of their most exciting projects in Penang: The Light Linear and The Light Point. Also in the pipeline is Nusa Duta, a landed-mixed development project in Taman Perling, Johor Baru.

Over at Mah Sing, the developer is offering several packages depending on whether it is completed or otherwise. Essentially, the buyer pays 5% and the rest is a loan.

Glomac meanwhile is offering a 100% loan package with the usual freebies of free legal fees for signing of the sale and purchase agreement and loan documentation for three of its township developments – Bandar Saujana Utama in Sungai Buloh, Saujana Rawang in Rawang and Sri Saujana in Johor. The package is limited to residential units only. Buyers of its commercial projects have the possibility of 90% loans.

Group MD Datuk Fateh Iskandar Mohamed Mansor says if a buyer is not entitled to the 100% loan, the difference between the purchase price and the loan amount (which is called the differential sum) can be paid through an easy payment, interest free for 10 months.

The company is also offering a RM500 cash reward for existing buyers if they introduce referrals for properties in the three townships. In addition, it is also giving away a free TV for all township buyers for residential units only.

Although there is currently a plethora of goodies being offered, there is a cost to it.

If a developer is offering a package which offers a RM1,000 booking fee and a monthly repayment of RM1,300 for the next five years for a semi-detached unit, the buyer is essentially paying interest for the next five years. It is only on the sixth year that capital repayment kicks in and when this happens, the monthly repayment will swell to about RM2,000.

Says a Mah Sing spokesperson: “Some people prefer a low entry and pay more later. At RM1,300, the interest rate is actually 5.55% less 2%. So if the base lending rates moves to 7%, it’ll be 7% less 2%. There are things that buyers will have to consider other than just the low entry level. In addition to that, it is a 90% to 95% loan and the interest to be serviced will be high, especially when the tenure is long.”

So the little push is coming from both banks and developers, but hey the money is in your pocket.

By The Star (By Thean Lee Cheng)

High time to refinance your loan?

With lending rates at historical low levels, the obvious question to ask is – should one refinance their home loans? The answer is simple – if there are net savings to be enjoyed by refinancing the existing loan, then yes. If the impact is neutral, then there’s little point going through all that hassle.

Two years ago, banks were charging home buyers base lending rate (BLR) “plus” interest rates for their housing loans.

Today, the BLR for mortgages has fallen to a “minus” level. In addition, then, the average BLR was about 6.75% which was later adjusted to about 5.55% currently.


The fall in lending rates followed the unprecedented cut in overnight policy rate (OPR) by Bank Negara Malaysia since November last year by 150 basis points to 2% as it stands now.

Over the week, the central bank paused on its rate cut, leaving the OPR unchanged.

This has led some economists to predict that there will be no more OPR cuts for the rest of 2009 and 2010 which may give borrowers a reason to lock in their interest rates for housing loans at current low levels.

If the economy stabilises by next year, analysts expect interest rates to rise. But the views are mixed as there are also analysts who feel that if the situation worsens, Bank Negara could further cut the OPR.

Dr Choong Kwai Fatt, tax consultant and associate professor at the Faculty of Business and Accountancy, Universiti Malaya, opines that now may be a good time to refinance home loans.

“For refinancing, we recommend customers to change to Flexi loan, which allows them to make additional repayment and draw balance at any time with convenience of automated teller machine cards and cheque books. In addition, any amount in the current account is used to reduce the outstanding loan amount, hence there are interest savings,” he says.

AmResearch deputy head of research Fiona Leong concurs. She says banks are proactively trying to retain their customers from changing to other banks during this period as they scout for better packages.

“Customer retention is the name of the game for mortgage loan,” she says, quoting Hong Leong Bank Bhd’s statement.

In view of economic uncertainty, Leong says most economists expect some downward revision in BLR but none expect them to be sustantial.

Home owner Ang, 42, is planning to refinance his outstanding loan of RM153,000 given the prevailing low interest rates.

He’s not sure whether to do so with his existing bank or switch to another but it all depends on which one will offer more savings.

He took a RM200,000 10-year loan with current BLR plus 0.25% from a local bank three years ago and he has seven years remaining to service his outstanding loan.

By refinancing with his existing bank, he will be able to avoid the penalty fees of RM4,590 (imposed on those who switch banks) but the lending rate may be higher than what other banks could offer him for the rest of the loan tenure.

If he were to refinance, Ang says his monthly instalment will reduce to RM2,120 from RM2,240 per month.

Another option is for him to maintain the monthly instalment but reduce his loan tenure.

Hoping to take advantage of the situation by wooing customers, some banks such as EON Bank is offering packages that partially absorbs customers’ early settlement and legal fees but with slightly higher interest rates.

Public Bank Bhd is offering BLR minus 1.8% to 2.0% but the bank will not absorb penalty charges incurred by customers for switching bank during the lock in period.

Typically, banks’ lock in period is about five years; customers who switch banks before this period ends will have to fork out a penalty fee which comprises 3% of total loan amount or loan outstanding or a minimum penalty of RM5,000-RM10,000.

