Housing dream come true?

PROPERTY players are eagerly waiting for clear guidelines from the Government on how the recently launched My First Home (MFH) scheme is supposed to work. Social housing generally does not provide good returns, developers and consultants point out, and without concrete details, it is even harder to expect the private sector to be actively involved. As always, land is a central issue.

First announced last October in Budget 2011 and officially launched in March by Prime Minister Datuk Seri Najib Tun Razak, the scheme is aimed at helping young professionals between 18 and 35 to own a home priced between RM100,000 and RM220,000. At the launch, Najib expressed his hope that the private sector would view participation in the scheme as a corporate social responsibility (CSR) activity, and not as a venture to profit from.


Ghazali: ‘There are still a lot of existing affordable homes in locations such as Nilai, Rawang and Sepang.’

In other words, the developers are expected to shoulder the costs of MFH projects as part of being dutiful corporate citizens. Nevertheless, it has been reported that the Government was considering providing land at very low cost or for free, even in the Klang Valley, in joint ventures with the private sector. If this indeed happens, says Real Estate and Housing Developers' Association (Rehda) president Datuk Seri Michael Yam, it will help developers to lower costs.

Still, there is this next question on the minds of developers: If the land comes free or cheaper, where will it be? If the sites are far from the city centre or in areas that lack public amenities, will there be enough buyers? As it is, many low-cost housing projects built by the private sector are in areas such as Nilai, Rawang and Sepang, which cannot boast of high demand. If the scheme's objective is to meet demand for homes, allocating land in such locations would be self-defeating.

Lightening the developers' load

Yam says land generally constitutes a fifth of the total gross development cost of stratified properties. “For most parts of the Klang Valley and Penang, the likehood is that housing units below RM220,000 would be stratified apartments with relatively small built-up areas, despite land being free,” he adds.

Elsewhere in Malaysia, it may still be possible to deliver landed properties with smaller built-up areas in less prime areas, if access to completed roads and infrastructure is available, and certain conditions and cross-subsidy requirements are waived.

He points out that the expenditure in developing a property project covers land, manpower, construction materials, consultancy fees, utility contribution, bank interest, cross subsidy for low-cost homes and discounts to meet national aspirations. “If all the stakeholders can review their cost, provide subsidised materials and reduce utility contributions, the final delivery cost can be lowered,” he says. He also suggests that the Government consider providing upfront infrastructure and utilities to further reduce the burden on developers.

Hua Yang Bhd chief executive officer Ho Wen Yan believes that it is possible for developers to offer better homes if the Government supplies the land.

He argues: “With cheaper land cost, better homes with larger living area and better amenities can be provided. With good transportation infrastructure such as integrated highways, the MRT (Mass Rapid Transit), KTM Komuter and other forms of public transport, it is possible to live further away and work in the city. This is a proven model in developed cities all over the world.”

At present, says Ho, urban density in Kuala Lumpur is increasing rapidly. To reduce social and economic pressures, there is a need to look at alternatives beyond the city centre.

He points out that while property developers may not be looking to earn sizeable margins from the MFH scheme, some profit is still needed to make participation viable for them. “Balancing all the factors of cost, land allocation and earnings will be critical towards the long-term sustainability of the scheme. Financial incentives such as tax breaks, rebates and other forms of support will be welcomed by the private sector,” he says.

What buyers want

While the developers focus on costs, the buyers are primarily concerned about three things location, location, location. This has been a perennial point of contention with social housing, be it low-cost or affordable housing. Or any form of housing, for that matter. Because land within or close to the city is expensive, developers tend to build social housing in less-than-prime areas, which explains the poor demand.

Normlly, low-cost housing costs about RM42,000 a unit with a build-up of 650sq ft. Affordable housing, such as those that come under the MFH, is priced between RM100,000 and RM220,000 a unit. Size for units under the scheme has not been determined so far.

With land cost escalating, property consultancy Rahim & Co executive chairman Datuk Abdul Rahim Rahman reckons that developers should be allowed to build premium units in tandem with MFH homes so as to give them a chance to make a profit.

“If the Government provides a 100-acre plot for the scheme for free, or at very low cost, conditions should be imposed whereby the private developer must allocate fixed portions of the project for low-cost and affordable housing. Perhaps 30% of the project can be low-cost housing and 20% for affordable housing. The remainder can generate profits for the developer,” he says.

Generally, Rahim adds, location, demand and transportation are issues that the Government needs to consider. “Old apartments sized at less than 1,000 sq ft can be found for less than RM220,000 in the Gombak area. However, for double-storey houses in Gombak and Cheras, the prices are upwards of RM350,000 and RM450,000 respectively. If they stay in Rawang or Klang, and work in Kuala Lumpur, the cost of daily transport to work is prohibitive.”

Boustead Holdings Bhd director (property) Datuk Ghazali Mohd Ali says if an MFH project is located in the Klang Valley, the developer should be allowed to build affordable homes in place of low-cost units. For similar projects outside the Klang Valley, he says, developers can opt to build low-cost homes instead, as buyer income tend to be lower in such locations and demand may not be as strong given that there is abundant land in these areas.

Ghazali says the MFH affordable homes need to be built in locations where demand is strong as they are meant for young working professionals. “There are still a lot of existing affordable homes in locations such as Nilai, Rawang and Sepang. So it would defeat the purpose of the scheme to build more of such homes in these areas. The Klang Valley remains the top draw for young adults looking for job opportunities. It will continue to be the location of choice for young adult home buyers, unless there is an efficient transportation system serving Nilai, Rawang and Sepang,” he adds.

“Poor response to these units will mean higher holding and opportunity costs for developers.”

The provision of social housing is not something new to developers. Developers of projects of a certain size are required to carve out a portion of their land for low-cost housing. There is also Syarikat Perumahan Negara Bhd (SPNB), a unit of the Minister of Finance Inc, which was set up in 1997 to provide affordable housing.

But for whatever reasons, public response to affordable homes built by SPNB has not been encouraging. Recent reports highlighted the lack of response to 11,400 low and medium-cost housing units completed by the company.

SPNB chairman Datuk Idris Haron says this could be due to the lack of publicity about the homes. With the launch of this MFH scheme, SPNB will act as a one-stop centre for applications and access to financing for homes. National mortgage company Cagamas Bhd will guarantee 10% of the financing for the home purchases. A total of 25 banks have agreed to give out home purchase loans under the scheme.

So far, about 4,516 housing units with retail prices that are categorised under the MFH scheme, have been completed in 12 projects by SPNB. Another 8,991 units in 16 projects are under construction. As of April 30, 772 people had applied for loans under the scheme, while 143 applications have been approved, amounting to RM21.3mil in loans, with an average value of RM149,365 per loan.

By The Star

Fine-tuning necessary for housing scheme

BESIDES the possibility of the Government providing land for free or at low cost, another issue surrounding the My First Home (MFH) scheme is the general consensus that it is unrealistic to have the same limit on monthly income and property price across the country. To date, it has been announced that houses under the scheme are priced from RM100,000 to RM220,000 per unit, and to qualify, buyers must have a monthly salary of not more than RM3,000.

Developers are of the view that the higher land values in the Klang Valley and major cities should be reflected in the MFH scheme.


