Suncity in tie-up to develop Tianjin Eco-City

PETALING JAYA: Sunway City Bhd (Suncity) has teamed up with Sino-Singapore Tianjin Eco-City Investment and Development Co Ltd (SSTEC) for a project in Tianjin Eco-City, China, which an estimated gross development value worth more than RM2.48bil.

SSTEC is a 50:50 joint venture between a Chinese consortium led by Tianjin TEDA Investment Holding Co Ltd and a Singapore consortium led by Keppel Group.

Tan Sri Jeffrey Cheah

Sunway group chairman Tan Sri Jeffrey Cheah said a memorandum of understanding had been signed between the two parties to conduct market research and a feasibility study.

“We will decide on the feasibility of the project after we complete it in

six months,” he told reporters yesterday.

The second-phase development of the project will be a mixed-development project constituting 88% residential and 12% commercial properties, with construction expected to begin from 2011.

In a statement, Suncity said it was “optimistic that China’s property market will continue to grow at a healthy level as a result of an urbinisation process, a process that will see China’s urban population swell to approximately 850 million by 2020 or 47%.”

The project is Suncity’s biggest in China.

The Tianjin Eco-City is a landmark bilateral project between China and Singapore.

Located in the Tianjin Binhai New Area, the 30 sq km Tianjin Eco-City will be a modern township where 350,000 people will live.

Separately, Cheah said Sunway Holdings Bhd would rely on its own reserves to fund its Singapore joint-venture condo project with Hoi Hup Realty Pte Ltd.

“The company has enough funds to proceed with the 400 to 500 condo units there,” he said, adding that Sunway would have a 30% stake in the venture.

The project, which has a gross development value of S$435mil, covers 207,000 sq ft at Jalan Senang and Lengkong Tujoh off Sims Avenue.

By The Star

SunCity to take part in RM2.5b China project

The massive 3,000ha Tianjin Eco-City, which is worth several billion ringgit, will be developed in three phases from 2011.

Sunway City Bhd (SunCity) has signed a joint-venture agreement with Sino-Singapore Tianjin Eco-City Investment and Development Co Ltd (SSTEC) to undertake a RM2.5 billion mixed development in Tianjin, China.

However, implementation of the project is subject to a feasibility study.

The massive 3,000ha Tianjin Eco-City, which is worth several billion ringgit, will be developed in three phases from 2011.

SunCity will develop part of the second phase, covering 41ha, with SSTEC.
Sunway Group founder and chairman Tan Sri Dr Jeffrey Cheah said that a joint-venture company, led by SunCity, will be set up after the study is completed.

The joint-venture company will build bungalows, villas, semi-detached and terraced houses, high-rise residences and commercial properties, including a shopping mall, on less than 20ha. The rest will be kept green.

"We are very confident of this project as it is driven by the Chinese and Singaporean government. SSTEC has attracted the largest and best eco-developers in Asia. This proves the project will happen," said Cheah.

He was speaking at a press conference yesterday in Bandar Sunway, Selangor, after inking an agreement with SSTEC to carry out the study and market research, and to come up with a sustainable business model for the project within six months.

The developers include China's Shimao Group, Japan's Mitsui Fudosan and Taiwan's Farglory Group, which are involved in the first phase of Tianjin Eco-City.

"The main thing is to get the right product so the development can run. The next six months is very crucial. We will plan the 41ha properly to come up with a sustainable, workable and viable development," Cheah said.

He added that the project will be funded by equity and bridging finance.

Part of the funding will also come from a real estate investment trust (REIT) that SunCity is planning to launch in the next one to two years.

SSTEC is the master developer of Tianjin Eco-City. It is a 50:50 joint venture between the Chinese consortium led by Tianjin TEDA Investment Holding Co Ltd and the Singapore consortium led by the Keppel group.

Tianjin Eco-City is a landmark bilateral project between China and Singapore with private-sector investment and development. When completed, it will have 26,500 households.

SSTEC chief executive officer Goh Chye Boon said it was targeting reputable developers from the project to work with when it embarks on new projects in China.

"We want to make sure Tianjin Eco-City is sustainable so we can replicate the development in other parts of China. We are looking for bigger land now," Goh said, adding that SunCity may be given more jobs in Tianjin Eco-City.

He said SunCity may also be roped in to work on other projects that the Chinese and Singaporean consortiums are eyeing in China, Indonesia, Vietnam and India.

By Business Times (by Sharen Kaur)

Sunway City rises to 9-day high

Sunway City Bhd, a Malaysian property developer, rose to a nine-day high after the company said it plans to collaborate with a Chinese company and a Singapore consortium led by Keppel Group to develop a housing and office project in China.

The stock climbed 1.3 per cent to RM3.23 at 9:11 am local time in Kuala Lumpur, set for the highest level since October 19.

By Bloomberg

Empire Shopping Gallery operational by Q1 2010

SUBANG JAYA: The Empire Shopping Gallery, which is expected to be fully operational by the first quarter next year, has already leased out 70% of its lettable units.

Owned by Couture Homes Sdn Bhd, the five-level lifestyle neighbourhood shopping gallery has a gross built-up area of 600,000 sq ft with 180 stores.

It will offer among others, international and domestic brands, food and beverage outlets, and a gourmet supermarket.

Couture Homes managing director Datuk Sean Ng said Empire Shopping Gallery was designed to be a lifestyle and contemporary centre that Subang Jaya would be proud to call its own.

“We believe we are the only shopping gallery to dedicate an entire floor to children called the Empire Junior Floor,” he said in a statement.

He added that the gallery’s primary focus was edutainment, featuring a centre for the learning arts such as ballet, drama, linguistics, information technology and a host of creative arts in addition to toy stores.

The company yesterday help a topping-off ceremony to symbolise the completion of the the gallery’s construction.

The Empire Shopping Gallery is part of the freehold Empire Subang commercial development that comprises three additional elements – Empire SoHo, Empire Tower and a boutique hotel.

Empire SoHo offers 210 home offices. The Empire Tower is a 12-storey office block while the 13-storey Empire Hotel is destined to be the latest stylish gateway for business and leisure travellers.

Couture is a member of the Mammoth Empire Group of Companies.

By The Star

SP Setia in China JV project

KUALA LUMPUR: SP SETIA BHD's subsidiary is teaming up with China's Hangzhou Ju Shen Construction Engineering Ltd to undertake a mixed real property development project in XiaoShan, Hangzhou.

It said on Wednesday, Oct 28 its subsidiary, Setia (Hangzhou) Development Co. Ltd and Hangzhou Ju Shen would set up a limited liability joint-venture company to undertake the project on 25 acres of land there, of which five acres would initially be developed under the first phase.

"The management of SP Setia is of the view that the JV Contract will further drive the Group on its way towards achieving its overseas expansion ambitions supported by the success and awareness generated through its maiden international, integrated commercial and luxury high-rise development projects," it said.

SP Setia said the JV contract also provided an important opportunity for the group to start off with a small presence in the fast-growing Hangzhou property market and progress from there to the larger China market.

In view of the above, the JV contract augurs well for the company and is expected to contribute positively to the future earnings and cash flow of SP Setia.

By The EDGE Malaysia (Joseph Chin)

Mixed reaction to property tax

PETALING JAYA: The Government’s proposal to reimpose the real property gains tax (RPGT) may ensure a more balanced property market in the long run but industry players see it as counter-productive to the ongoing efforts to stimulate investments in the property sector.

Under Budget 2010, the RPGT of 5% would be imposed from Jan 1 on gains from the disposal of real property irrespective of the holding period and category of owner.

Prior to the exemption of the RPGT in April 2007, tax on gains from property sales was on a progressive basis from 30% to 0% depending on the holding period of the property.

Industry players and analysts see the reinstatement of the RPGT as premature when the property market is just recovering from the global financial crisis.

However, they hope the move to allow Employees Provident Fund (EPF) contributors to utilise their current and future savings in Account 2 for home purchase would compensate for the imposition of the RPGT.

Datuk Ng Seing Liong ... RPGT will adversely impact fragile market’s confidence level

Real Estate and Housing Developers Association (Rehda) president Datuk Ng Seing Liong said re-instating the RPGT after a brief exemption period of less than three years would adversely impact the already fragile market’s confidence level among investors, both local and foreign.

“Worse, the move is also a reinforcement of Malaysia’s infamous ‘flip-flopping’ property investment policies,” Ng added in a statement yesterday.

He urged the Government to review the RPGT proposal and carefully study the cost-benefit analysis of such a move before its implementation.

Rehda also viewed the re-imposition of RPGT at 5% irrespective of number of years of acquisition as “punitive to owners of existing housing units who may have bought their properties decades ago.”

Ng said the owners might want to sell their houses to upgrade to better properties or to relocate.

HwangDBS Vickers Research said in a note yesterday the property tax was a “negative surprise” and would “dampen the velocity of transactions”.

Concurring with the view, CIMB Research said the 5% RPGT “was a shock to us as the Government had suspended RPGT 2½ years ago to give the property sector a boost and attract foreign purchasers.”

Although the real property sector had enjoyed some measure of recovery in the past three to six months, the research house said transactions remained subdued and many developers had yet to undertake new project launches.

“The RPGT of 5%, although low, could make developers pause and gauge market conditions before taking the plunge, which would push back their earnings recovery. Also, the re-imposition of RPGT may stir fears of more RPGT increases in future years, which could have a compounding dampening effect on the sector,” CIMB Research added.