The fees however vary from bank to bank. There are other costs involved in switching lenders as well such as search fees, inspection fees, stamp duty and loan legal fees (usually costs less than 3% of total loan).

It is important to note that all rates and terms and conditions are negotiable, and hence, vary on a case by case basis.

By The Star (by K.C. Law)

Gloomy outlook for timber product sector

Projected pick-up in plywood demand from Japan the only bright spot going forward

The price outlook for Malaysian timber products remains flattish or negative, with an expected pick-up in plywood demand from Japan the only bright spot going forward, according to industry players.

Housing demand in Japan is expected to recover in September as a stimulus package for house buyers there starts to kick in, says Datuk Wong Kuo Hea, managing director of timber and plantation group Ta Ann Holdings Bhd.

Recently, plywood makers from three countries – Indonesia, Malaysia and Japan – had a meeting and agreed to try to sustain their prices.

“So plywood price has reached a bottom, (but) unfortunately consumption is going down for the next six months. Therefore, the price should be flat,” Wong says.

However, the demand for logs is still strong, particularly from India, but not from China where it is flat, he adds.

The International Timber Trade Organisation (ITTO), in its latest market report, says prices of Malaysian timber products “are not expected to hold,” due to the weakening domestic residential and commercial property industry.

The trade organisation notes that foreclosures of both private and commercial properties are on the rise in the wake of massive layoffs by major multinational companies and a slump in domestic demand.

“At the forefront of the layoffs were suppliers of major building and construction materials and household accessories.

“Prices of residential properties, often propped up by foreign investors and speculators, may actually decline for the first time,” it says.

However, ITTO sees a bottoming out of prices this month in Japan, a key importing market for Malaysian timber products. Prices of timber products in Japan are expected to bottom out after the Japanese Golden Week holidays in early May, it says.

On the global front, data show weakening timber-related exports.

Ghana reported dips in all timber product exports, except plywood, in 2008 while Brazil’s furniture exports to Argentina dropped 51% in the first two months of 2009.

Peru’s wood product exports also fell nearly 50% in the first two months of this year compared with the same period in 2008.

European imports last year showed a marked decline for tropical hardwood products, while China was the only country posting mixed results. China’s export value of wood and non-wood furniture grew 21.5% in 2008 but wood flooring sales declined in the fourth quarter of the same year.

By The Star (by Loong Tse Min)

Buyers stay on sideline to remain debt-free

ASIANS’ lower risk appetite has been a blessing as it has spared the region a more severe impact from the global financial meltdown. The people’s prudence and higher propensity to save have provided a much needed cushion to help them sail through the current tumultuous times.

We should be thankful for still upholding these virtues like what our great grandparents used to do in the good old days.

These virtues will hopefully be passed on to our children and grandchildren to appreciate the goodness of living within one’s means and saving for rainy days.

It is heartening to note that Malaysians have yet again shown that they are a prudent lot and have pulled the brakes on unnecessary spending.

This is seen in the high subscription for the various tranches of government bond issues to raise funds to finance projects and various allocations made under the two stimulus packages.

The global economy is still not out of the woods yet and there will still be many difficult months ahead before things start to stabilise again.

While the property “chase” in the United States has contributed to much of the over-lending activities and the sub-prime loans debacle that triggered the global financial meltdown last June, Malaysians have not succumbed to over-speculating in property and are not over-geared.

By and large, Malaysians are relatively unscathed by the subprime mortgage and credit crunch crisis that emanated from the United States.

Developers have served many cash buyers for properties priced above RM1mil, which goes to show that many rich Malaysians prefer to be debt-free than pay exorbitantly for their property, as they believe that by the time their bank loans are settled, the full amount they have forked out would add up to almost double the property’s price.

That was before Bank Negara slashed the overnight policy rate to an all-time low of 2% per annum in February and the subsequent drop in housing mortgage rates to as low as base lending rate minus 2.3% now.

With rates having came down to the current lows, does it mean that the market is ready to see a huge influx in property take-up and more people will be rushing to invest in property?

There are various schools of thought on the subject. Some, including developers, say this is the best chance for buyers to shop for their dream house as lending rates and property prices will not continue to stay at the current low but will start rising by the middle of next year.

By leveraging on the low mortgage rates and lock in at this level for their whole loan tenure, borrowers will be able to enjoy the prevailing low rates and save substantially on interests.

After all, property is a tangible asset and one of the best instruments to hedge against inflation when things start to get expensive again with an economic recovery.

However, there are others who believe that however low the cost of transaction may go down, it all boils down to the people’s confidence in the economy and their job security. They will not commit to a new property just yet until there are more convincing economic data to show a bottoming out of the global economic downturn.

Nevertheless, the latest March loan approval figures unveiled by Bank Negara of a 49.1% and 31.1% month-on-month increase in residential and non-residential property loan approvals show property buying activities are making a comeback.

The latest statistics also show that for the very first time in six months, residential property loan approvals have risen by 10.7% on year-on-year basis.