Leong: ‘The scheme should reflect the higher land values.’

“The scheme should reflect the higher land values, living costs and incomes in the Klang Valley and major cities to ensure there is no mismatch between demand and supply,” says Mah Sing Group Bhd group chief executive and managing director Tan Sri Leong Hoy Kum.

Leong and other developers say a price limit of RM350,000 is more realistic in Greater KL and Penang, and the monthly income limit should be raised to RM5,000.

Real Estate and Housing Developers' Association (Rehda) president Datuk Seri Michael Yam says the present threshold household income for the purchase of low-cost houses is RM2,500, which is just RM500 less than the RM3,000 income limit for MFH buyers.

The minimum property value of RM100,000 should be set aside so that those who are not entitled to the RM42,000 low-cost homes be given a chance to own a property, says Yam.


Chang calls for home buyers to be given preferential interest rate.

Loan financing is another issue linked to the MFH scheme. National House Buyers Association (HBA) secretary-general Chang Kim Loong says buyers with a monthly income of RM3,000 may have problems with mortgage payments, despite the 100% financing provided under the scheme.

Chang explains that based on the previous BLR (base lending rate) of 6.3% and a “market rate” of BLR less 1.8%, the effective interest charged to a house buyer is about 4.5% per annum. Generally, banks practise a rule of thumb whereby any single loan repayment should not exceed one-third of the borrower's gross pay.

“For a RM220,000 housing loan with a tenure of 30 years and 100% financing, a buyer with a monthly salary of RM3,000 would be paying monthly repayment of RM1,115, which is 37% of his gross monthly salary. These borrowers would not have much savings and could default on their loan obligations in the event of personal emergency expenses. Also, it would be impossible for these house buyers to take up additional loans to buy cars.”

Chang calls for home buyers under the scheme to be given a preferential interest rate of 3% fixed throughout the loan tenure. He also says the Government must make it compulsory for MFH projects to be based on the 10:90 BTS (build-then-sell) concept to give maximum protection to home buyers and to shield the Government from potential liabilities as such projects are easier to revive in the event they are not completed.

Under the BTS concept, a buyer only pays 10% of the price on signing the sale and purchase agreement, with the balance to be settled only after completion of the house.

Yam of Rehda concurs with Chang and calls on banks to allocate a block of loans at preferential interest rates with longer loan tenures and with the provision of having joint multiple borrowers.

By The Star

SP Setia plans RM2.8bil projects

PUTRAJAYA: Property developer SP Setia Bhd will redevelop the Sri Johor, Sri Pulau Pinang and Sri Melaka low-cost apartments and the Taman Ikan Emas low cost homes in Bandar Tun Razak, Cheras at a total development value of RM2.8bil.

SP Setia's deputy president and chief operating officer Datuk Voon Tin Yow said the first phase of the project would take off next month.

He said this at a press conference yesterday after a meeting the Federal Territories and Urban Wellbeing Minister Datuk Raja Nong Chik Raja Zainal Abidin on the proposal to rebuild the housing area.

Raja Nong Chik said the first phase of the project would involve the development of affordable, quality homes totalling 1,255 units. They would be completed in three years.

He said SP Setia would also undertake an apartment housing project in the area for young executives with each unit to cost not more than RM300,000 and with a built-up area of at least 800 sq ft.

The decision to build quality, affordable homes in the area was made in view of the housing area which has been rundown. The area will be modernised with well appointed homes as well as public facilities and improved landscaping.

Under the second phase, Raja Nong Chik said the housing developer would also develop a commercial and residential centre which will take 14-15 years on the 53.4ha.

By Bernama

Beating traffic congestion

Driving in Kuala Lumpur during rush hour, when people are going to office or going home, one cannot help noticing that the number of cars heading in one direction is matched by the number of cars heading in the opposite direction. People seem to live at one end of the city and work at the other end. The amount of petrol consumed and the number of hours wasted must be phenomenal. How does this come about? Is there a solution?

Improvement of public transportation could reduce the number of cars on the road but the new cars registered every year seem to cancel out the reduction. Restriction of cars from certain parts of the city by imposing a fee for entry during peak hours has been considered and abandoned. These solutions do not seem to work in Kuala Lumpur. Taking taxis is not a pleasant experience because taxis are often old and dirty and the drivers seem to be a grumpy and choosy lot. They avoid certain destinations at certain times of the day, which are usually the very destinations that you need to get to in a hurry.

Actually somebody, whom I will call CK, has found an interesting solution to the problem. CK was a manager in a large foreign manufacturing company and the division under him was famous for the loyalty of its staff. The staff turnover rate in his division was the lowest in the company. There was no need to keep retraining new staff and there were hardly any disruption due to staff quitting.

What was his secret? It was not something you will find in any management book. When he recruited, he selected only people who lived in other towns, not in KL. When they came to KL to work, they would be in a totally new environment and would have to look for accommodation. Naturally they would look for accommodation close to their place of employment, preferably within walking distance. In time, they would get married and buy a house in the same area. Then their children would go to school in the same area. They would be less likely to change jobs and move away.

If your enterprise is located in Cheras and you hire somebody from Kepong, at the opposite end of town, you will create an unhappy commuter who has reason to quit upon getting the first alternative offer.

I saw a somewhat similar principle applied in Singapore when I visited the Marina Bay Sands project while it was still under development. This was a megaproject employing thousands of foreign workers, who would have caused great social disruption in Singapore had they been obliged to find accommodation all over the city. The employers were obliged to house all the workers in quarters nearby so they could walk to work. Food was provided in large comfortable canteens within the project areas. I was told this was the norm in all big projects in Singapore. In this way there is minimal human congestion caused by megaprojects.

Another innovative way to reduce traffic congestion has been tried out in Santiago, Chile and Beijing, China. This was to allow cars with odd-numbered plates and those with even-numbered plates to drive on alternate days. In theory, this should halve the number of cars on the road. But in Santiago, everybody began to keep two cars, one with odd-numbered plate and the other with even-numbered plate. The car population doubled and congestion got worse. The same idea was applied in Beijing during the period of the Olympic Games, and it worked better. The time period was too short for people to consider getting two cars.

In Bangkok, they have motorbike taxis and it has become a common sight for executives in coats and ties to ride pillion in order to get to their meetings on time.

In the Philippines in the 1970s, they gave up getting to meetings on time. The first time I attended a seminar in Los Banos, which is an hour's drive from Manila, I turned up early and thought I had made a mistake about the date and time. Then a few locals turned up. Slowly, the hall filled up. Students came first, then junior academics and junior civil servants, then professors and senior civil servants. Finally, the minister who was to perform the opening ceremony arrived, two hours late. He started his speech with a joking apology, blaming the traffic in Manila for the delay. However, the participants seemed to have timed their arrival very accurately according to their social rank. It looked like a well-practiced pecking-order display, in which everybody knew when to arrive except the foreign participants.

That display, involving about 200 people, would have wasted 600 man-hours. If every minister and provincial governor repeated this every working day, the effect on national productivity would have been calamitous. This was during the early days of Asean, when President Fidel Marcos ruled by decree and the Philippines prided itself as the most advanced country in Southeast Asia. Makati district in Manila had the most modern shopping malls in the region. The streets were filled with big American limousines.