ECM-Libra described the reinstatement of the RPGT as a “shocker.”

“This may dampen property buyers’ sentiment and may deter speculative activities to a certain extent,” it said in a note yesterday.

According to Mah Sing Group Bhd group managing director Tan Sri Leong Hoy Kum, the waiver of RPGT since April 2007 had been effective in boosting sentiment and increasing domestic and foreign demand in the local property market as it had lowered the cost of property sales.

As Mah Sing catered mainly to first-time home buyers, owner-occupiers and the upgraders’ market, Leong said it would not bear the brunt of the impact of the RPGT.

SP Setia Bhd president and CEO Tan Sri Liew Kee Sin said:”We cannot assume that purchasers who have bought these properties are going to sell upon completion. Many are first time buyers looking to set up a home and we also have many purchasers who are upgraders.”

Liew said at 5%, the RPGT would not significantly impact decisions to buy or sell properties, regardless of the holding period.

“RPGT is a tax on gains derived and not proceeds received from the disposal of real property. The reimposition of the tax by the Government at this time indicates their confidence in the health of the sector and also that there are decent gains to be made from property transactions,” Liew added.

Sunway City Bhd managing director of property development Ngian Siew Siong concurred that a tax rate of 5% “is very minimal and should not be a deterrent to buyers and investors.” “Malaysia’s property prices are still comparatively lower than those in other regional countries,” he said.

However, Ngian wants gains from properties acquired more than five years ago to be exempted from tax, pointing out that those who kept their properties for over five years comprised mainly owner-occupiers and long-term investors who did not speculate in the property market.

“After all, the RPGT was introduced to curb speculative buying and as such, owner-occupiers and non-speculators should not be burdened by it,” he said.

By The Star (by Angie Ng)

Real property gains tax and green tech incentives

This is the final of a three-part question-and-answer series provided by PricewaterhouseCoopers on various aspects of Budget 2010

Q. I have owned my house for 10 years. I am thinking of selling it next year, or maybe consider giving it as a gift to my son. I am a Malaysian citizen. Will I need to pay real property gains tax (RPGT)? At what rate? Will there be any special exemptions available to me?

A. If you sell the property, the rate of RPGT applicable would be 5% of the chargeable gain as per the intention of the reintroduction of RPGT.

As an individual, under the Budget proposals, you will be entitled to an exemption of RM10,000 (previously RM5,000) or 10% of the chargeable gain, whichever is the higher.

You are entitled to a once in a lifetime exemption from RPGT for disposal of a private residential property. If you give the house to your son as a gift, you will be exempted from tax, as it is proposed that all gifts of real property between parent and child, husband and wife, grandparent and grandchild would be exempt from tax.

I took a loan to finance the purchase of a piece of property a few years ago. If I sell my property, can I incorporate the interest that I have been paying on the loan as part of the purchase price of the property when calculating the RPGT liability?

Based on the proposals in the Finance Bill 2009, you will no longer be able to include any interest incurred on capital employed to acquire the asset as part of the acquisition price of your property in calculating the RPGT liability.

I sold a piece of property in January 2007, which at the time, resulted in a loss to me for RPGT purposes. However, the government then announced the RPGT exemption from April 1, 2007 onwards. As a result, I have not been able to utilise the tax relief from that RPGT loss ever since. Can I still use that tax relief when RPGT is imposed again from next year?

Based on the transitional provisions proposed in the Finance Bill 2010, if you were entitled to a tax relief for RPGT purposes and have not utilised that tax relief at March 31, 2007, you will be entitled to claim that relief as a deduction against any RPGT assessed in the first year of assessment subsequent to the year of assessment 2009, and so on for subsequent years of assessment, until the whole amount of the relief is fully allowed as a deduction.

The principal activity of my company is the manufacture of food products. The board of directors decided to register trademarks of some of our products with the Domestic Trade and Consumer Affairs Ministry. I understand that the recent budget announcement proposes that the expenses incurred on the registration of trademarks in Malaysia will be allowed as tax deduction for purposes of income tax computation. Can you please confirm?

The proposed tax deduction on the expenses incurred on the registration of trademarks will only apply to companies which have a paid-up capital in respect of ordinary shares of RM2.5mil and less at the beginning of the taxable period.

Note that the company should not be related to a company which has a paid-up capital in respect of ordinary shares of more that RM2.5mil at the beginning of the taxable period.

In addition, the company should not have full-time employees exceeding 150 persons nor annual sales turnover exceeding RM25mil respectively.

The registration expenses include fees or payments made to trademark agents registered under the Trade Marks Act 1976.

This deduction is essentially targeted for small and medium enterprises. This proposal is effective from Year of Assessment 2010 to 2014.

To expand the use of green technology, the government launched the Green Building Index (GBI) on May 21, 2009. Can you elaborate on what GBI pertains to and some of the tax incentives available.

GBI was developed by Pertubuhan Akitek Malaysia and the Association of Consulting Engineers Malaysia.

Under the GBI assessment framework, points will be awarded for achieving and incorporating environment-friendly features which are above current industry practice.

Two different sets of GBIs have been developed for both commercial and residential properties.

The assessment criteria include:

·Energy and water efficiency

·Indoor environmental quality

·Sustainable management and planning of building sites in respect of pollution control and facilities for workers

·Usage recyclable and environment friendly materials and resources

·Adoption of new technologies

As a measure to encourage the construction of buildings using green technology, it is proposed that the owners of buildings awarded the GBI certificate be given exemption equivalent to 100% of the additional capital expenditure incurred to obtain the GBI certificate.

This incentive is applicable on new buildings and upgrading of existing buildings.

The proposal is effective for buildings awarded with GBI certificate from Oct 24, 2009 until Dec 31, 2014.

Further details on GBI can be viewed at http://www.greenbuildingindex.org.

By The Star

Rush to beat property gains tax deadline

Thinkproperty.my has reported an unusually high number of new listings after the 2010 Budget announcement as well as a high number of price cuts for properties on sale

The reintroduction of a real property gains tax (RPGT) from January 1 next year appears to have triggered a rush to sell properties but agents said it will be very tough to beat the deadline.

Thinkproperty.my, a website that lets people advertise their properties for free, said it has seen an unusually high number of new listings after the 2010 Budget announcement.

There have also been a high number of price cuts for existing properties that are on sale. However, it did not provide detailed numbers.

Last Friday, Prime Minister Datuk Seri Najib Razak said the RPGT will return next year at 5 per cent after it was scrapped in 2007.
But agents think it is just a knee-jerk reaction. Property consultant Sharizal Supian said a property deal takes between three and six months to complete, which means it will be very hard to beat the January 1 deadline.

The RPGT has not been well-received as many think it would halt the growth of the property market.

Thinkproperty.my chief executive officer Asim Qureshi believes the re-introduction of the tax has been a year or two too soon.

"We need some of the feel good factor to gain momentum and this tax can only slow down that momentum.

"Furthermore, I believe that having a tax exemption for property owned for a certain number of years would be better as the tax would target property speculators," he said in a statement.

Asim said Malaysia is increasingly seen as an international property hot spot and the RPGT will somewhat undermine that view.

However, he thinks that at 5 per cent, the reintroduction has been gentle and it may not significantly disrupt the market.

"In terms of opportunity, it will be a good time to buy in the secondary market from now until year-end which is where the tax will have its most direct impact," he said.

Emkay Group chief oper ating officer Peter Teh has a different take. He thinks that any sudden surge in sales in the next few months would be mainly due to a recovering property market.

He said the tax will not deter serious home buyers. "They are also not really buying now but over a few years and they will not fell the pinch as it will pass through in the next coming years."

Property stocks took a beating yesterday as the property tax was "a negative surprise" to investors, analysts said.

IJM Land Bhd, the country's fifth biggest property developer, fell 2 per cent to RM2.44, while Sunrise Bhd slid 4.6 per cent to RM2.28. Eastern & Oriental Bhd shed 6.5 per cent to RM1.15.

By Business Times (by Zaidi Isham Ismail)

Flurry of property transactions on the cards

KUALA LUMPUR: The proposed flat tax rate of 5% on gains from any property transacted, irrespective of the number of years it is held before being sold, is expected to create a spike in transactions of property held for five years and more, said a tax consultant.

The consultant said that in a bid to minimise the effects from the tax that was proposed in the Budget 2010, the number of property transactions is expected to significantly increase over the next few weeks leading up to the end of the year.

The proposed tax is to take effect from Jan 1, 2010.

In tandem with developments that are expected to negatively impact the property sector, stock prices of property counters on Bursa Malaysia have declined.

The property index fell 15.12 points to 805.26 with IGB Bhd and IJM Land Bhd being the top losers. IGB, which is the ultimate parent company of MegaMall and Properties surrounding it in Mid-Valley, shed 14 sen to close to RM2. IJM Land, which is fast gaining ground as the next “S P Setia”, lost 12 sen to close at RM2.37.

The tax consultant said that medium- and long-term property investors and companies holding property for more than five years would dispose the property within the next few weeks.

The consultant said that since 1976 when the real property gains tax (RPGT) was introduced, property transacted after five years of ownership were not taxed.

“But the new proposal calls for tax on all property transacted irrespective of the number of years it is held. This will disadvantage those holding properties for more than five years and that have seen an appreciation in its value,” said the consultant.

He cites an example of a person or company that has held a property for more than five years and looking at a gain of RM1 million.