The higher figures show that the aggressive sales promotions by developers since late January are having a positive impact on property sales and loan approvals. Besides better sales numbers in the first quarter of this year, the higher loan approvals may also be driven by re-financing of existing mortgages.

Ultimately, the decision to buy or not depends on one’s financial capability and risk-propensity.

· Deputy news editor Angie Ng hopes that Malaysia and most parts of Asia will be spared the threat of a swine flu pandemic that is currently ravaging other parts of the world.

By The Star (by Angie Ng)

Few projects abandoned in Johor in last 10 years

Home buyers browsing at the Malaysia Property Expo 2009 at Johor Baru City Square shopping centre

JOHOR BARU: House buyers in Johor should not be unduly worried that housing projects in the state will be abandoned during the current economic downturn.

In the last 10 years, the state had seen only 2% of projects abandoned, said Real Estate and Housing Developers Association (Rehda) Johor branch chairman Lee Kim Chai.

He said most of the residential and commercial properties were close to completion and those completed were already issued with certificates of fitness.

“House buyers are becoming more knowledgeable and discerning and they will shop around before making their purchase,” Lee told StarBiz at the launch of the Malaysia Property Expo 2009 recently.

The four-day event saw 31 developers offering 8,000 units of mixed properties valued at more than RM2.7bil.

Lee expected most developers would not launch new products under the economic conditions now but would focus on selling off their completed units.

“Developers are also working closely with banks to offer different financial packages to attract buyers including low interest rates on approved loans,” he said.

Lee said given the abundance of real estate available, the Johor property scene would be market-driven with prices becoming more competitive.

Meanwhile, Asiatic Land Development Sdn Bhd vice president Habibullah Khong Sow Kee said the take-up rate for its two projects in Johor was encouraging during this downturn.

The projects are the Asiatic Indahpura township in Kulai covering an area of 2,832.79ha and Pura Kenchana township in Batu Pahat on a 3,642.17ha site.

He said 404.65ha had been developed in the Kulai project to date with 5,000 units of residential and commercial mixed properties and 129.49ha in Batu Pahat with 2,000 units of mixed properties.

“Demand for property in secondary towns such as Batu Pahat is good as people there are going for lifestyle living instead of just buying homes,” said Habibullah.

Asiatic Land is a wholly-owned subsidiary of Asiatic Development Bhd and a member of the Genting Group.

By The Star (by Zazali Musa) (Posted on 1st May 09)

EON Bank housing loans soar, thanks to Super Easi

EON Bank Bhd saw the number of housing loans almost doubling in the first quarter of 2009 from a year earlier, thanks to its Super Easi 123 Home Loan campaign launched last year.

The lender recorded a total mortgage loan acceptance of RM300 million for the first three months of the year, compared with RM190 million a year ago.

The Super Easi Home Loan campaign, which features a financing base lending rate of -2.2 per cent coupled with a 48 hours turnaround promise, managed to achieve RM1.025 billion in total sales in 2008.

"We still maintain our target of between 6 per cent and 8 per cent total loan growth for the year. The trend for the last three months has seen that the consumer segment has a better opportunity for growth. Having said that though, business loans are stable," EON Bank head of group consumer banking Michael Lor Chee Leng told reporters in Kuala Lumpur yesterday.

For the first-quarter, total loan disbursement grew by about 50 per cent to RM2 billion.

Of this, RM1.1 billion was from individual sectors of consumer loans such as higher purchase and home loans, while some RM900 million was disbursed to businesses.

EON Bank yesterday announced a three-month campaign, which offers customers who apply for a new home loan for both refinancing and purchases of completed properties a new Toshiba Natural Picture LCD television (TV).

The bank expects to lend out another RM400 million during the campaign.

The latest mortgage campaign is applicable to new home loan applications with a minimum amount of RM200,000 approved during the campaign period and accepted within 48 hours.

For approved loan amounts of RM200,000 to RM399,999, RM400,000 to RM999,999 or RM1 million and above, customers will automatically qualify for a 26", 32" or 42" Toshiba Natural Picture LCD TV respectively.

Toshiba Sales Services Sdn Bhd director Shunji Kamimura said the company is confident that it will be able to grow revenue to RM650 million for the current financial year, up from RM600 million registered in the last financial year ending April 30 2009.

Growth is expected to slow down to 10 per cent this year, as compared with the last three years which saw an average growth rate of 30 per cent.

"Even though growth is slowing we will not slow down on advertising and promotion spending. This year we have allocated RM30 million for activities such as this campaign," Shunji said.

By Business Times (by Presenna Nambiar) (Posted on 1st May 09)

Colliers awarded Best Commercial Real Estate Agency

KUALA LUMPUR: Colliers International has been awarded the Best Commercial Real Estate Agency Award 2009 in Hong Kong. With the win, Colliers is now in the running for the Best Commercial Real Estate Agency Award in the Asia Pacific region.

The award is a feature of the International Property Awards, a contest dedicated to identify the best real estate companies and professionals across the globe.