Unknown to us, the country was already beginning its decline to the bottom. The proliferation of time-wasting habits may have been a major cause.

Botanist and researcher Francis Ng is the former deputy director-general of the Forest Research Institute of Malaysia. He is now the botanical consultant to Bandar Utama City Centre Sdn Bhd and the Sarawak Biodiversity Centre.

By The Star (by Francis Ng)

N. Korea launches city facelift to mark anniversary

North Korea said Friday it had launched a construction project to change the showcase capital "beyond recognition" in the run-up to the centenary of its founder's birth next year.

The massive construction will centre on the Mansudae area of Pyongyang where the giant statue of late president Kim Il-Sung stands, the official Korean Central News Agency said.It will include a "monumental edifice", high-rise apartment blocks, public buildings and cultural and leisure facilities including a round people's theatre facing the existing Mansudae Assembly Hall where parliament meets.A restaurant will also be built to face Pyongyang's famous Okryu Restaurant, along with a park.

The new construction will match existing monumental edifices dedicated to the memory of the founder and his Juche (self-reliance) ideology, the agency said."This will change the appearance of the capital city beyond recognition," it added.

The North in 2009 announced plans to build 100,000 new high-rise apartments in three districts of the capital to mark the 2012 anniversary.The latest project has been announced despite chronic food shortages in the impoverished communist state.

UN agencies say six million people, a quarter of the population, urgently need aid.The North has vowed to become a "great, powerful and prosperous nation" by next year, the 100th anniversary of the birth of its founder who died in 1994.The country fosters an all-pervasive personality cult built around the late Kim and his son and current leader Kim Jong-Il.Kim Jong-Il is now grooming his own son Jong-Un as heir apparent.

By AFP

Greenhill bullish on Setia City Mall revenue

SHAH ALAM: Greenhill Resources Sdn Bhd, a unit of the country's largest developer SP Setia Bhd, is bullish that its latest project, Setia City Mall, will generate big revenue.

Part of the optimism is based on the high take-up rate for the mall's retail space.



The estimated RM450 million Setia City Mall is due to open its doors for business in May next year.

Those that have confirmed tenancy include big names like Padini Concept Store, Golden Screen Cinemas, Urbanfresh, Harvey Norman, Fitness First, Courts and Wangsa Bowl.

Greenhill development director Robert Spinks said out of the 250 retailers expected 160 have confirmed their slots in Setia City Mall.

The mall consists of 740,000 sq ft of lettable space spread over four levels of zoned shopping space. Its biggest tenant will be Parkson, which is taking a total of 120,000 sq ft.

Setia City Mall is jointly developed with Asian Retail Investment Fund, a fund managed by the investment arm of global property developer Lend Lease.

"We are confident the opening of Setia City Mall will help boost Greenhill's revenue," Spinks said at a media briefing yesterday.

He did not reveal any sales forecast.

Spinks said construction work on the mall was started in 2009.

"Gross development cost for the Setia City Mall is about RM450 million," he said, adding that the project would be a good and profitable venture for those involved.

Rental varies from RM5,000 to RM30,000, depending on size and lots.

Spinks said Setia City Mall would offer much more than the typical retail destination.

"It will provide a fun and affordable family experience - encompassing shopping, dining and entertainment," he said.

Meanwhile, SP Setia executive vice-president Khor Chap Jen said there will be a convention centre and a 250-room hotel located opposite the northern entrance of the mall.

"The construction of the convention centre, which is large enough to host a 200-table banquet, will commence next month," he said.

The company also plans to launch three blocks of SoHo (small office home office) apartments next to the hotel by the end of this year.

By Business Times

Mah Sing rewards loyal customers

KUALA LUMPUR: Mah Sing Group Bhd yesterday introduced a loyalty rewards programme called "M Club" designed to keep its custo-mers returning to the developer and buy more properties in Johor Baru, Penang and Klang Valley.



The enhanced loyalty programme offers its 10,000 members the chance to enjoy privileges and discounts of up to 30 lifestyle brands.

"We hope in the future our customers will view their M Club as indispensable as their identification card. In fact, in the pipeline is a new-generation Mah Sing Community website complemented by Facebook and Twitter accounts and a community-centric blog," Mah Sing chairman and independent non-executive director Tan Sri Yaacob Mat Zain said in his speech.

He added that M Club members or better known as the Mah Sing community, will appreciate select bene-fits being brought direct to their doorsteps with the simple act of flashing either their classic, gold or platinum M Club card at the merchants, with services ranging from home and living, beauty and health to wellness and personal development.

Among the 30 lifestyle merchant partners are KL Lifestyle Art Space, IHeal Medical Centre, Lightcraft and Times Bookstores.

By Business Times

Encorp Strand bags another property award

KUALA LUMPUR: Encorp Strand, the flagship development of Encorp Bhd, has added another feather to its cap when it clinched the Highly Commended Award (Mixed-Used Development category for Malaysia) of the Asia Pacific Property Awards 2011.

Encorp executive chairman and group chief executive officer Senator Datuk Seri Effendi Norwawi said the award represents the hard work and commitment that have gone into the group's flagship development.

"Encorp Strand is a testament of our relentless pursuit of innovation and providing unbeatable quality, standard, value and services to all our customers, and the award certainly confirms this project's stature," he said in a statement.

Effendi received the award on behalf of the company at the high-profile presentation ceremony at Longemont Hotel in Shanghai, China, on Tuesday.

Encorp Strand was previously a winner of the inaugural The Edge-PEPS Value Creation Award 2010, an accolade for properties with the greatest value creation in terms of capital appreciation as well as sustaining value.

Encorp Strand comprises the fully completed and sold Business Suites, the iconic Red Carpet Boulevard, Garden Offices, The Mall and Residences. Collectively, these components offer a complete living, working, shopping, dining and entertainment experience.

Effendi said Encorp Strand is essentially a product of the group's commitment to innovation and quality for its customers.

"This is the Encorp experience, an experience that is anything but ordinary," he said.

Encorp Strand is easily accessible from Kuala Lumpur City Centre and the rest of Klang Valley via the DUKE highway, Damansara-Puchong Highway, the New Klang Valley Expressway, Middle Ring Road II and Penchala Link of the Sprint Expressway. It is about a 20-minute drive from the city centre.

By Business Times

New project in Iskandar Malaysia set to boost sales

Done deal: Frankie (second right) exchanging the documents with Fujimora (second left) while Tan (right), Takahiro (left) and Ahmad Zahri (thrid right) and Pee look on.

JOHOR BARU: Iskandar Malaysia is set to attract more foreign property buyers who want to make the city as their second home or to invest in properties.

Johor Baru’s proximity to Singapore is one of the strong selling points and many of them are also attracted to the prices of the residential properties which are relatively cheaper compared to theirs home countries.

“Iskandar Malaysia is progressing well since its launch with many infrastructure projects and major developments taking shape within the next one to two years,’’ said Seri Alam Properties Sdn Bhd general manager Frankie Tan Kiat How.

He said this after the signing of Memorandum of Understanding (MoU) between the company and Global Asia Assets (M) Sdn Bhd (GAAM) at the Wealth of Iskandar Malaysia Conference.