“After Jan 1 next year, the tax would be equivalent to RM50,000 for a gain of RM1 million. If the property is transferred before January 2010 for say RM1 million and sold a year or two later for about RM1.1 million, the tax will only be on the gain of RM100,000 which is RM5,000,” said the consultant.

However not all are of the view that the ruling would spark a slew of transactions by people owning property for more than five years.

KGV-Lambert Smith Hampton executive director Samuel Tan said that it was too early to tell whether there would be a spike in property listings or transaction.

“But I foresee people becoming more careful when it comes to purchasing and selling a property, thus slowing down the momentum we are just starting to gain which is detrimental to our marke,” he said.

However, nearly all players in the property sector agree that the proposed tax was not fair to long-term holders of property.

According to YY Lau, a director of YY Property Solutions General, the people who are being penalised are those who own properties for many years.

“Long-term owners will feel discriminated. When they bought their properties 20 to 30 years ago, they were not told they will have to pay a 5% RPGT. That is why, there should be an exemption for properties owned for more than five years.”

He also said that it was not clear as to why the RPGT would be imposed.

“If it meant to curb speculation, then I’m afraid it’s counter-productive. In fact, it will encourage speculation, as there is no difference whether you sell within a year or five years like previously where a progressive rate based on the years of ownership was in place. If there is no differentiation, what’s to stop a speculator from selling and buying?”

Raine & Horne International Zaki and Partners Sdn Bhd executive director Lim Lian Hong expected the proposed tax to be an immediate shocker but in the long run, it won’t be a big deal.

“However, this will affect those who own properties for longer number of years. If you bought a house over 30 years ago, the prices would have appreciated and it would cut into the profit they will make from the sale. The government needs to take another look at the ruling as tax should not be imposed on properties owned for more than five years.”

By The EDGE Malaysia (by Jacqui Chan)

Exemption order on real property gains tax likely this week

The Finance Ministry is expected to come up with an exemption order on the Real Property Gains Tax (RPGT) this week to clear the confusion surrounding the RPGT proposal.

Under the 2010 Budget, the government proposed a fixed tax rate of 5 per cent on gains from the disposal of real properties effective January 1 next year.

However, based on the Finance Bill, disposals within two years of acquisition will be taxed 30 per cent, 20 per cent in the third year and 15 per cent in the fourth year, while disposals within five years and beyond will still be subjected to 5 per cent.

"As far as the Act is concerned, the rate is still there, which is 5 to 30 per cent. Exemption order has yet to be gazetted but it is coming out very soon, maybe around this week," the Finance Ministry's Under Secretary, Tax Analysis Division, Siti Halimah Ismail, said in Kuala Lumpur yesterday.
She was speaking to reporters after the 2010 Post Budget Dialogue, organised by the Malaysian Economic Association and University of Malaya's Faculty of Economics and Administration, and supported by Standard Chartered Bank Malaysia Bhd.

By Bernama

SP Setia: Pact execution extended to Feb 20

PROPERTY developer SP Setia Bhd said its wholly-owned unit KL Eco City Sdn Bhd and Datuk Bandar Kuala Lumpur (DBKL) have agreed to extend the period for the execution of a privatisation agreement up to February 20 2010.

Both the parties were supposed to execute the agreement within two years from the date of a memorandum of understanding (MOU) entered on August 21 2007.

Under the MOU, SP Setia has agreed to pay, through DBKL, compensation to a maximum of 600 squatter families amounting to RM3.6 million for the land near Mid Valley in KL, to be developed into a mixed residential and commercial development as a privatisation joint-venture project.

By Business Times

SP Setia in Viet deal

SP SETIA Bhd, through its subsidiary, Setia Lai Thieu Ltd, has signed an agreement with Investment and Industrial Development Corp for the assignment of 27 acres of land worth US$16.26 million (RM54.96 million) in Lai Thieu Town, Vietnam.

The land will be developed into a US$250 million (RM845 million) mixed-use project, which is expected to take six years to complete.

The development will include shop houses, commercial centres, a club house and apartments.

Lai Thieu Town is located 16km north of Ho Chi Minh City and an hour’s drive from Tan Son Nhat International Airport.

This will be SP Setia’s third project in Vietnam.

By Business Times

SP Setia plans Vietnam project

PETALING JAYA: SP Setia Bhd plans a mixed property project with gross development value of US$250mil in Vietnam.

SP Setia said its subsidiary, Setia Lai Thieu Ltd, had entered into an in-principle agreement with Investment and Industrial Development Corp (Becamex) for an independent mixed-use real estate project in Binh Duong Province.

“It shall entail a mixed development of about 1,700 units comprising shophouses, terrace houses, semi-detached houses, commercial centres, a clubhouse and apartments,” it said in a filing with Bursa Malaysia.

The project would be on 26.79 acres and would be transferred from Becamex to a newly-formed company for US$16.26mil, it said.

“The US$16.26mil was arrived at by aggregating all the costs and expenses for compensation and payment of all land-related fees,” it added.

By The Star

Builders fall on property tax

KUALA LUMPUR: IJM Land Bhd led real estate stocks lower and builders fell after Prime Minister Datuk Seri Najib Tun Razak imposed a capital gains tax on property and the Government cut development spending.

IJM Land, Malaysia’s fifth-biggest developer, slid 5% to RM2.37 while IGB Corp lost 6.5% to RM2.

The property tax was a “negative surprise” and would “dampen the velocity of transactions,” HwangDBS Vickers Research Sdn Bhd said in a report.

The Government aims to bolster revenue and cut spending to help trim a budget deficit to 5.6% of gross domestic product next year from a 22-year high of 7.4% in 2009.

Malaysia planned a 5% capital gains tax on property from January to help broaden the base of revenue collection, Najib said last Friday. Development expenditure will be reduced by 4.4% to RM51.2bil next year.

Gamuda Bhd, Malaysia’s second-biggest construction company, lost 1.4% to RM3.30, set for the biggest decline since Oct 9. IJM Corp Bhd dropped 1.2% to RM4.86.

“Although we believe the property market has bottomed, we view this measure came too soon,” Citigroup Inc said in a report yesterday, referring to the property tax. It’s a “negative for the sector as it would curb buying interest.”

Sunway City Bhd and Sunrise Bhd had their stock ratings cut to “hold” from “buy” by HwangDBS, which also lowered the target prices of SP Setia Bhd, DNP Holdings Bhd and Eastern & Oriental Bhd.

Shares in Sunway were unchanged while Sunrise fell 4.6% to RM2.28. SP Setia lost 1.3% to RM3.81, headed for the lowest level since July 13. DNP sank 6.6% to RM1.41 and Eastern & Oriental declined 6.5% to RM1.15.

“The Government needs to ensure that the Malaysian tax system is equitable and able to generate revenue for development purposes,” Najib said in his budget speech. Property tax exemptions for families would remain, he said.

Malaysia scrapped a three-decade old capital gains tax on property in April 2007 in a bid to help clear a backlog of unsold homes and attract overseas funds.

Previously, the capital gains tax on property was 30% within the first two years, falling to 5% by the fifth year. For foreigners, the old tax started at 30% for the first five years, dropping to 5% in the sixth and subsequent years.

Neighbouring Singapore said in August it wouldn’t proceed with an earlier plan to impose a tax on some property transactions after receiving negative public feedback.

The city-state had planned to tax individuals who sold more than one property within a four-year period to deter speculation.

By Bloomberg

MBAM to host construction summit

The Master Builders Association Malaysia (MBAM) will hold the second Malaysian Construction Summit on November 10 at the Sunway Pyramid Convention Centre.

Industry players and government officials will gather at the one-day event to talk about issues and produce some practical solutions for the industry.

For further details please contact Zharraine Chang, senior executive officer at 03-7984-8636 or email mbam02@mbam.org.my.

By Business Times

Malaysia builders, steel firms lower

STEEL makers and select property stocks suffering further selling pressure after the government slashed development spending goal for 2010.

AMONG builders, Gamuda was down 0.3 per cent, WCT dipped 0.37 per cent and IJM, the country’s largest construction group by assets, fell 0.62 per cent.

Steel maker Ann Joo slid 2.65 per cent and Perwaja, the country’s largest steel firm by output, was unchanged after a weak opening.

Prime Minister Datuk Seri Najib Razak last week said development spending will be cut by 4.5 per cent next year as the government moves to contain ballooning budget deficit following this year’s big stimulus plans.

By Reuters

5% cap for real property gains tax

PETALING JAYA: The Government will issue an order to cap the real property gains tax (RPGT) at 5%.

Second Finance Minister Datuk Seri Ahmad Husni Hanazdlah reiterated the RPGT of 5% was imposed on gains from the disposal of real property irrespective of the holding period and category of owner.

“In the Budget 2010 presentation, the Government proposed that real property gains tax at a fixed rate of 5% be imposed on the gains from the disposal of real property effective Jan 1, 2010,” Husni said in a statement yesterday.

“The rate imposed is irrespective of the holding period and the category of the owner,” he added.

The 5% rate will be implemented through the Real Property Gains Tax (Exemption) Order 2009.

“This order will be gazetted as soon as possible and is effective Jan 1, 2010.

“Therefore, the current rate of RPGT, which is higher than 5% as in Schedule 5 of the Real Property Gains Tax 1976, will no longer be applicable,” he said.