“Colliers prides itself for its excellent business partnership and unique culture. We are delighted to have won this award. The result is a reflection of our position in the Hong Kong real estate industry,” Richard Kirke, managing director of Colliers International Hong Kong, said in a press statement on April 30.

“We strive to deliver specialised services that are based on our in-depth market knowledge at the local, regional and global levels. It is great to have independent recognition that we add value for our clients, staff and the community where we do business.”

The International Property Awards are sponsored by institutions including the CNBC, New York Times and HSBC. The judges comprise professionals from a wide range of property disciplines.

By The EDGE Malaysia

LBS to launch 1,420 medium-cost terrace houses

KUALA LANGAT: LBS Bina Group Bhd aims to launch 1,420 medium-cost terrace houses with a total gross development value (GDV) of RM218mil in the Klang Valley by year’s end, said managing director Datuk Lim Hock San.

From left: LBS Bina Group executive director Alan Chia Lok Yuen, Datuk Lim Hock San and staff members at the launch of Iris Garden in Bandar Saujana Putra Wednesday.

The developer also has projects lined up in Ipoh, Cameron Highlands and Batu Pahat, Johor.

LBS will be launching 1,000 units in Bandar Saujana Putra and 420 units in Taman Tasik Puchong in the next few months, according to Lim.

“We want to build affordable homes priced below RM200,000 for the middle-income group,” he told reporters here after the launch of Iris Garden in Bandar Saujana Putra yesterday.

Lim said the group had sold about 85% of the 220 single-storey houses under the Iris Garden series since their soft launch in February.

LBS is confident of selling by next month all the units which have gross built-up areas of 968 sq ft and priced from RM149,900.

“We will then launch our Ruby Garden project that consists of 200 terrace houses with GDV of RM30mil located in the same area. We also hope to launch phase two of Iris Garden this year,” Lim said.

To date, 4,800 property units worth RM499mil have been completed and delivered to buyers in Bandar Saujana Putra.

It also plans to launch 588 single-storey semi-detached houses priced below RM200,000 in Batu Pahat, Johor with a GDV of RM90mil.

A further 680 apartments and 300 townhouses in Taman Golden Hill in Cameron Highlands, with a combined GDV of RM140mil, will be launched by the year-end.

“There is still demand for property amid the current difficult times and we believe that this is a good time for buyers to buy as mortgage interest rates are very low,” Lim said.

On why the company had been very quiet in recent years, he said: “We have been quiet for the past two years but we hope to have a higher profile again this year. With the right products and business directions, I believe this year would definitely be better for us.”

LBS currently has a total landbank of 2,500 acres in the Klang Valley, Pahang, Ipoh, Batu Pahat and Zhuhai in China.

By The Star

Home decor expo targets RM25m deals

The Home Decoration Exhibition 2009 (HOMEDEC'09), which began at the Kuala Lumpur Convention Centre (KLCC) today, is expected to see an increase in business transactions from RM23 million last year to RM25 million this time.

The four-day event is organised by C.I.S Network Sdn Bhd, a leading organiser of trade exhibitions and events management in Malaysia.

C.I.S Network president Vincent Lim said that in 2008, there were 230 exhibitors for the exhibition, while this year there are 260.

"HOMEDEC is aimed at creating a market place for homeowners to get more tips and information on the latest home decoration products. We are targeting 90,000 visitors throughout the exhibition," he told Bernama after a media tour of the event today.

Lim said given the economic downtrend, it was the best time for homeowners to purchase home decoration products, as prices are much more affordable.

He also said the home decoration industry is expected to record positive growth this year.

The products at HOMEDEC include home technology, kitchen and home appliances, bath and sanitary ware, windows and doors, pools and spa, bedroom and wardrobe, furniture and furnishings as well as interior decorating.

By Bernama

SP Setia leads rally in property stocks

SP Setia Bhd led a rally among Malaysian property developers, the country’s best performers this month, after central bank data showed loans approved for home purchases in March jumped the most in at least a year.

Shares of SP Setia, Malaysia’s largest developer, surged 12 per cent to close at RM3.54, the most since September 7, 1998, capping a 27 per cent rise in April. Sunway City Bhd jumped 5 per cent to RM2.11, adding to a 42 per cent monthly advance.

Loans approved for buying Malaysian residential property surged 49 per cent in March from a month earlier, the second monthly gain, adding to signs the industry may be rebounding.

The Kuala Lumpur Property Index of 87 stocks jumped 23 per cent this month, outpacing the benchmark Composite Index’s 14 per cent gain, and making it the best performing industry group on the stock exchange.

The industry is “showing signs of resiliency” and “incentives to buy property are more compelling now as the average lending rate is at a new low of 5.16 per cent,” ECM Libra Capital Sdn Bhd said in a report today. The “risk-reward trade-off is favourable now as opportunities for significant absolute gains are aplenty when stocks trade back up.”

Malaysia’s central bank said yesterday the domestic economy is likely to improve in the second half as the world economy stabilises. It refrained from lowering its benchmark interest rate yesterday, pausing after three consecutive cuts amid signs the worst may be over for Asia’s exporters.