Seri Alam Properties was represented by Tan and assistant general manager (Finance) Tan Siew Peng while GAAM by its chief executive officer Fujimora Masanori and general manager Sakanoue Takahiro.

The ceremony was witnessed by Johor committee chairman for Local Government and Housing Datuk Ahmad Zahri Jamil and UMLand Bhd chief executive officer Pee Tong Lim.

The company will develop 110 bungalows, each with a swimming pool with a land area of 4,500 sq ft each and a club house under the Japanese Holiday Homes in Bandar Seri Alam township in Pasir Gudang for Japanese buyers on a 8.09ha site overlooking a lake.

“We believe the project will be a good platform to attract more foreigners to come and buy properties in Iskandar Malaysia,’’ said Tan.

The collaboration, he added, would increase the number of Japanese community within the township which already has from the existing Japanese International School there.

By The Star

S’pore plans more HDB flats

SINGAPORE: Aspiring home owners can expect to see more build-to-order (BTO) Housing Development Board (HDB) projects launched in mature estates next year, promised National Development Minister Khaw Boon Wan on Monday.


Khaw ... ‘I have asked HDB to look into more mature estates as possibilities.’

Announcing this latest policy shift in another blog post, he said: “I have asked HDB to look into more mature estates as possibilities.

“It is too late to prepare suitable sites for this year, but we should be able to put up some for next year's BTO.”

He said that his ministry had been “rather reluctant” to launch BTO in mature estates as it was worried that such popular launches would attract high subscription rates, “further alarming the market”.

“While this is a valid concern, I believe Singaporeans will understand that mature estates will always attract very high subscription,” he said.

“We should not be daunted by such a prospect, but should instead try to meet the aspirations of many young couples wanting to set up nests near their parents. Our response should be to put up more sites in mature estates, even as we ramp up BTO launches elsewhere.”

Khaw added that it would be inevitable that some of these new sites would be near existing residential blocks, and he hoped residents would bear with the construction while works were under way.

The blog, titled Making a Calculated Move, was his third since last Thursday. Like the other two as well as his recent comments it showed the determination of the new National Development Minister to address areas in housing which are causing unhappiness to various segments of Singaporeans.

Last Friday, he spoke of speeding up the construction of new flats and raising the number of BTO units from 22,000 to 25,000 this year. At a forum with youth on Sunday, he said that more rental flats must be built for lower-income families.

Under the BTO system launched in 2002, the HDB builds flats in response to demand for them.

In his latest post, Khaw noted that the current BTO launch for 4,000 new units in four towns was under way. So far, there have been about 8,000 applications, and this was within the ministry's expectation.

Not surprisingly, he said, projects in the mature estate of Tampines are the most popular, with many applying for four and five-room flats.

He acknowledged that new flats in mature estates are more attractive since many couples living there would like to continue to live close to their parents.

This is a move which the government supports, and so it has doubled the chances of such couples under the Married Child Priority Scheme.

The current BTO launch in Tampines was also the first one there in recent years, he noted.

He said that young couples eagerly looking for new homes should calculate their chances.

“My advice to them is to opt for non-mature estates,” he said.

“You improve considerably your chance of securing one in the new towns, instead of competing with many others for the popular projects in the mature estates,” he said, adding “good luck friends, and congratulations on your recent or upcoming wedding”.

For years, the Ministry of National Development's (MND) position has been to focus on launching new flats in non-mature estates such as Punggol and Sengkang.

Last year, former national development minister Mah Bow Tan said that land in mature estates was limited and the mainstay of BTO supply would still be in outlying estates.

Launches in mature estates have proven to be wildly popular.

In 2009, 1,718 BTO flats in Queenstown SkyVille@Dawson and SkyTerrace@Dawson received over 10,000 subscriptions, or 12 buyers for some units in the estate.

In 2007, 400 flats in Telok Blangah Towers were oversubscribed nearly 20 times, with 7,970 applications.

Mature estates usually have more established infrastructure such as recreational and educational facilities and well-connected transport links.

In such areas, land for building new flats is limited and flats built are generally snapped up quickly.

Dennis Wee Group director Chris Koh said that these projects were also likely to be smaller in size, given the limited land.

He added that flats could be built at the perimeter of mature estates.

Colin Tan, research and consultancy director at real estate firm Chesterton Suntec International, said HDB could overcome such size limitations by building taller blocks and increasing the population density.

Khaw's latest announcement gives hope to buyers like human resources executive Teo Yingying, 25, who has applied for a BTO flat with her boyfriend five times with no success. She is hoping for a BTO launch in Tanjong Pagar where she now lives with her parents.

“I want to be near my parents. If we ever have children, my parents can help me take care of them when we're working,” she said.

MND said that it was studying suitable sites and more information would be released later this year.

By Asia News Network/ST

Survey: England, Wales house prices fall sharply in May

LONDON: House prices in England and Wales dropped at their fastest annual pace in over 1 years in May as demand fell for the first time since January, a survey showed.

Property research company Hometrack said prices were 3.7% lower in May compared with a year ago, the biggest decline since October 2009. On the month, prices nudged 0.1% lower after April's unchanged reading.

Hometrack blamed the decline on flagging consumer morale, public holidays and people taking Easter breaks that ran on into May.

“The late Easter break and May bank holidays reduced the volume of traffic through agents' offices,” said Hometrack research director Richard Donnell. “But of greater significance is the growing evidence of weakening consumer confidence.”

Economists expect high inflation, weak wage growth, tax rises and public spending cuts to weigh on consumer spending and house prices this year, despite record low interest rates.

One survey released on May 27 suggested consumer morale may not be as bad as many feared.

The GfK NOP measure showed its biggest rise in almost 20 years in May, although analysts said it might have received a temporary boost from unusually fine weather, the royal wedding and a run of public holidays.

The Hometrack survey showed that the number of new buyers registered with estate agents fell by 0.5% in May, the first decline since January.

The number of sales agreed rose by 1.6% in May, lower than the 8% jump seen in April and March's 12.6% rise.

London continued to buck the national trend, with prices up by 0.2% on the month.

Hometrack said it expected lower demand to keep pressure on national house prices over the rest of the year.

“With concern over household finances and the wider economic outlook, demand for housing is likely to continue to post further modest declines over the summer,” Donnell said.

By Reuters

Mixed views on two offers

PETALING JAYA: Reactions of analysts are mixed about whether minority shareholders of Asia Pacific Land Bhd (AP Land) and OSK Property Holdings Bhd should accept takeover offers for the property developers.

Some opine that shareholders should ask for a higher price for the takeovers, considering that both offer prices are at significant discounts to the book values of the two companies.

On Friday, OSK Property’s major shareholders offered to buy up the remaining of the company they do not own for RM120mil or 87 sen per share.

The stock closed at 79.5 sen just a day before the offer was made. This means that the offer price by OSK Property’s major shareholders was at a mere 9% premium over the last traded market price.

Against OSK Property’s latest net assets per share of RM1.74, the offer price is a 50% discount.

For the financial year ended Dec 31, 2010 (FY10), the company posted revenue of RM144.9mil against RM125.8mil a year ago. Net profit for FY10 was RM11.9mil against RM5.1mil in FY09.