However, exemptions to individuals are given as follows:

● The level of exemption is increased from RM5,000 to RM10,000 or 10% of the chargeable gains, whichever is the higher;

● Gifts between parent and child, husband and wife, grandparent and grandchild; and

● Disposal of a residential property once in a lifetime.

There was some confusion when after the budget announcement last Friday, Deloitte Malaysia country tax leader Ronnie Lim said in a statement that the highest rate for RPGT was 30%.

Based on the Finance Bill, Lim said, disposal within two years of acquisition will be taxed 30%; in the third year, it will be 20%; in the fourth year 15%, while disposal within five years and beyond, will still be subject to 5% tax.

“Through our press release of Oct 23 in connection with Budget 2010, we reported on the proposed changes to the Real Property Gains Tax (RPGT) Act 1976 as a result of the Finance Bill.

“The Finance Bill retained all the holding period sensitive rates of RPGT in force prior to the suspension of that tax (in April 2007) but, in respect of individuals, introduced a 5% tax rate in place of a nil rate for disposals which take place after the fifth year from acquisition date.

“Apart from this rate change, the existing rates of RPGT in effect prior to the suspension of that tax were not altered by the Finance Bill,’’ Lim explained in a statement yesterday.

“The Ministry of Finance has issued a press release on the matter and explained that a 5% rate of RPGT, irrespective of holding period and category of tax payer, individuals or companies, will be introduced through a ministerial exemption order.

“When the ministerial exemption order is issued and gazetted, the rates of tax in the RPGT Act will be modified by the rates in the order.

“Generally, such orders are temporary in nature and specify a commencement and cessation date. These orders may also be renewed or revoked.

“As long as the order is in force, the rates of RPGT in the Act, which begin at 30%, will be over-ridden by the rates to be specified in the order,’’ Lim said, adding that a flurry of property transactions was expected before the end of the year.

By The Star

Developers, builders fall on property tax

IJM Land Bhd led Malaysian real estate stocks lower and builders fell after Prime Minister Datuk Seri Najib Razak imposed a capital gains tax on property and the government cut development spending.

IJM Land, Malaysia’s fifth-biggest developer, slid 2 per cent to RM2.44 at 10.28 am local time, outpacing the FTSE Bursa Malaysia KLCI Index’s 0.4 per cent decline. IGB Corp lost 3.3 per cent to RM2.07.

The property tax is a “negative surprise” and will “dampen the velocity of transactions,” HWANGDBS Vickers Research said in a report today.

The government aims to bolster revenue and cut spending to help trim a budget deficit to 5.6 per cent of gross domestic product next year from a 22-year high of 7.4 per cent in 2009.
Malaysia plans a 5 per cent capital gains tax on property from January to help broaden the base of revenue collection, Najib said on October 23. Development expenditure will be reduced by 4.4 per cent to RM51.2 billion next year.

Gamuda Bhd, Malaysia’s second-biggest construction company, lost 1.2 per cent to RM3.30, set for the biggest decline since October 9. IJM Corp dropped 1.2 per cent to RM4.87.

“Although we believe the property market has bottomed, we view this measure came too soon,” Citigroup Inc said in a report today, referring to the property tax. It’s a “negative for the sector as it would curb buying interest.”

Sunway City Bhd and Sunrise Bhd had their stock ratings cut to “hold” from “buy” today by HWANGDBS, which also lowered the target prices of SP Setia Bhd, DNP Holdings Bhd and Eastern & Oriental Bhd.

Shares of Sunway were unchanged, while Sunrise fell 2.9 per cent to RM2.32. SP Setia lost 1.3 per cent to RM3.83, headed for the lowest level since July 13. DNP sank 2.7 per cent to RM1.47 and Eastern & Oriental declined 4.1 per cent to RM1.18.

“The government needs to ensure that the Malaysian tax system is equitable and able to generate revenue for development purposes,” Najib said in his budget speech. Property tax exemptions for families will remain, he said.

Malaysia scrapped a three-decade old capital gains tax on property in April 2007 in a bid to help clear a backlog of unsold homes and attract overseas funds.

Previously, the capital gains tax on property was 30 per cent within the first two years, falling to 5 per cent by the fifth year. For foreigners, the old tax started at 30 per cent for the first five years, dropping to 5 per cent in the sixth and subsequent years.

Neighboring Singapore said in August it wouldn’t proceed with an earlier plan to impose a tax on some property transactions after receiving negative public feedback. It had planned to tax individuals who sold more than one property within a four-year period to deter speculation.

By Bloomberg

Naza TTDI set to bag RM14b job

The property arm of the Naza Group is set to bag the job to build Malaysia's largest international conference and exhibition centre for heavy industries

NAZA TTDI, the property arm of the Naza Group, is set to clinch a RM14 billion property development project on a 24.2ha parcel of land near the Malaysia External Trade Development Corp (Matrade) headquarters in Kuala Lumpur.

Sources said the flagship project will be the construction of Malaysia's largest international conference and exhibition centre.

It will specifically cater to heavy industries like shipping, machinery, trains as well as high technology industries such as aerospace.

"The expo centre is part of the government's vison to elevate Malaysia as a regional hub at par with South Korea, China and Japan as well as bolster innovation among Malaysians," said a source.
The project will also include residential units such as condominiums as well as commercial buildings and may take at least five years to complete.

It is understood that the project will be signed between the government and the Naza Group as early as the end of this month (October 2009).

"The expo centre will offer something different because traditionally people always go to the Putra World Trade Centre, Kuala Lumpur Convention Centre and Matrade headquarters for small- and medium-scale events, furniture fairs, export-import fairs or auto shows.

"This massive expo centre will offer something never done before, which are heavy industries such as ships and airplane components and even aerospace," said the source.

Sources said the Naza Group is currently seeking financial partners and is willing to do the project on a joint-venture basis.

It has approached banks like CIMB Group Holdings Bhd, the AmBank Group as well as government-owned funds like the Employees Provident Fund and Permodalan Nasional Bhd.

Neither Naza TTDI managing director SM Faliq SM Nasimuddin nor other Naza officials responded to questions sent by Business Times.

The Naza Group, traditionally known for its automotive operations, also aims to gain equal prominence in its property business as it targets to become among Malaysia's top three developers in five years.

The group is sitting on 180.59ha of land in the Klang Valley with a potential RM7.6 billion gross development value (GDV).

Naza TTDI raked in a net profit of RM86 million on revenue of RM239 million last year.

It has secured orders of RM1.8 billion from projects like the Platinum Park near the Kuala Lumpur City Centre, of which RM1.5 billion has yet to be billed.

By Business Times (by Zaidi Isham Ismail)

SP Setia in US$16.2m Vietnam JV

KUALA LUMPUR: SP Setia Berhad Group's subsidiary, Setia Lai Thieu Ltd is teaming up with Vietnam's Investment and Industrial Development Corp (Becamex IDC Corp) to undertake a mixed-use project in Vietnam valued at US$16.26 million.

The project would be carried out in Lai Thieu, Binh Doung province. The site is 16km north of Ho Chi Minh City and an hour's drive from Tan Son Nhat International Airport.

The development will encompass shophouses, terraced houses, semi-detached houses, commercial centres, club house and apartments which will be for lease and for sale.

"The project is expected to take six years to complete and has a gross development value (GDV) of US$250 million," said SP Setia.

The site is 2.5km from Phase 1 of the Vietnam Singapore Industrial Park with 230 international manufacturers from 22 countries with investments of more than US$1.4 billion. The working population is more than 40,000.

The project will be SP Setia's third project in Vietnam after EcoLakes at My Phuoc Industrial Park, 40 km north of Ho Chi Minh City and EcoXanh at Saigon Hi-Tech Park in District 9 of Ho Chi Minh City.

SP Setia made its maiden foray into Vietnam in mid-2007 when it teamed up with Vietnam’s state-owned conglomerate, Becamex to develop EcoLakes, a 558 acre eco sanctuary, conceptualised after SP Setia’s award-winning Setia Eco Park in Shah Alam.

The success of EcoLakes has reinforced SP Setia's confidence in the Vietnamese property market - in particular that of the Binh Duong Province.

By The EDGE Malaysia

Tax plan spurs new property listings: Website

The government's move to re-introduce Real Property Gains Tax (RPGT) from Jan 1 next year seems to have spurred some borderline sellers to put up their properties on the market, according to Thinkproperty.my.

The move has also encouraged others to reduce their prices to make sure they sell before the end of this year, the property website said in a statement today.

Thinkproperty.my said it saw an unusually high number of new property listings over the weekend as well as an unusually high number of listings where the price had been reduced from an earlier stated price.

Its chief executive officer Asim Qureshi said the re-introduction of the tax will play in important role in stamping out speculative investments in property.
"Speculations in property markets have caused the boom and bust cycles we have seen in many other real estate markets across the world and avoiding that kind of instability would be a positive," Qureshi said.

"However, while we have seen a surge in confidence in the property market in recent months, I cannot help but feel the re-introduction of the tax has been a year or two too soon," he said.

Qureshi said that having a tax exemption if the property was held for a certain number of years would have been better as the tax would have been more targeted at property speculators.

"One concern I do have is the message that this move will send out to foreign investors. Malaysia is increasingly being seen as an international property hotspot, and the re-introduction of the tax will somewhat undermine that view," he said.

"There is a big difference between 100 per cent tax-free property gains, which jurisdictions like the United Kingdom, the United Arab Emirates, Singapore and Hong Kong offer and a low rate of tax of five per cent."