Prime Minister Datuk Seri Najib Razak has unveiled two stimulus plans to bolster an economy he said may contract as much as 1 per cent this year.

By Bloomberg

Sunrise wins best residential awards in AsiaPac Property competition

10 Mont'Kiara

KUALA LUMPUR: Two luxurious condominiums under construction by Sunrise Bhd have won best residential awards in the Asia Pacific Property Awards 2009 competition.

Sunrise said on April 29 that 10 Mont’Kiara won in the category for “Best High Rise Architecture in Malaysia” and 11 Mont’Kiara for “Best High Rise Development in Malaysia”.

The Asia Pacific Property Awards were established in 2008 and were selected by independent judges selected by the International Property Awards organisers.

Twenty-one countries in the Asia Pacific zone took part in the coveted property awards this year which was sponsored by CNBC Arabia Television.

The luxurious bungalow-in-the-sky twin-tower 10 Mont’Kiara boasts 332 lavish units with sizes ranging from 3,478 sq ft to 4,090 sq ft and sprawling penthouse units of 7,500 sq ft.

11 Mont'Kiara

The iconic Green Mark-rated 11 Mont’Kiara presents five uniquely patterned curvilinear towers with a total of 339 units each enjoying a grand 270º view. With two private abodes per floor, unit sizes start from 2,700 sq ft with a choice of eight unique designs.

Limited units in both condominiums, located next to each other at Jalan Kiara 1, are available for sale.

By The EDGE Malaysia

Developers of luxury condo hardest hit

Analysts say property firms need new launches to boost sales

PETALING JAYA: The impact of the current economic downturn on property companies depends on the sub-segments that they are exposed to, with developers of luxury condominiums likely to take a much bigger hit, say analysts.

Developers also need to boost sales via new launches instead of sustaining on unbilled sales, they said.

OSK Research property analyst Mervin Chow said sales of luxury condominiums had been extremely slow.

“Certain speculators and short-term investors, especially those with poor holding power who have been trying to unwind their investments, will place massive downward pressure on luxury condo prices,” he said. “The glory days of luxury condos are over.”

Chow said the luxury condo segment “will experience a steep correction that should last for two years before a slight recovery, likely to be seen in 2011 when developers start to launch some projects which were scaled back in the previous two years.”

ECM Libra property analyst Bernard Ching agrees that companies which are exposed to high-end properties, especially condos within the KLCC and Mont Kiara areas, have been seeing declining sales.

However, Ching said many developers were now more prepared to face the downturn, having survived the 1997/98 Asian financial crisis.

“Most developers are now focused on preserving cashflow. This has been done by differring ‘greenfield’ projects which require substaintial upfront costs and focusing on existing projects or unsold stocks.

“Many developers are also introducing aggressive financing packages to entice buyers,” he added.

He noted that many developers were absorbing some of the upfront costs such as legal fees, stamp duties and even interest payments during the construction period and beyond.

For instance, early this year, SP Setia Bhd and Mah Sing Group Bhd required buyers to pay only 5% upon signing the sales and purchase agreement, with no further payments until completion of the projects concerned.

Analysts also noted that the sales performance of landed properties, especially in the mid to high-end segment, had been relatively better compared with luxury condos.

Chow said developers had been surviving on their huge unbilled sales built up in recent years, hence it was not a surprise that most were still able to report an impressive set of earnings figures in their latest quarterly results.

“However, as most of these developments are due for completion soon, much of these huge unbilled sales will be largely exhausted towards the later part of this year,” he told StarBiz.

An analyst at TA Securities concurred that some developers were sustaining on unbilled sales, and that they must have new launches to boost revenue.

“As long as companies have huge unbilled sales, they will still show resilient performance,” he said, adding that many developers were holding back on new launches now because buyers were adopting a “wait-and-see” attitude in anticipation of declining property prices.

Meanwhile, ECM Libra’s Ching said with the Malaysian property market in a downcycle for at least a year now, listed property companies had seen their market values decline significantly.

“Based on the KLSE Property Index, these companies’ market values have fallen by 48% since July 2007,” he said.

The TA Securities analyst said: “We will see price correction for mid-cap (property) companies by the end of the third quarter.”

By The Star (by Rachael Kam)

Mah Sing bags 2 AsiaPac Property awards

KUALA LUMPUR: Mah Sing Group Bhd’s Southgate Commercial Centre and Aman Perdana projects saw the lifestyle developer winning two coveted awards in the Asia Pacific Property Awards 2009.

Southgate in Kuala Lumpur was recognised as “Best Office Development in Malaysia”, whilst Aman Perdana in the Meru-Shah Alam corridor was named “Best Mixed Use Development in Malaysia”.

The awards, organised in association with CNBC Arabiya, would be presented to the winners at a gala dinner at the Marina Mandarin in Singapore on July 16.

Mah Sing said in a statement on April 29 the awards proved the group’s continued commitment to raise the benchmark as a premier lifestyle developer.

The Asia Pacific Property Awards 2009 was part of the International Property Awards, the world’s most prestigious competition dedicated to finding the best real estate professionals across the globe.