As at the end of FY10, OSK Property’s cash and cash equivalents stood at RM53.2mil.

The company currently trades at 11.25 times price/earnings ratio and has a market capitalisation of RM163.02mil.

Interestingly, the offerors did not provide any rationale for making the offer to take over OSK Property.

Considering the offerors for OSK Property – led by Ong Leong Huat – is making a general offer for the shares of the former, they would need to secure up to 90% acceptances before they can take the company private. This would mean that shareholders have ample room to reject the offer on the table if it is not up to expectations, explained an analyst.

In the case of AP Land, the offer was at 45 sen per share, which is a 9.8% premium over AP Land’s last traded price of 41 sen before the announcement was made, but only 7.7% over yesterday’s closing price of 41 sen.

AP Land’s net asset value per share has stayed above RM1 since 2005.

Under the new takeover rules, offerors will need at least 75% of non-interested shareholders to accept an offer before it can go through.

“This puts more power into the hands of minority shareholders, who can insist of a higher price for the assets of their company,” said one analyst.

On the other hand, the takeover offers do provide an exit opportunity for minority shareholders in companies whose share prices have not performed.

Analysts said that in general, the rationale for these exercises was that both companies had failed to attract market attention and therefore the value of their shares did not reflect the companies’ underlying strengths.

AP Land’s offeror is its parent company, the Low Yat group, which stated the following as the rationale for its exercise: “The liquidity of the trading of AP Land shares has been relatively low, with a trading volume of approximately 349,429 AP Land shares per day during the past one year.

“Therefore, it may not be easy for the shareholders of AP Land to be able to realise their investments in AP Land on the open market.

“The proposals will accord an opportunity for all AP Land shareholders to realise their investment in the company in the short to medium term at a reasonable premium above the historical market prices of AP Land shares ...”

AP Land’s major property projects include Bandar Tasek Puteri in Rawang and a residential development comprising luxury apartments in the Niseko region of Hokkaido, Japan.

Properties under OSK Property’s stable include luxury homes, townships and The Atria Shopping Complex in Damansara Jaya.

By The Star

Analysts have mixed views on Genting’s land purchase in Florida

PETALING JAYA: Genting Malaysia Bhd's land acquisition in Miami, Florida for US$236mil received mixed reactions from analysts while the move is seen as the way to diversify its earnings base and spur growth going forward.

ECMLibra Investment Research viewed the move positively given the choice location of the waterfront property, adding that Florida attracted up to 82.3 million visitors in 2010, of which 87% were local visitors.

“The announcement has made no mention of casino operations but we view that the announcement will be in due course as licences would be required from the Miami-Dade County,” it said in a report yesterday.

Reported in the South Florida Business Journal, Resort World Miami (RWM) president Mike Speller said Genting Malaysia would fund the US$2bil development cost of the project without stating the funding details.


Kok Thay ... ‘Downtown Miami has experienced dramatic residential and commercial growth in recent years.’

CIMB Research is neutral on Genting Malaysia's acquisition and the research house thinks that the deal positions Genting Malaysia to capitalise on the potential liberalisation of “resort-style” gaming in Florida.

It pointed out that there was a question mark over whether the Florida state government would liberalise such gaming in the state.

“This purchase, however, is sizeable, indicating the group's confidence in the success of the mixed development project, in our opinion,” it said.

CIMB left its earnings projections unchanged, pending more details on the acquisition.

“Assuming bank borrowings of US$200mil (85% of total price), we estimate that its net cash will fall by about 33% to RM1.5bil. The total price accounts for less than 1% of the group's shareholders' equity,” it said.

HwangDBS Vickers Research said: “While it is still early to assess earnings impact for RWM, we do not expect any meaningful contribution over the next two to three years. Genting Malaysia's foray into the United States, if successful, will help diversify earnings base and spur growth.”

Genting Malaysia announced last Friday that its subsidiary Bayfront 2011 Property LLC had purchased 13.9 acres in Miami for US$236mil, with plans to build a mixed-use development.

The land includes the building currently housing The Miami Herald Media Company and an adjacent parking lot.

It said in a press release that it was working towards developing a comprehensive master plan for RWM, as the development would be called, which would include hotel, convention, entertainment, restaurant, retail, residential and commercial facilities.

The project aims to capitalise on Miami's standing as one of the world's leading tourism hubs.

Its chairman and chief executive Tan Sri Lim Kok Thay said: “Downtown Miami has experienced dramatic residential and commercial growth in recent years, and we believe the addition of a large-scale mixed-use and entertainment complex will be a welcomed addition, further elevating the area's status as a global destination.”

The acquisition is an integral step for Genting Malaysia as it seeks to expand internationally in the leisure, hospitality and entertainment industry.

The envisioned RWM represents Genting Malaysia's second venture into the United States, after Resorts World New York at the historic Aqueduct Racetrack in the city of New York.

By The Star

When developing a luxury resort is a hobby

KUALA LUMPUR: Cardiologist Dr N.S. Dhaliwal has ventured into a hobby which most people would call a business.

Sixty-five-year-old Dr Dhaliwal has decided to turn his passion for building houses into a project.

Together with two other partners, Michiel Leo Philip and Roger Mauclair Deslorieux, the team is building a luxury development with a gross development value of RM200 million in Kudat, Sabah. It is called the The Nyior Luxury Villas Borneo Beach Resort.

The project, which is expected to be launched in the third quarter of this year, will have 43 villas and 57 serviced suites. It will include a club house.

The project is being developed by Borneo Eco-Green Resorts Sdn Bhd, in which Dr Dhaliwal has a 40 per cent equity interest, Leo Philip 30 per cent and Deslorieux 30 per cent.

Built on a 10.13ha fronting the Marudu Bay, the two-, three- and four-bedroom villas will have a built-up of between 2,500 sq ft and 5,000 sq ft. However, each lot in itself is double the size of the built-up.

"They will be sold from RM2.5 million to RM5 million," Dr Dhaliwal, who is the managing director of the property, said.

It has already hired a marketing firm in the UK to handle the sale of the property.

The company is targeting to sell the property to specific markets like the UK, Russia, the Middle East and other high-profile buyers.

The Nyior, he said, is not to be confused with an earlier project called Kudat Riviera, launched by another developer. This project is said to have been abandoned.

The Nyior resort is said to be private and exclusive, and those who land at the Kota Kinabalu airport will then be transported via a 20-minute helicopter ride.

"We were looking for a place for us ... and realised this was quite big and decided to develop a resort instead," Dr Dhaliwal said.

The sea-front resort, he said, would give access to diving, particularly wreck-diving where shipwreck is explored.

The entire project could take three years to complete.

By Business Times

M’sians in S’pore can help promote housing scheme

SINGAPORE: Malaysians residing in Singapore can assume a vital role in promoting the “Malaysia My Second Home Programme” (MM2H) among Singaporeans, says Tourism Malaysia director in Singapore Zalizam Zakaria.

He said Singaporeans were among the top ten purchasers of properties in Malaysia under MM2H followed by Japanese, British, Americans, Chinese nationals, Iranians, Pakistanis, Bangladeshis, Indian nationals, Australians and South Koreans.