On a positive note, Qureshi said the rate of tax was only five per cent of the gains, adding that the government has done the right thing by re-introducing the tax gently so as not to significantly disrupt the market.

"In terms of opportunity, I believe it will be a good time to buy in the secondary market from now until year-end, which is where the tax will have its most direct impact," he said.

"A lot of property owners will want to sell their properties before the deadline which means more supply, yet in the backdrop we have increasing confidence in the Malaysian property market and the country's strong economic fundamentals."

Thinkproperty.my, launched in October 2007, is owned by Think Media Sdn Bhd. The website has over 20,000 members and a rapidly growing database of over 70,000 quality property listings.

By Bernama

Malaysia clarifies Real Property Gains Tax

SECOND Finance Minister Datuk Seri Ahmad Husni Hanadzlah clarified that the Real Property Gains Tax, effective January 1 next year, is fixed at 5 per cent, irrespective of the property disposal year.

"The Real Property Gains Tax for the first year is 5 per cent and is the same for the second, third, fourth and fifth year," he reportedly said on Saturday.

In a statement released from Putrajaya yesterday, Ahmad Husni reiterated that in the 2010 Budget, the fixed 5 per cent tax to be imposed on the gains from the sale of property is irrespective of the holding period and the category of the owner.

This rate of 5 per cent will be implemented through the Real Property Gains Tax (Exemption) Order 2009. This Order will be gazetted as soon as possible and is effective January 1, 2010.
Therefore, the current rate of RPGT, which is higher than 5 per cent as in Schedule 5 of the Real Property Gains Tax 1976, will no longer be applicable.

The Second Finance Minster said there are three circumstances where the property owner is exempted from the 5 per cent gains tax.

The first is where the level of exemption is increased from RM5,000 to RM10,000 or 10 per cent of the chargeable gains.

The second, is when the property sale are gifts between parent and child, husband and wife, grandparent and grandchild. And finally, when the disposal of a residential property is a once in a lifetime transaction.

By Business Times

Exemption order on property tax out soon

The Finance Ministry is expected to come up with an exemption order on the Real Property Gains Tax (RPGT) this week to clear the confusion surrounding the RPGT proposal.

Under the 2010 Budget, the government proposed a fixed tax rate of five per cent imposed on gains from the disposal of real property effective Jan 1 next year.

However, based on the Finance Bill, disposal within two years of acquisition will be taxed 30 per cent, 20 per cent in the third year and 15 per cent in the fourth year while disposal within five years and beyond will still be subjected to five per cent.

"As far as the Act is concerned, the rate is still there, which is five per cent to 30 per cent. Exemption order has yet to be gazetted but it is coming out very soon, maybe around this week," Finance Ministry's Under Secretary, Tax Analysis Division, Siti Halimah Ismail, said today.
She was speaking to reporters after the 2010 Post Budget Dialogue, jointly organised by the Malaysian Economic Association and University of Malaya's Faculty of Economics and Administration, and supported by Standard Chartered Bank Malaysia Bhd.

Gains from the disposal of property are subject to tax under the Real Property Gains Tax Act 1976 to curb speculative activities in the propoerty sector. However, the RPGT was exempted in 2007 to help the property sector.

Siti Halimah said the government is expected to collect some RM500 million from the real property gains tax in 2010 but lost RM240 million in individual income tax due to the reduced one per cent from 27 per cent to 26 per cent.

On the sources of tax revenue, she said that Malaysia's tax base was narrow.

"Being a narrow base, the revenue is not sustainable actually. For example, the import duty, because our commitment to free trade agreements, we have no choice but to reduce the rate," she added.

Come Jan 1, 2010, an estimated 98 per cent of the goods that come from Asean countries will be at zero import duty.

Siti Halimah said Malaysia's tax revenue was dependent on petroleum income, which contributed over 40 per cent to the total federal government revenue.

"Therefore, we have to find new sources of revenue for the government and we have a lot of new sources of growth, namely biotechnology, green technology, information and communications technology, and financial services," she said.

On the Goods and Services Tax (GST) which is expected to increase the government''s revenue collection, Siti Halimah said: "That is the reason why the government would like to push for the GST."

The government was in the final stage of its GST study, she said.
On the restructured fuel subsidy scheme, Siti Halimah hoped that the scheme would help to reduce the subsidy burden on the government.

"We hope to save government expenditure and the scheme is focused on only the targeted group," she said.

By Bernama

New York's biggest ever US$5.5b real estate poised to flop

NEW YORK: It was the most expensive real estate deal in U.S. history. Now it's poised to become one of the biggest flops.

At the height of the real estate bubble in 2006, an investment group led by New York City real estate firm Tishman Speyer Properties and BlackRock Realty Advisors paid US$5.4 billion for a pair of gigantic Manhattan apartment complexes known as Stuyvesant Town and Peter Cooper Village.

The price seemed outrageous to many, but the company believed it had a winning strategy: It would aggressively convert thousands of rent-regulated apartments occupied by middle-class families into luxury units that would fetch top dollar.

Three years later, to the glee of many New York renters, the tactic has been a bust.

Tenants fought back, conversions happened much slower than expected and a state court ruled Thursday that about $200 million in the company's new rent increases were improper.

Real estate analysts say the ownership group is now just two to three months away from a likely default on the $3 billion mortgage it used, along with a $1.4 billion secondary loan, to buy the property.

Foreclosure looms as a strong possibility.

Even before the state Court of Appeals ruling on a lawsuit filed by the apartment complex tenants, ratings firms had estimated that the value of the 80-acre (32-hectare) property, home to 25,000 people, had fallen to as little as $2 billion - far less than the outstanding loan balance.

Given the math involved, "I wouldn't be surprised if they just want to walk on it," said Steve Kiritz, a senior vice president at the credit ratings agency Realpoint LLC

"The whole master plan with this project had been for Tishman to come in and ramp up the number of units that were paying market rent," he said. New York state's rent regulation laws place restrictions on how much landlords can charge renters for many apartments.

Regular folks - especially those who have had home financing problems of their own - might laugh at the folly until they realize that some of their own money might be tied up in the deal.

Some of the biggest equity investors in the deal are public pension funds that manage retirement system benefits for millions of government employees.

Florida's State Board of Administration had put $250 million into the project. It has already written off the entire investment as a loss.

California's two largest government pension funds, the California Public Employees' Retirement System and the California State Teachers Retirement System, invested a combined $600 million.

CalSTRS has also already written off its $100 million stake.

Tishman, by comparison, stands to lose much less.

Its share was $112 million, less than 2 percent of the purchase price.

A spokesman for the company declined to comment Friday on the project's future.

Tishman Speyer's co-chief executive, Rob Speyer, told The New York Times in a recent interview that win or lose on the court case, "the asset is going to require a restructuring."

"Once the court case is resolved," he said, "we'll speak to our debt holders as well as our fellow equity investors."

Teams of lawyers will likely spend the next few months fighting over who gets control of the complex and which lenders are entitled to get some money back, said Dan Fasulo, a managing director of Real Capital Analytics.

How much they recover, and who is wiped out, may come down to how much appraisers decide the buildings are really worth, based on more realistic rent projections.

"I had a number, put together last week, that I thought was fair. I don't think that number is fair anymore," Fasulo said.

"No one could give you an honest appraisal right now."

Stuyvesant Town isn't the only such project to run into trouble after plans to increase rents went poorly.

An investment group that purchased Riverton Houses, a big development in Harlem built around the same time as Stuyvesant Town, ran into financial problems after its bid to convert hundreds of rent-regulated units to market rates went slower than expected.

One analyst estimated the value of the complex in September at $108 million, about half the value of the $225 million mortgage on the property, which is currently in default.

Any debt restructuring process at Stuyvesant Town is likely to be complicated.

The mortgages that financed the deal were chopped up, repacked and sold as Commercial Mortgage Backed Securities to a variety of investors.

Fasulo said the complexity of the arrangement and the size of the property itself mean that a traditional liquidation still might not happen.

A sale, he said, "would be very disadvantageous at this time," given the state of the real estate market.

"There would be tremendous demand," he said, but at such a depressed price that the lenders might be better off holding on to the troubled property.

By AP

Existing home sales surge

WASHINGTON: Sales of existing US homes surged a record 9.4 per cent in September as Americans rushed to take advantage of a tax credit for first-time buyers before it expires next month.

Purchases rose to a 5.57 million annual rate, more than forecast and the highest in more than two years, the National Association of Realtors said on Friday in Washington. The median price fell at the slowest pace in a year as the number of houses on the market shrank.

While sales may cool unless Congress decides to extend the US$8,000 (US$1 = RM3.38) credit due to expire November 30, lower prices and mortgage rates have also made houses more affordable and may cushion any decline. Smaller price decreases show the market is stabilising as demand improves, easing the strain on consumer finances that deepened the worst recession since the 1930s.

"The excess supply of unsold homes has declined a lot and this reduces the downward pressure on home prices," said Harm Bandholz, an economist at UniCredit Global Research in New York.
"An improvement in house prices is an important condition for a rise in housing wealth and therefore higher willingness of households to start spending again."

By Bloomberg

Major US real estate lender files for bankruptcy protection

In its bankruptcy filing Sunday in Delaware bankruptcy court, the company listed total debt of $21 billion and assets of $20.1 billion.

CHICAGO: Capmark Financial Group, one of the largest U.S. commercial real estate lenders, has filed for bankruptcy protection amid mounting bad debt, becoming the latest casualty in the still turbulent U.S. real estate market.