Mah Sing was named a winner of these coveted awards for three years from 2007 to 2009 which proved that Malaysia was not only able to compete at this level but also excel in this highly competitive Asia Pacific property arena.

Its innovative product development and quality of finishes, as well as committed customer service saw the group taking top honours in the property category in recent The BrandLaureate 2008-2009 awards.

The group also won in three categories in the Euromoney Liquid Real Estate Award 2008, which were Best Developer, Overall – Malaysia; Best Office/Business Developer – Malaysia and Best Mixed-Use Developer – Malaysia.

Mah Sing group managing director Datuk Seri Leong Hoy Kum said the group was gratified to be recognised for its development on an international level.

“Buying a property is quite probably the most significant personal expense anyone is likely to make during their lifetime. As a developer that is setting global standards, we will continue striving to live up to our buyers expectations by offering quality properties.

“Coming hot on the heels of our recent win namely Best Brand in Property in the prestigious The BrandLaureate Awards 2008-2009, these awards serves to encourage us and allow us to stand out in the crowded market place. We will continue to build a leadership position for Mah Sing Group Berhad whilst contributing to branding Malaysia globally,” he said.

Mah Sing, meanwhile, extended their “Easy Home Ownership” campaign to June 30, 2009. The campaign is a financing programme for their residential and commercial properties.

Of the purchase price, buyers are required to pay only 5% for residential properties, and 15% for commercial properties, with the balance payable upon completion of the properties. For completed residential properties, buyers can reduce their monthly installment payments by servicing only the interest on their loan amount for the first five years. Mah Sing Group will absorb the legal fees for the sales and purchase agreement, loan documentation, and memorandum of transfer for selected properties.

Mah Sing Group has 16 projects in Klang Valley, Penang island and Johor Bahru with RM3.8 billion worth of remaining gross development value and unbilled sales as at Dec 31, 2008.

By The EDGE Malaysia

House buyers cautious due to fears of income security

PETALING JAYA: Potential house buyers are still wary about making property purchases despite lower mortgage rates as the economic outlook remains uncertain, analysts said.

Average mortgage rates have fallen to about 3.5%, but at the same time banks have been more stringent on the approval of loans. The average mortgage rate is obtained from base lending rate (BLR) of 5.55% minus 1.5% to 2.4% for housing loans (or effective annual rates between 3.15% and 4.05%), depending on the amount and tenure of loans, and the package customers sign up for.

OSK Research said the attraction of lower mortgage rates had been superseded by fears of income security amid a deteriorating economic outlook.

“For those who are still financially sound, most would rather wait a while longer to snatch up better bargains a few more months down the road. Some are hoping for developers to come up with more creative and attractive perks and some are also waiting for prices to drop further, if any, before they are convinced to buy,” the OSK analyst told StarBiz.

The research house said downside risk for landed properties appeared limited compared to luxury condominiums, with the demand for landed properties expected to return by year-end.

“Most of the homebuyers in this segment are cash-rich and not highly leveraged. Given the accommodative interest rates today, any forced-selling or foreclosures of properties like the one we saw during the 1997/98 Asian Financial Crisis will be limited in this downcycle,” it said.

OSK Research expects the demand for luxury condominiums to decline by 30% to 40% in 2010 from 2008, with luxury condo prices already currently down by 15% to 20%.

An analyst from Kenanga Research agrees that the bearish economic outlook is making potential buyers hesitant about buying properties now.

“What if this (sign of market recovery) is just one-off data? What we need is for the sentiment to improve,” she said, noting that only 60% of bookings had been translated to actual sales compared to almost 100% previously due to more stringent loan requirements.

Jupiter Securities Sdn Bhd head of research Pong Teng Siew said that with the mortgage rates of 3.5% and effective cost of funds of 1.5%, banks net interest margin should be about 2% now.

“But cost of funds for smaller banks such as EON Capital Bhd, RHB Capital Bhd, AMMB Holdings Bhd are higher (slightly over 2%) because of higher interest bearing liabilities,” he told StarBiz.

A house buyer contacted by StarBiz said his current mortgage loan interest rate was 3.15% for the first two years and 3.45% for the remaining tenure.

He recently signed up for a 20-year conventional home loan from Alliance Bank Malaysia Bhd for the purchase of a double-storey house.

He is paying about RM1,700 per month for his RM300,000 loan.

His loan package included a one-time payment of RM2,500 for mortgage reducing term assurance, legal fees and stamp duty.

Other banks are offering similar mortgage rates.

For example, RHB Bank is charging BLR minus 2.1% for housing loans that range from RM250,001 to RM500,000, while Hong Leong Bank Bhd is offering BLR minus 2.2% for a RM300,000 mortgage loan.

Malayan Banking Bhd uses a property’s location as one of the criteria to determine interest rate, but is still offering rates in the region of BLR minus 2%.

All these banks have BLR of 5.55%.

By The Star (by K.C. Law)

Sime Darby sells 700 homes from 3rd showcase

PETALING JAYA: Sime Darby Property Bhd has clinched sales of over 700 units worth RM500mil from its third series of Parade of Homes showcase launched last month.