The programme is promoted by Malaysia to allow foreigners, who fulfill certain criteria, to stay in Malaysia for as long as possible on a 10-year multiple-entry social visit pass which is renewable.

Open to citizens of all countries recognised by Malaysia regardless of race, religion, gender or age, applicants are allowed to bring their spouses and unmarried children below the age of 18 as dependants.

The Malaysian High Commission in Singapore, in collaboration with Tourism Malaysia briefed Malaysians living in the city-state at its monthly “Malaysians Get Together” on the advantages of owning a house in Malaysia.

According to Zalizam, Malaysians should do a “sales pitch” among their Singapore friends by highlighting that the Government would continuously seek to improve the programme.

Quoting International Living.com, Zalizam said Malaysia ranked the 16th most preferred top retirement haven in the “Annual Global Retirement Index” in 2009.

Apart from a relatively low cost of living, he said it was worthwhile to note that those who qualified would be able to bring their immediate family members along, own freehold property in Malaysia, import worldly goods and even purchase a brand new car, tax free.

“They can also enjoy all the multiple benefits that Malaysia offers to its citizens,” he said, explaining further that Malaysia had an efficient and affordable healthcare system.

By Bernama

Strong interest to jointly develop 50 acres near KLIA2

PETALING JAYA: Twenty companies have collected request for proposal (RFP) documents to partner Malaysia Airports Holdings Bhd (MAHB) to develop 50 acres near KLIA2 in Sepang.

Due to the large number and requests from the companies interested to be developers, MAHB has extended the closing date of the RFP to July 4 from June 1.

MAHB posted the RFP notice on its website on March 31 and documents were available for collection from April 4 onwards. The airport operator had also briefed interested parties on its requirements in April.

The RFP is for the privatisation of the 50-acre commercial development that would comprise premium factory outlets centre, a food and beverage centre and an auto city. Since it covers a big area, several parties may be selected.


Bashir ... ‘The 50 acres form the first phase of the entire development.’

“The 50 acres form the first phase of the entire development. We will provide the land (and partner parties that will develop the land). We have completed levelling the land recently,'' MAHB managing director Tan Sri Bashir Ahmad told StarBiz in an interview.

The 50 acres is part of the 6,750-acre landbank that is earmarked for development around KLIA and this development dubbed KLIA Aeropolis falls under the wholesale and retail initiative under the NKEA. It would transform KLIA into a diversified airport city, providing significant opportunities including employment, leisure and tourism.

KLIA2 is 1.5km from the KL International Airport (KLIA) main terminal building. KLIA2 is the new low cost carrier terminal (LCCT) that is under construction and it would be able to cater up to 30 million passengers.

MAHB is asking the Government for an extension on the lease of the land identified for development from the current 25 years to 60 years.

After the RFPs are in, the evaluation process will begin and the key would be to select the right partner and bring in appropriate brands and retailers.

“(A lot of it is about) selling the right product and getting the model right from the onset. It is not (merely) about opening shops but the right shops, the right products and location,'' he said.

The targeted completion date of the 50-acre development is in 2013.

The commercial development has been identified as the key driver to help the airport operator boost revenue in the long term while it maintains competitive aviation charges for airlines and passengers.

In its 2010 annual report, MAHB quoted Datamonitor Retail as saying that the global airport retail market was expected to grow by 60% in 2015 and be worth US$44.1bil. In 2010, a 8.4% global growth rate for airport retailers was fuelled by the Asia Pacific, Middle East and African regions. MAHB is positioning itself to take advantage of the opportunity and thus the greater focus on its commercial business.

“We will get rental income and royalties from this land venture,'' Bashir said, but did not elaborate as the RFPs are not in yet.

Over the past year, MAHB has increased retail space in both the LCCT and KLIA substantially. There is equal contribution from both commercial and aeronautical businesses to revenues but the plan is to drive commercial revenue contribution to reach 60% by 2014.

MAHB hopes to also more than double revenues to RM3.2bil by the same time and expects its earnings before interest, tax and amortisation (EBITDA) to hit RM1bil by then.

For the financial year ended Dec 31, 2010, MAHB recorded RM1.8bil in revenues, RM378mil in net profit and EBIDTA stood at RM706mil. The company is scheduled to announce its first quarter results tomorrow. The full year estimates for 2011 by an analyst are that revenues should increase to RM1.9bil and net profit to RM472mil while EBIDTA should reach RM783mil.

There will be other phases in the development of KLIA Aeropolis which would include a commercial business district which houses office parks, retail/commercial centres, an auto mall, exposition/convention centre, medical centre, training centre complex and service apartments. There are also plans to build golf courses, a boutique hotel and a theme park as well as agro-tourism tracts of land.

Last year, all 39 airports operated and managed by MAHB nationwide handled a total of 57.8 million passengers and Bashir said he would not be surprised if they manage 60 million this year.

By The Star

Quality of housing stock already makes KL a global city

The Binjai Residency in Kuala Lumpur.

In a recent report from the UK, it was stated that the quality of a city's housing stock plays an important role in boosting its attraction and making it more competitive in global terms. Malaysia has slipped in global competitiveness according to both The Institute of Management Development and World Economic Forum but does this mean the quality of housing stock is still not of global standards?

It is arguable that London is one of the top global cities and it has recently been reported that the housing stock in London continues to sell well and at prices equal to, or even above, pre-recession levels. This may be testament to the quality of homes in central London they are so desirable because of the quality of design, finishing and of course location in a vibrant city.

Kuala Lumpur is not a global city yet but there are examples of high quality housing stock that should be contributing to its global competitiveness. For example, The Troika is designed by British firm Foster & Partners in cooperation with local firm GDP and such a building in London, New York and Paris would be five or six times more expensive to buy or rent. Probably the most expensive apartment transaction in the country was at a price of RM2,657 per sq ft for a penthouse unit at Binjai On The Park and the next closest in value would be The Troika.

The buyer is a corporate figure who has been on Forbes magazine's list of wealthiest people. On June 22, 2010, he bought the triplex penthouse, measuring 14,300 sq ft, on the 42nd floor of Binjai's Tower B. The price tag of RM38mil meant the penthouse was sold for almost RM2,660 per sq ft. At the time, the marketing and sales manager was quoted in The Star as saying “The buyer bought the penthouse to stay. He fell in love with the 360-degree unobstructed view of the KLCC skyline right at his doorstep” similar to views offered by the likes of London's One Hyde Park. “Binjai On The Park was just like one of his other homes around the globe,” said Terri Har, marketing and sales manager of Layar Intan Sdn Bhd, the developer.

The “Global Cities Review” published by Savills in the UK compares prices of residential units bought by CEO level executives in London, New York, Moscow and Hong Kong, and KL pricing is still 50% more affordable than in New York which was the only city not to show any price gains over the last five years. Indeed, the value of a CEO's home in New York last year was still down 7% on 2005 prices.

London's wealthy residents, whether they own or rent, are likely to live in a house and it is “landed property” in Malaysia that is still the most sought after and valuable in the country. The so-called “bungalow in the sky” concept for some KLCC apartments has sold well and make wonderful accommodation for owner occupiers but investors have found it difficult to let at rents that would give acceptable returns.