Capmark has been hurt by rising losses on mortgage loans, and has had to foreclose on properties such as the Equitable Building in Atlanta because borrowers were not able to make loan payments.

In its bankruptcy filing Sunday in Delaware bankruptcy court, the company listed total debt of $21 billion and assets of $20.1 billion.

It seeks to reorganize under court protection, reducing its debt while continuing to operate its businesses.

Many U.S. banks and real estate investment trusts have been hurt by increasing losses on commercial real estate loans.

With millions of jobs lost and office space remaining empty during the recession, developers have been forced to default on loans.

Analysts predict that commercial real estate defaults will rise rapidly.

"We view this reorganization process as an unfortunate but necessary response to recent unprecedented conditions in financial and commercial real estate markets, which presented a significant challenge for Capmark and similarly situated finance companies," said Capmark President and CEO Jay Levine, in a statement.

"By constraining the availability of capital, these difficult market conditions had a negative effect on all our core businesses."

Last month, Pennsylvania-based Capmark posted a $1.6 billion quarterly loss, as it set aside $345.8 million to cover loan losses during the quarter ended June 30.

The company had been in talks with lenders and bondholders to restructure its debt so that it could stay in business.

Capmark in September agreed to an option to sell its North American servicing and mortgage businesses to Berkadia III LLC - a joint venture of Warren Buffett's Berkshire Hathaway Inc. and Leucadia National Corp.

Now that Capmark has been forced to file for bankruptcy protection, it will receive $415 million in cash and a $75 million note in the deal, minus any losses on a portfolio of mortgages.

Had the transaction been completed outside of bankruptcy court, Capmark would have received $375 million in cash at the closing.

Berkadia would have held $40 million to cover indemnity claims and pay the $75 million note.

Capmark was created in 2006 after a private equity group led by KKR & Co., Goldman Sachs Capital Partners and Five Mile Capital Partners bought the commercial real estate business of lender GMAC LLC for $1.5 billion in cash.

According to the bankruptcy filing, the group owns 75.4 percent of the company.

GMAC owns 21.3 percent, with most of the remaining shares owned by employees and directors.

Messages left for KKR, Goldman Sachs and Five Mile were not immediately returned on Sunday.

In a statement, Capmark said its Capmark Bank subsidiary is not part of the bankruptcy filing.

The bank, which recently received $600 million in new equity from Capmark Financial, will continue to serve its customers.

As of Friday, Capmark and its units involved in the filing had more than $500 million of cash and cash equivalents available to fund operations.

Capmark said it believes it has enough liquidity at this time to allow it to pay vendors for goods and services and to pay salaries and continue benefits to its employees, and has filed motions with the court to allow it to do so.

"The Chapter 11 process will give Capmark the opportunity to restructure our balance sheet while continuing to focus on maximizing value for our principal stakeholders," said Mohsin Meghji, the company's chief restructuring officer, in a statement.

Capmark's filing marks the latest in a string of commercial real estate-linked bankruptcies.

General Growth, the second largest shopping mall owner in the U.S., in April filed for bankruptcy protection in the largest U.S. real estate bankruptcy case in history with $27 billion in debt.

Extended Stay Hotels LLC in June also filed for bankruptcy protection, citing massive debt stemming from its 2007 acquisition by the Lightstone Group at the peak of the hotel market and a sharp drop in business travel due to the recession.

By AP

Better days ahead for condo market

Artist’s impression of 11 Mont’Kiara. The project will be completed in 2011.

The mere mention of Mont’Kiara easily strikes a chord among many Klang Valley folks and property investors as it is a vibrant neighbourhood and is one of the favourite property hotspots in the country.

There are currently close to 10,000 completed condominiums in Mont’Kiara, its neighbouring areas in Sri Hartamas and the newer Dutamas area. Another 6,000 units are expected to come on stream in the next couple of years.

Although transactions almost halted early this year following the global financial crisis, sentiment is gradually recovering since the middle of this year, with more transactions concluded in the secondary market.

Overall, the market had fared quite well although average prices of high-end condominiums in Mont’Kiara have dropped by 10% to 15%. Thanks to the buyers’ tenacity and the more flexible repayment terms offered by financial institutions, there was no fire sale reported so far.

Knight Frank Research, in its latest Real Estate Highlights, says although the market for high-end condominiums is still soft, prices seem to have bottomed out especially for suburban condominiums.

The market is starting to show some signs of recovery as more buying activities are seen in the second half of the year.

However, the report points out that despite the renewed interest, the downside of the sector lies in the incoming supply of new condominiums which will be completed in the second half this year and in 2010.

According to Zerin Properties chief executive officer Previndran Singhe, the asking prices for the older residences range from RM400 to RM650 per sq ft, while the newer projects have price tags from RM450 to RM750 per sq ft.

Rental rates are holding out quite well with the older developments enjoying yields of between 7% and 10% last year.

Previndran says the higher entry cost for the newer projects will push yields down to around 6% this year.

“Prior to this bout of global crisis, most properties in Mont’Kiara have seen substantial increases in prices, averaging gains of at least 50% for most of the completed developments. Moving ahead, we expect prices of apartments to hold,” he adds.

Although there is a short term over-supply issue, Previndran says the situation is expected to reverse as the attractiveness of Mont’Kiara picks up again among investors given its superb amenities, international schools and business activities.

The number of hits in the company’s website, www.montkiara-living.com, has picked up from about 3,500 a month early this year to about 8,000 to 9,000 hits a month now. On the ongoing projects, he says projects under construction are still on schedule and some, including MK10, Gateway and Ceriaan Kiara, are almost completed. The launch of some of the planned developments including MK28 and 163 Kiara have been pushed to next year.

“Some of the projects are highly anticipated as there are investors and owner occupiers still looking for newer properties to invest in Mont’Kiara. The bigger units are always in demand by owner occupiers while lower range units are popular among investors,” explains Previndran.

Echoing his positive sentiments, Sunrise Bhd senior manager for branding and community development Anne Tong says the company is seeing a strong return of buying interest for its projects in recent months, notably for 11 Mont’Kiara and the Mont’Kiara Residence bungalows.

“In a space of seven months since March, we have chalked up property sales of RM309mil from just these two projects, of which RM239.3mil have been sales and purchased agreement (SPA)-signed. We also booked in SPA-signed sales of RM31.5mil from the balance of other existing projects such as Mont’Kiara Meridin and Solaris Dutamas,” she adds.

Tong says the company’s projects have average occupancy rate of 80% to 90% for the older projects and 50% to 60% for the newly completed ones.

“This means that more and more people are calling Mont’Kiara home. We are positioning Mont’Kiara as the preferred place to stay in Kuala Lumpur, and differentiating the Sunrise Mont’Kiara community further within the area,” she adds.

Sunrise has widened its product range to suit all market segments – from small units of under 1,000 sq ft for singles and couples, to larger units of 3,500 sq ft for bigger or extended families.

Previndran says Mont’Kiara will continue to be an obvious property hotspot as it has gained the critical mass to continue to prosper.

“Adding to that is the limited supply of land that puts a natural limit on future supply,” he points out.

On some of the “vogue” products that should be considered by developers, he cites projects with more green elements, well designed layouts, strong management, good finishes and security. They should have varying sizes from 600 sq ft to 2000 sq ft.

“As for commercial products, products that will do well include proper service apartments and hotels, and smaller office suites with corporate designs,” he adds.

By The Star

Making right buy can result in big gain

MALAYSIAN property has withstood the test of time quite well and the many economic downturns over the years have failed to weaken its position as an attractive and reliable investment instrument.

Whether it is used as a roof over our head or for capital appreciation and rental income, many Malaysians have benefited from buying property in one way or another.

Astute property investors who have bought the right property, whether residential or commercial, at the right time have reaped attractive capital appreciation or rental yields from their investment.

In fact, there is quite a number of successful investors who have gone on to become multi-millionaires by merely leveraging on property investment.

Those who have made it as successful property investors have sworn by its efficacy as the first step towards achieving one’s financial freedom. The list of the “Who’s Who” and gurus of property investment include Renesial Leong, dubbed the Queen of Properties; Dr Peter Yee; and personal finance trainer Azizi Ali.

The latest global financial crisis has shown that local property, especially landed units, are resilient and have withstood the onslaught of the “value eroding” impact of the economic downturn.

Although prices of high-rise residences in Mont’Kiara have dropped between 10% and 15% while those in the KLCC areas have eroded by up to 20% in the sub-sale market, landed residences have held out quite well.

So, is this the best time to invest in property and start building up one’s portfolio of real estate assets to join the club of property investors?

For those with the financial resources and surplus cash, investing in property is certainly a much better option than stashing one’s cash in a savings or fixed deposit account going by the low interest rates.

Even those who don’t have much ready cash to invest or have low tolerance for risk can afford to build up a comfortable nest of property assets by leveraging on the low cost of funds prevailing today.

Given its reputation as a good hedge against inflation and the possibility of higher inflation setting in when the economic recovery picks up steam down the road, there is a stronger possibility for property prices to strengthen than to depreciate going forward.

Before prices start to climb again, it will be a good time to lock in at the current prices.

It must be noted that the current environment for property buying is very positive given that the entry cost is still at an all time low.

If developers continue to offer their housing packages and allow buyers to sign up for a property with just a 5% to 10% down payment, the low entry cost will continue to make it easy for property ownership.