Managing director Datuk Tunku Putra Badlishah said the company’s initial target sales was RM600mil for the third showcase that runs till June 15. It had RM800mil worth of properties on sale for the third showcase.

“We are pleasantly surprised with the strong sales results amid the current economic situation.

“This proves the Malaysian property market is still resilient and people are still willing to invest in properties,” he told StarBiz.

Of its nine new launches, three projects were fully taken up.

Sime Darby’s Parade of Homes campaign, which was held in conjunction with Malaysia Property Expo 2009, has generated sales of RM246mil and RM146mil for its first and second series respectively.

Tunku Putra Badlishah said property buyers tended to purchase from reputable developers during this time for the assurance of completion of their projects.

“While other property developers are occupied with clearing their previous launches, we have, as of now achieved 60% of sales for our new launches,” he said.

Among the benefits offered during the showcase are special easy payment scheme that allows buyers to pay the difference between the purchase price and loan amount in monthly instalments of up to 12 months, base lending rate minus 2.3% after vacant possession and interest-free period during construction.

The property developer also provides a guaranteed buy-back programme.

By The Star (by Shannen Wong) 

Reviewing Malaysian REITs

Menara Axis in Petaling Jaya

The Malaysian real estate investment trusts (MREITs) were launched in 2005 after REITs in general hit the stock markets in Japan, Hong Kong and Singapore. Within a year 10 REITs were launched, one repackaged with another two oldies remaining, making up 11 REITs.

Before the global financial turmoil in 2008, the MREITs performed predictably well, yielding 6% to 7% dividend returns with marginal growth in share premium.

By end-2008, along with the rest of the equities market, the MREITs took a severe beating from which they have hardly recovered.

Some salient points of the MREITs are worth noting.

■ REITS share prices have declined substantially.

The MREITs today show a substantial discount to the net asset values (NAV) of the assets underlying the REITs, ranging from 23% to 39% (as shown in Table 1). The property market, in general, has not shown such drastic changes in values over 2007.

Although the asset base of the MREITs has increased, much of this is due to the injection of new and additional assets and not because of increases in asset values or appreciation in values.

The peculiar nature of this phenomenon is because of the nature of the REITs.

■ On a down market, REITS show equity tendencies, on an up market, REITS show bond tendencies.

Much research has been carried out by academics as to the behaviour of REITs. The research has been inconclusive.

It will appear, from the little information and research that can be done in Malaysia, that MREITs have a tendency to behave like an equity in a down market, that is, if the stock market declines the MREITs will also follow suit, irregardless of the stability, or otherwise of the underlying asset.


However, in an upswing, the fixed nature of the income and the inability of the underlying asset to react quickly forces the MREITs to behave like a fixed-income instrument, like a bond. This phenomenon would explain why the MREITs are now selling at a discount to the NAV.

■ Income to continue at current levels.

It is anticipated that the current income of the MREITs will continue at current levels and may not be affected by the general downturn. Almost all the MREITs were launched before 2007; therefore the rents underpinning their income were at 2006 and 2005 levels.

It is believed that these rents are sustainable and the majority of MREITs did not increase the rental levels to the high levels reached in 2007. Hence, the income and the dividend flow is expected to continue.

■ Sale and leasebacks will continue to perform better.

Another reason the income will be sustainable is because a number of MREITs has secured guaranteed returns on a sale-and-leaseback basis. Therefore, the downturn in the market is shielded.

■ Yields have increased tremendously.

The sustainable income, coupled with the decline in the net asset value, has boosted dividend yields to between 6% and 14%. Table 1 explains the dividend yield position of the MREITs in January 2009. These returns show, on average, an increase of 50% over the previous yields.

■ Singapore yields even higher due to a sharper drop in REITS pricing.

The sharper corrections to the equities market and the more prominent impact of the economy has affected the Singapore REITs, pushing prices down and, thus, increasing yields. Some REITs are giving yields in excess of 25% in Singapore.

■ Injection of new assets will face yield disparities.

The yield disparities have affected the injection of new assets into existing REITs. Most real estate pricings and rental incomes fall between 6% and 8% for commercial properties. When current yields are in excess of these returns, REIT sponsors will be unable to inject new assets at below the dividend yields.

■ Opportunities for acquisition of better quality asset.

However, the current downturn can also provide wonderful opportunities for the acquisition of better quality assets and a more competitive pricing of the real estate.

■ Refinancing.

Financing for REITs has been different from normal financing. As the requirement is for the income to be distributed, almost all the MREITs have been servicing only the interest component of the loan; there is no repayment, partially or otherwise of the loan.

This, coupled with the lower negotiated interest rates regime, has helped the MREITs to declare a higher dividend than the yields from the underlying asset.

In a number of cases, refinancing may be soon. In view of the reduced interest rates currently being considered by the financial institutions, it might be easier to get a lower interest rate.

The MREITs appear to have weathered the financial storm well as the discounts to the net asset value is manageable and not as severe as in other countries.