Only 40% of 5mil plus purchases in London were made by British buyers in 2010 and this is exactly what Malaysia needs more foreign buyers of residential accommodation and more foreign tenants from multinational corporations. The quality of the housing stock is present and getting better all the time and we look forward to more liberalisation of the business sector and the attraction of more foreign investment to boost the luxury housing market and improve the country's competitiveness.

London is the world's largest financial centre alongside New York and there are more overseas banks in London than any other international city. Obviously the attempt to base an Islamic “mega bank” in Kuala Lumpur is welcome and may make Kuala Lumpur the global centre for Islamic finance. Life in London is very busy with Heathrow being the world's busiest airport and London having more than 300 languages spoken. Malaysia has embraced multiculturalism and so this is not likely to hinder progress towards being a global city.

Just like London, the hunting grounds for wealthy families to live in large houses in KL are well established residential areas characterised by wide roads and plenty of parks or trees Areas in London for houses like Belgravia, Holland Park, Regent's Park, Chelsea and Mayfair are the equivalent of our Bukit Tunku, Ampang Hilir, Bangsar and Damansara Heights. Well-planned new townships like Desa Park City may well become the equivalent of Chiswick in West London one day and will undoubtedly help Kuala Lumpur become a global city!

Senator Datuk Abdul Rahim Rahman is the executive chairman of Rahim & Co group of companies

By The Star

Glenmarie plans RM1b projects over next 5 years

SHAH ALAM: DRB-HICOM Bhd's property subsidiary, Glenmarie Properties Sdn Bhd (GPSB), aims to launch projects with a total gross development value (GDV) of about RM1 billion over the next five years.



"We're going to launch about 3,500 units of commercial/residential developments over 3,300 acres of land. That's the projection for the next five years," said Siti Mariam Mohd Desa, group director for property, asset and construction.

GPSB, formerly known as HICOM Properties Sdn Bhd, is known for its riverside and gated resort-style development here in Glenmarie, near the Subang airport.

It still has a balance of 200 acres in Glenmarie that can be developed, she said.

Siti Mariam spoke to reporters here yesterday after GPSB and Bank Muamalat Malaysia Bhd, another DRB-HICOM subsidiary, formalised an agreement to develop a home-financing package.

The package, available at selected Bank Muamalat branches in the Klang Valley, is designed for potential buyers of two of GPSB's developments, namely Glenmarie Gardens and Laman Glenmarie.

Glenmarie Gardens consists of 70 units of bungalows that will be launched in three phases. The first phase is fully sold, while the second phase is expected to be launched next week and the final phase, in 2012.

Laman Glenmarie comprises 385 units of two-storey link houses covering 70 acres of land at Section U1A here.

"Competitive financing rates, convenience of online repayment and a longer financing tenure of up to 70 years of age, or maximum financing duration of 40 years, are some of the package's attractive selling points," Bank Muamalat's chief executive officer Datuk Mohd Redza Abdul Wahid said.

He said buyers could be eligible for funding of up to 95 per cent of the home value.

Bank Muamalat has a financing portfolio of over RM8 billion, of which half is in consumer loans.

Mortgages make up "at least 50 per cent to 60 per cent" of its consumer loans, he said.

Mohd Redza said the bank's consumer loans are expected to grow by up to a fifth this year.

By Business Times

Tower of sustainability

An artist’s impression of Menara Binjai.

When the idea was conceptualised to develop a 35-storey grade-A office building along Jalan Binjai in Kuala Lumpur, the plan was to construct a “tower of sustainability” rather than a mere “structure with windows”.

“We wanted to build something that was tall, striking and beautiful with lots of glass, not a building with small windows,” says Khor Joo Saik Sdn Bhd director Jackie Chua.

The office tower that the company is building is Menara Binjai, which is scheduled for completion by the fourth quarter of this year.

Fellow company director Chua Guan Hock says a lot of thought has gone into making it “as green as possible”.

“Going green was not an afterthought. It was planned from the beginning. By doing this (going green), we felt that we would be able to improve the quality of the working environment for potential tenants.

“Construction began in 2008 but it has been on the drawing board since 2004,” he says.

According to Guan Hock, Menara Binjai complies with strict environmental regulations that comprise reducing the impact of its construction on the surrounding area and adopting a low carbon footprint approach.

Key green features of the building include low-E double-glazed windows for optimum heat and sound insulation, energy-saving air conditioning (which uses a centralised water-chilled air conditioning system), destination-based lifts (which allows customised floor selection to minimise waiting and stopping times, with drive motors that enable up to 30% savings in electricity consumption) and energy-saving lighting.

Guan Hock adds that incorporating green features into the building allows the company to be more “disciplined”. “It made us more aware on the impact that we had on the environment, so this made us (more conscious) in saving water and reduce unnecessary wastage of raw materials used.”

According to the company's brochure, the host of green features at Menara Binjai permits sustainable, energy-efficient operation with up to 25% savings on electricity and air-conditioning consumption.


From left: Khor Joo Saik project manager David Hong, Jackie Chua and Chua Guan Hock.

The building has also received the Green Mark Gold Certification (Provisional) from the Singapore Building and Construction Authority as well as provisional certification from Malaysia's Green Building Index, making it the first dedicated office tower in the country to receive both awards.

Multimedia Super Corridor-status accreditation for Menara Binjai is pending, according to Guan Hock.

The building, which has a gross development value of RM180mil, will be targeted mainly at tenants in the oil and gas, financial, services and trading sectors.

Strategically located at the junctions of Jalan Binjai, Jalan Tun Razak and Jalan Ampang, Menara Binjai will comprise four levels of basement parking and another four levels of podium parking.

The office floors, which have a net lettable area of 12,000 to 13,000 sq ft, start from level six. Project manager David Hong says the company has also invested in a centrally-located data centre on the fifth floor of the building.

“Instead of having our tenants set up their own server rooms, we felt that it made business sense to have them park their facilities in one common data centre,” he says.

Menara Binjai today stands on the site where the family home of the late physician Dr Chua Boon Teck used to be. Boon Teck's father was Chua Cheng Tuan, one of the co-founders of Cycle & Carriage Co, now known as Cycle & Carriage Bintang Bhd.


The old Chua family home used to sit where Menara Binjai now stands.

Boon Teck's wife, the late madam Khor Joo Saik (whom the company is named after), was said to be a formidable nyonya businesswoman who acquired substantial plantation and property plots for the Chua family, including heritage sites where the Coliseum Cinema and Coliseum Cafe are located.

Guan Hock and Jackie, who are descendants of the Chua family, says they have no plans to sell Menara Binjai.

“We don't intend to sell the building. It's for the long term,” says Jackie, adding that since they own the land, they are able to provide a competitive rate of RM7.50 per sq ft for their would-be tenants.

“The land is a legacy of the family,” she says.

By The Star

Housing for average income earner

REAL estate industry players are asking the authorities to step in to control the spike in housing. International Real Estate Federation (Fiabci) Malaysia president Yeow Thit Sang says it is time the authorities look into the matter.

“Home prices have gone up so much that it has reached a ceiling to the point that high-end housing developers must give a 20% rebate in the condominium segment or there will be no sales,” says Yeow.