Coupled with the other perks including the low mortgage rates of 3.2% to 3.5% a year offered by financial institutions, zero mortgage instalment until the property is completed, and free legal fees and stamp duty for sale and purchase agreement and loan documentation, it must be one of the best time to shop around for a house if you have not already done so.

The exemption from real property gains tax (RPGT) for profits made from property sales will also be one of the inducements for more buying and selling activities. (Under Budget 2010, the Government has proposed to reimpose the RPGT next January.)

There’s also the potential wealth creation effect to consider when prices start to appreciate again.

Based on a 13-year property cycle, renowned mapmaker and property researcher, Ho Chin Soon predicts the local property market will peak around 2011 if the economic recovery continues unabated.

He says the last property boom which took place before the Asian financial crisis in late 1997 saw a 70% jump and a 14% compounded growth rate in property prices over a four year period.

Property investment looks like a wise choice. After all, unlike some other intangible investment instruments, property is a tangible asset and its value will not just evaporate overnight unless a major natural disaster struck.

To ensure they make the right purchase, the onus is on property buyers to do the necessary homework of checking out the background of the developer and the project’s feasibility before signing on the dotted lines.

While believing in the tenacity of the local market, deputy news editor Angie Ng cautions against an over-speculative market as unchecked spiralling property prices are prerequisites for potential bubbles.

By The Star (by Angie Ng)

New EPF scheme for home purchase

The government will launch a scheme in January allowing Employees Provident Fund (EPF) contributors to use current and future savings in Account 2 to boost house ownership.

The scheme, announced under the 2010 Budget, will help contributors secure higher financing to buy higher-value or more houses. However, it is limited to the purchase of one house at a time.

"While it is a good idea conceptually as it aligns with the goal of 'every Malaysian will own a home', it remains unclear how the future savings in Account 2 will be calculated," PricewaterhouseCoopers Taxation Services Sdn Bhd executive director Ng Say Guat told Business Times.

She said uncertainties such as unemployment, default in future contributions and amount of future salary could impact the future savings.

Meanwhile, property sellers will be disappointed that the Real Property Gains Tax Act 1976 (RPGTA) has been reintroduced, after it was waived two years ago.
Under the 2010 Budget, disposal of real property will be taxed 5 per cent from January 1 next year.

The tax is collected through a withholding mechanism under which the buyer keeps 2 per cent of the purchase value and pays to the Inland Revenue Board.

Individuals will be given an exemption up to RM10,000 or 10 per cent of the gains, whichever is higher.

However existing exemptions under the RPGTA are retained for gifts between parent and child, husband and wife, grandparent and grandchild.

The exemption also applies for the sale of one residential property for a citizen or permanent resident of Malaysia.

"The re-imposition (of RPGTA) is counterproductive to the efforts to stimulate the property market in these trying times," Real Estate and Housing Developers' Association Malaysia president Datuk Ng Seing Liong said.

By Business Times (by Jeeva Arulampalam)

Property gains tax makes comeback

The Government has proposed to reimpose real property gains tax (RPGT) for gains arising from property disposal.

Based on the Finance Bill, disposal within two years of acquisition will be taxed 30%; in the third year, it will be 20%; in the fourth year 15%, while disposal within five years and beyond will still be subject to 5% tax.

The latest measure, which will come into effect in January next year, has been described as “a knock-out punch” by Deloitte Malaysia country tax leader, Ronnie Lim.

“It was merely four short sentences in the 2010 Budget speech. However, that short reference to RPGT carried a knock-out punch,” Lim said in a statement yesterday.

He pointed out that from the speech itself, many would have thought that a low rate of tax of 5% would apply to most gains arising from disposals of real property.

“Be prepared for a shock – this is not the case and the highest rate of RPGT will be 30%,” he said.

Most rates of RPGT from January 2010 will be restored to those prevailing immediately before its suspension in April 2007.

Lim said one notable difference was that the exemption from tax for disposals after the fifth year of acquisition has been removed.

“Even where a property was purchased over 20 years ago, a gain on disposal from 2010 will attract 5% RPGT (without any indexation of acquisition price to reflect current purchasing power of the ringgit),” he said, adding that a flurry of property transactions could be expected soon.

Concurring with Lim, OCBC Bank Bhd director and chief executive officer Jeffrey Chew described the measure as a counter-productive move in efforts to encourage property investments among local and foreign investors, particularly to attract real estate investment trust investors.

“Furthermore, this would make Malaysia’s property market less attractive compared to other neighbouring countries in the region despite our property prices being among the lowest in the region,” Chew said.

However, Khong & Jaafar Sdn Bhd managing director Elvin Fernandez gave the thumbs up to the RPGT, saying “it shows that Malaysia, like other Asian countries, is not for unfettered speculation.”

“The RPGT is an anti-speculative tool, not a revenue earner for Government coffers,” he added.

To promote home ownership and enhance the people’s quality of life, the Government has also proposed a scheme to allow Employees Provident Fund (EPF) contributors to utilise their current and future savings in Account 2 for home purchase.

Meanwhile, to encourage green technology in the property sector, building owners obtaining Green Building Index (GBI) Certificates from Oct 24 until Dec 31 will be given income tax exemption equivalent to the additional capital expenditure in obtaining such certificates.

Those purchasing buildings with GBI certificates from developers will be given stamp duty exemption on instruments of transfer of ownership.

The exemption amount is equivalent to the additional cost incurred in obtaining the GBI certificates. This exemption is given to buyers who execute the sale and purchase agreement from Oct 24 until Dec 31, 2014.

And to promote rehabilitation of abandoned housing projects, the Government will consider extending appropriate financial assistance to rehabilitate low and medium-cost houses based on the existing project list.

An allocation of RM200mil will be provided under the housing and local government ministry.

Under the Government’s initiative to provide housing facilities for the low and middle-income groups, the National Housing Department will provide 74,000 low-cost houses to be rented in 2010.

By The Star

MBAM: Budget 2010 continues to support industry

KUALA LUMPUR: The Master Builders Association Malaysia (MBAM) said Budget 2010 has continued to support the construction industry through the promotion of public-private partnership initiatives.

President Ng Kee Leen said the construction sector expected a 3.5% growth this year, which would mean the third successive year of positive growth.

“Furthermore, the construction sector is envisaged to expand 3.2% in 2010 and the sector is expected to benefit from economic recovery and ongoing construction activities under the second stimulus package,” he said in a statement.

He said MBAM was appreciative that the Government would focus on the development of the five growth corridors with emphasis on provision of infrastructure and public amenities.

“The industry wishes the Government will ensure the speedy and efficient implementation of the projects,” he said, adding that the MBAM was also supportive of Government’s efforts to support the Green Building Index.

“It was announced that RM1.5bil will be provided as loans to promote green technology and this will also help spur the initiative. The setting up of the National Green Technology Centre will also give further currency and credibility to the Government’s effort to promote Green Building Initiatives,” he said.

Meanwhile, UDA Holdings Bhd, which received a RM30mil contract by the Government to build 300 units of Kedai Desa in rural areas nationwide, said it would strive do an efficient job and deliver the project on time.

“... It shows the Government’s sensitivity to help the people in rural areas on providing business opportunities for them to improve their income. This is the concept of One Malaysia,” said managing director Datuk Jaafar Abu Hassan.

Ho Hup Construction group managing director Lim Ching Choy said the provision of RM4.7bil for road and bridge projects under the budget would boost the construction industry and the company was looking forward to participate in the projects.

“It is a very good initiative by the Government to enhance infrastructure as the impact will not just benefit the construction industry but also other businesses involved directly with the construction sector,” he told StarBizWeek.

Malaysian Resources Corp Bhd group managing director Shahril Ridza Ridzuan told StarBizWeek that the company was looking forward to take part in any project initiated by the Government under the construction budget.“(Our focus) will be on infrastructure and transport infrastructure projects,” he said.

By The Star

RM9bil set aside for construction sector

The construction industry has been given a shot in the arm with a RM9bil allocation next year to finance various infrastructure projects.

Of this, RM4.7bil will be allocated for road and bridge projects and RM2.6bil for water supply and sewerage services.

A provision of RM899mil has been made for rail facilities, RM820mil for ports and sea services and RM276mil for airport projects.

An allocation of RM2.3bil has been made to upgrade infrastructure in rural areas, including RM857mil to construct 510km of rural roads and 316km of village roads.

Among the roads to be constructed are in Kapit, Lawas and Simunjan in Sarawak, as well as Kinabatangan, Kota Belud and Keningau in Sabah.

An allocation of RM530mil will be made for water supply to 16,000 houses, RM825mil for electricity supply to 30,000 homes, and RM88mil to implement 5,356 social amenity projects such as rural clinics, community halls and public recreational areas.

Under its plans to develop Putrajaya and Cyberjaya into more lively and vibrant townships, efforts will be intensified to increase business, commercial and recreational activities there.

Among the projects to be implemented in Putrajaya are the construction of a hypermarket, international school, art gallery, museum, vehicle repair complex and recreational centre.

For Cyberjaya, the projects include affordable houses, hypermarket, business complex, parking lots, recreational centre, schools, and a more efficient public transport system.

The Government also plans to develop wakaf properties throughout the country for charitable purposes.

Initially, an allocation of RM20mil will be provided.

Under this initiative, Yayasan Waqaf Malaysia (YWM) will implement programmes that will focus on economic development, particularly small-scale high-impact projects, as well as education, social and welfare of Muslims.