Added to that is the sustainable income from the rents.

It would appear, therefore, that MREIT yields will be maintained and the downside risks are manageable.

PEPS is the acronym for Persatuan Penilai & Perunding Harta Swasta Malaysia (Association of Valuers and Property Consultants in Private Practice Malaysia). We welcome your feedback on this article. Please email to starbiz@thestar.com.my.

By The Star

Freebies, low interest rates pamper house buyers

IT looks like potential house buyers are having the best deal ever — they are being courted by developers who are eager to seal more sales by offering better terms, including freebies, as well as financiers who have brought down interest rates to among the lowest since 1980.

At rates as low as base lending rate (BLR) of 5.25% minus 2.3%, buyers can lock in their loans for the whole of their loan tenure.

This is made possible by the all-time low overnight policy rate at 2% per annum now.

This compares with the previous rates of BLR plus a certain percentage of spread in the past two to three years.

The high liquidity in the local banking system as a result of the people’s high savings rate, coupled with a low loans growth in the past three to four quarters, has resulted in banks having huge cashpiles.

As at Feb 28, the loans-to-deposits ratio stood at only 73.6%, compared with 92.8% during the 1997 Asian financial crisis and 85.9% in 2001 during the dotcom bust. The banking system is flushed with total deposits of RM976.5bil while total loans disbursed amounted to only RM729.2bil.

This means close to RM250bil is still available for financing purposes.

Amid the global financial crisis and the adverse impact on the local economy, loans for most business sectors, including for small and medium enterprises, are expected to slow down further.

Property loans are still a major source of financing for local financial institutions but since last October, the monthly residential property loans growth has contracted by 5% to 27% on a year-on-year basis.

The low loans rate reflects the people’s cautious sentiment on the state of the economy and their unwillingness to spend on big-ticket items, including property.

Besides new property loans, banks are also looking at the refinancing market as more borrowers are considering the option of re-financing or re-mortgaging their properties to benefit from the existing low interest rates.

If one were to opt for a new loan facility from another bank, the borrower has to be prepared to pay penalty charges for early redemption of the loan. This usually works out to between 3% and 5% of the outstanding loan or the total amount taken.

Depending on the loan tenure and financing rates one has signed up for, it looks like most borrowers will opt to refinance their property as it will still work out to be cheaper for them, even after paying the penalty charges.

In view of the current challenging times when most people are watching over their spending, any amount of savings will be welcomed.

It is understood that some banks have offered to absorb the loan processing fees and penalty charges if the borrower switched to their loans.

With the many financing packages available today, the onus is on the borrowers to weigh all the costs and benefits before signing on the dotted line.

Angie Ng is deputy news editor at The Star

By The Star (by Angie Ng)

Paramount Venue plans to build apartments in Sentul

Developer Paramount Venue Sdn Bhd aims to launch six blocks of low-cost and low-medium cost apartments worth RM62 million collectively in Sentul, Kuala Lumpur, over the next 8-15 months.

The company will launch four blocks of low-cost apartments, comprising 850 units worth RM42,000 each, by year-end.

It expects to launch two blocks of low-medium cost apartments featuring 320 units, each priced at an average of RM80,000, by early 2010, project director Mohd Zainudin Badarudin said.

The properties will be built within its ongoing RM1 billion Bandar Sentul Utama township project, located close to the YTL Sentul east and west developments.

Mohd Zainudin said the low-cost apartments are primarily for squatters occupying several sites at the township while the low-medium cost apartments are to cater to the low-income group.

"We are in the midst of submitting the building plans to City Hall for approval," he said yesterday after handing over keys to buyers of Sentul Utama condominium at the township, witnessed by Datuk Bandar Kuala Lumpur Datuk Ahmad Fuad Ismail.

The 28ha Sentul project was supposed to have been developed in 1997 but failed in 1994 as its developer, Sentul Murni Sdn Bhd, a unit of Mycom Bhd, was dragged into a legal battle by squatters located within the township.

To rid itself of assets that are slow to develop, the ailing public-listed Mycom sold Sentul Murni to Paramount Avenue in 2005.

At the time when Paramount Avenue took over the project, only the first phase comprising low-cost apartments had been completed, while 80 per cent of Phase Two namely the Sentul Utama Condominium and the following phases were abandoned.

In less than 30 months after Paramount Venue took over, it completed three 17-storey blocks (Sentul Utama Condominium), totalling 720 units.

It hopes to start constructing the final block, or Block D, by August.

"We are waiting for building approvals and for the squatters to relocate. Block D will have 240 units with added features, each priced from RM180,000. We have Singaporean investors who are keen to buy the units," Mohd Zainudin said.

Earlier at a press conference, Ahmad Fuad said a programme has been put in place to help relocate squatters in project areas.

"Between 1990 to 2007, there were 270 abandoned projects in the Federal Territory, majority of which have been revived. We need more white knights like Paramount Venue to take over abandoned projects for the sake of buyers," he said.

By Business Times (by Sharen Kaur) (Posted on April 28, 2009)