The main focus of YWM is to eradicate hardcore poverty as well as enhance the socio-economic status of Muslims.

Projects planned include the construction of wakaf rakyat shops at selected mosques and small business bazaars for the public, including the asnaf.

By The Star

RM9b for infrastructure development

The government has allocated RM9 billion to finance infrastructure projects.

More than half of the money, or RM4.7 billion, will go to roads and bridges construction and RM2.6 billion to upgrade water supply and sewerage services.

Another RM899 million is for railway facilities construction, RM820 million for seaports and RM276 million to upgrade airports.

Master Builders Association of Malaysia hopes the government will speed up the project implementation.
"This year, the construction sector is expected to grow 3.5 per cent," said its president Ng Kee Leen.

With the setting up of the National Green Technology Centre, the association looks forward to new guidelines and specifications in the design of sustainable homes, office blocks and structures.

Green buildings can be built via modular system, using renewable building materials, incorporating lighting and air-conditioning systems that are energy efficient and fitted with dual flush toilets.

By Business Times

Mydin to open hypermarts in key towns

Mydin Mohamed Holdings Bhd plans to open hypermarkets in all the key towns in Malaysia like Kuantan, Johor Baru and Seberang Prai in the long run.

Its managing director, Datuk Ameer Ali Mydin, said the company would open two hypermarkets in Meru Raya and Manjoi in Perak by 2011.

"The areas have been identified and the proposals are now in ''planning approval'' stage," he told reporters after the opening of the 46th ''My Mydin'' mini market which is based on eco-retail concept in Kota Seriemas near Nilai today.

He said currently, the company has three hypermarkets in Subang Jaya, Melaka and Kuala Terengganu.
Ameer said the RM70 million wholesale hypermarket in Kubang Krian, Kelantan would start operations in January 2010 and would hire 450 staff.

He said the company would also build 30 more ''My Mydin'' mini markets in the Klang Valley next year.

"The company will franchise the mini markets once it has built at least 50 branches. This is to ensure more entrepreneurs get to run the mini markets," he said.

Ameer said the Kota Serimas mini market was different from its other branches.

"It is built with attractive landscaping to give shoppers the peace of mind and comfort.

"It has also a surau, a reception area, children's playground, free parking, and kioks selling all types of products," he said.

He said the company aimed to make the Kota Serimas mini market a ''one-stop centre'' for the locals to buy provisions and allow them to interact and organise various activities.

By Bernama

CIMB-Mapletree buys Patimas Computers HQ

CIMB-MAPLETREE Management Sdn Bhd (CMM) has bought Patimas Computers Bhd’s headquarters in Bukit Jalil, Selangor, for RM60 million.

Patimas will continue to lease and utilise the building as its headquarters over a period of 12 years, with an option for an extension.

The property, located within Technology Park Malaysia, comprises a two-storey purposed-built Grade A office building with a gross area of 138,000 sq ft.

This purchase is the fourth commercial property to be acquired by CMREF 1 Sdn Bhd – a Malaysian-focused private closed-end real estate fund that is managed by CMM, a joint-venture between CIMB Group and Mapletree Investments Pte Ltd of Singapore.

By Business Times

L&G expects 8trium to break even by year-end

An Artist's Impression of 8rium.

KUALA LUMPUR: Land & General Bhd (L&G) expects its latest project, 8trium, a mixed commercial development in Bandar Sri Damansara, to break even by year-end.

Managing director Low Gay Teck said currently, about 90% of the company’s unbilled sales were from 8trium and he believed the development could be about 90% sold by the middle of next year.

8trium comprises a two-storey 100,000 sq ft retail podium and 260 office suites in two business suite towers. L&G will maintain the retail podium once it completed.

“Thirty per cent of the units in Tower 1 that was launched recently have been snapped up and about 90% of the units in Tower 2 have been sold.

“The response to 8trium illustrates that we have successfully introduced the right product that suits our buyers’ needs,” he said yesterday at the 8trium groundbreaking ceremony and customer appreciation event.

Low said currently, L&G had about 45 acres of undeveloped land in Bandar Sri Damansara where it planned to develop residential and condominium projects once the proposal had been approved by the relevant authorities.

“We plan to acquire more land in the Klang Valley to develop mixed projects (commercial and residential) and these will be financed by the company’s internal funds and bank loans,” he said.

By The Star

L&G upbeat on sales of units in 8trium towers

Property developer Land & General Bhd (L&G) expects 90 per cent of units in its two commercial towers in Bandar Sri Damansara, Selangor, to be snapped up by June next year.

Dubbed "8trium", the commercial development comprises a two-storey 100,000 sq ft retail podium and 260 units of office suites contained in two blocks.

The development has a gross development value of RM160 million and makes up 90 per cent of L&G's unbilled sales.

"Tower 2, which was officially launched this July, is over 90 per cent sold. Meanwhile, 30 per cent of Tower 1, which was launched 10 days ago, has been taken up," L&G managing director Low Gay Teck told reporters after the 8trium groundbreaking ceremony yesterday.

The project is slated for completion by the first quarter of 2012.
The developer is also looking to develop another 16.18ha in Bandar Sri Damansara.

"We have submitted the necessary documents for the approval of the relevant authorities for a residential development there," said Low.

L&G is also in talks with landowners to pursue land deals in the Klang Valley, for either residential or commercial developments.

"We don't have a target landbank size, but what we look for is valuable land. Our business direction is to consider areas that are sought after," he said.

The land purchase will be financed via bank borrowings and cash reserve.

L&G also has undeveloped land in Sungai Petani and Johor.

By Business Times (by Jeeva Arulampalam)

Atis to raise stake in Mutiara to 30.28%

KUALA LUMPUR: Atis Corporation Bhd is raising its stake in property developer Mutiara Goodyear Development Bhd to 30.28% with the proposed acquisition of an additional 9.26% at 97 sen per share for a total of RM20.74 million cash, in a related-party transaction.

Atis said yesterday it had entered into an agreement with Laman Arif Sdn Bhd and Lim Beng Guan to acquire their 9.26% stake comprising 21.38 million shares in Mutiara.

“The proposed acquisition is in tandem with our corporate vision, as we view the investment in Mutiara as strategic to our core business.

“Atis would be able to synergise the business of both companies, and enable us to tap into Mutiara’s business presence, network and expertise to derive business opportunities of providing electrical and engineering products required by future development projects,” said Atis.

Lim is a non-independent non-executive director and shareholder of Atis. The transaction is deemend a related-party transaction as Lim is also the executive director of Mutiara and a major shareholder by virtue of his direct interest in the company and indirect interest via Laman Ariff.

Prior to the disposal, Lim owns 6.28 million Mutiara shares or 2.72% and Laman Arif 15.1 million shares or 6.54%.

Cumulatively, the two vendors’ total cost of investment in the 21.38 million Mutiara shares from October 2007 to October 2008 was about RM21.27 million or 99.46 sen per Mutiara share.

Mutiara yesterday closed two sen lower at 83 sen, with 263,000 shares done.

Recently, Atis proposed to acquire an 8.66% stake comprising 20 million shares in Mutiara from WEIDA (M) BHD, also at 97 sen per share for a total of RM19.4 million, bringing its stake in the property developer to 21.02%.

Weida, which holds a 17% stake or 39.09 million shares in Mutiara, had then said it would also seek a general mandate from its shareholders to sell its remaining holding of 19.09 million Mutiara shares (8.27% stake), either via the open market or placements for no lower than 97 sen per share.

The latest acquisition would push up Atis’ net asset per share to RM1.60 from RM1.45, and increase its net borrowings to RM74.65 million from RM34.5 million, while its net gearing ratio would rise to 0.29 times from 0.15 times based on its consolidated results as of March 31, 2009.

Mutiara Group develops residential and commercial properties in Klang Valley and Penang and has strategic landbank in these two areas.

By The EDGE Malaysia (by Tony C H Goh)

Hunza plans rights issue

HUNZA Properties Bhd plans to raise at least RM43 million from a rights issue to finance ongoing projects, investments or fund working capital.

The property developer has proposed to issue up to 45.21 million new shares on the basis of one new share for every 10 existing shares, it said in a statement to Bursa Malaysia.

It has also offered one free warrant, with a maturity of five years, for every one rights share. It has yet to fix the issue price but it will not be lower than RM1.

By Business Times

Zambia welcomes Malaysian builders

MALAYSIAN companies have been invited to capitalise on investment opportunities in Zambia's construction industry worth a potential US$1.77 billion.

Zambia's National Council for Construction executive director Dr Sylvester Mashamba said the African country welcomed all businessmen from Malaysia to invest in the industry, either by themselves or in joint ventures with local companies or government agencies.

"We have a lot of things to offer to Malaysian businessmen, especially those in road construction, through government funds worth US$1.6 billion for the period from 2004 to 2013," he said at a half-day seminar on "Business Opportunities in Construction and Education in Zambia" in Kuala Lumpur today.

In addition to roads, Mashamba said, other areas that Malaysian companies could participate included sports infrastructure, water and sewage disposal infrastructure, multi-facility economic zones in Lusaka and Chambeshi, housing and hydroelectric power stations.
The construction sector has been the biggest growth industry in Zambia in the past 10 years with its annual growth rate averaging 17 per cent, he said.

Bilateral trade between Malaysia and Zambia in 2008 totalled US$17.5 million with exports valued at US$4.7 million and imports at US$12.8 million.

By Bernama