House prices have gone up many times beyond the average household income.


Yeow...‘We are in a situation where people are using the property market to gamble.’

Yeow says the scenario of low-occupancy and falling prices can be found in KL City Centre and Mont'Kiara. “Overall, developers need to slow down,” he says, adding that KL Sentral is another area where office and retail properties are undergoing continuous development.

Yeow says the Housing and Local Government Ministry and the relevant authorities can play a greater role in controlling prices. They can do this by studying the needs of the market the take-up rate, the number of people entering the Klang Valley to seek employment, the number of expatriate entering or leaving the country, and which type of housing is facing a shortage.

“They can approve or not approve applications by developers. For example, there are too many condominiums in the KLCC area which cost millions of ringgit,” says Yeow.

He says expatriates are the ones who mainly occupy these units. Many who bought into that location are local and foreign investors who expect a certain yield. When they do not get the yield they want, they may decide to sell it instead of holding on. When this happens, there is always the possibility of prices coming down.

In London, Hong Kong, Singapore, China and Australia, the authorities will study the housing needs of cities. “We must do the same,” says Yeow. Currently, this is being done on a five-yearly basis, which is far from the ideal, says Fiabci Asia-Pacific executive director Yu Kee Su.

The people need medium-range housing priced around RM300,000, says Yeow.

Khong & Jaafar managing director Elvin Fernandez says some form of measures targeted at the property sector should be put in place.

“It would be difficult for the authorities to know when to apply the brakes and when to lift the foot off the pedal if we are to use demand and supply to control prices. A better measure would be to bring back the real property gains tax on a graduated level to help curb speculation.

“A second measure would be to extend the 30% downpayment requirement for second property instead of the third and subsequent residential purchase,” says Fernandez.

Last November, Bank Negara required buyers of third and subsequent residential properties to pay a minimum downpayment of up to 30% while the remaining 70% constitutes a loan. Analysts say this is just a temporary setback.

Fernandez also suggests doing away with mortgage brokers.

“Banks want to increase their share of property loans and engage mortgage brokers, who are not bank staff. These brokers' interests are not aligned with the long-term interest of the banks. They only want their commission.

“The services of mortgage brokers is something that came out of the United States. Are these mortgage brokers doing a service or a disservice to our banking system and to the house buyers?”

Yeow reiterated the need for housing to be priced in the medium range of about RM300,000 because this is what the average wage earner can afford even in the Klang Valley.



However, he notes that it is difficult to find houses with this price in the Klang Valley or Penang and this is worrying. Yeow says that the most pressing issue now is escalating prices and the question of affordability among the ordinary wage earners.


His concerns are very real. House prices have moved far ahead of wages. Yeow says the average monthly household income is about RM7,500 while Fernandez puts it at close to RM6,000. He is quoting a private survey done for the Klang Valley this year.

RAM Holdings Bhd economist Jason Fong says that at the national level, the average monthly household income in 2009 was RM4,025. Putrajaya has the highest monthly average wage of RM6,747 while Kelantan has the lowest at RM2,536.

On a sectoral basis, Fong says the average wage for manufacturing sector (March 2011) is RM2,240 while for wholesale and retail (fourth quarter 2010) is RM2,219 and for rubber plantation (March 2011) is RM826.

Kuala Lumpur has the highest average transacted property price at RM488,536 last year, says Fong. This is the least affordable relative to income levels in Malaysia in 2009.

In the east coast, the lowest transacted price in Terengganu was RM74,063 while in Kelantan was RM82,337 both were relatively affordable.

Fernandez says there is a need to look at housing from the perspective of the ordinary wage earner with an average income of about RM6,000 or less because of the relatively low wages in the country. “We cannot look at housing from the perspective of those earning RM15,000 or more a month. In 2008, only 1.7% of the entire population drew a monthly income exceeding RM15,000, and only 5.2% earned more than RM10,000.

“In the Klang Valley, only about 3% earn more than RM15,000. This means there are not many rich people in Malaysia,” says Fernandez.

He points out two fundamental factors that drive house prices household income and rental returns.

House prices, as against annual household income, is normally calculated at three to four times. For example, if a household monthly income is about RM6,000, which is what the average Malaysian household earns, at four times, the price of the house should be about RM300,000 (6,000 x 12 = 72,000 x 4 = 288,000).

In the Klang Valley, this has gone up to 15 to 20 times. In places like Kajang, house prices against annual household income is about four times. “Such areas are relatively untouched by the rapidly rising prices in other parts of the Klang Valley. Their yield is, therefore, higher, at 3%.”

While housing prices have gone up, rental has not.

A double-storey house in Petaling Jaya was priced at about RM500,000 about two years ago while rental was between RM1,500 and RM1,700.

Today, that same house is priced at about RM800,000 but the rental is only RM1,800 to RM2,000. So although house prices have gone up, rental rates do not reflect that rise.

Condominiums used to have yields of about 8% while landed housing about 4%. Both have fallen to about 4% and 2% respectively today.

RAM Rating Services Bhd head of real estate and construction ratings Shahina Azura Halip says the affordability issue is expected to persist as prices of residential properties, especially landed units, are likely to increase this year but at a much slower pace than last year.

This is fuelled by the keen demand, higher land prices and construction costs, as well as the scarcity of landed properties in prime locations.

“Bank Negara's 70% cap on the loan-to-value ratio for buyers' third residential property mortgages will deter speculation to some extent particularly in the high-end segment although the impact is not expected to be as significant in the long run, given the strong fundamentals supporting demand for homes,” she says.

Meanwhile, Shahina says, the Government's recent announcement on the My First Home Scheme, which will enable those earning less than RM3,000 per month to obtain 100% financing for the purchase of their first house costing RM100,000 to RM220,000, is a positive move for the market.

“The main consideration, however, is the availability of either landed or strata-titled units in this price range, especially in Kuala Lumpur, Selangor, Penang and Johor,” she says.

Both Yeow and Fernandez are of the view that, at the rate house prices are moving now, those who have not bought their houses will not be able to afford one because salaries are not growing in tandem with inflationary pressures.

Says Yeow: “We are in a situation where people are using the property market to gamble.

“It is purely to flip. This is bad because it will only drive prices higher. This deprives the average wage earner of buying his own house.

“The Government is trying to stem the bubble with various measures,” Yeow adds.

By The Star

Sharp property price hike puts a damper on affordability

The fact that the average salaried workers are ready to buy into properties many times their annual income is food for thought.

LONG-TERM sustainable house prices ought to be determined by two key fundamentals household income and rental returns. The relationship between household average annual income and property prices is an important one as it measures affordability levels.

If the average annual household income in the Klang Valley is RM72,000, this means the family can afford a house that is three to four times the annual income; that is, a property priced between RM216,000 and RM288,000.

This is just a rough guide. If commitments are high in other areas, they may not be able afford a property priced within this range.

For a long while in Malaysia, this number hovered between three and four times. In the United States, it was about eight times in many of the overpriced cities just before the financial crisis hit the property market.

Last year, certain parts within Petaling Jaya began to inch up to five and six times. This means households had to fork out more in order to buy properties priced between RM360,000 and RM432,000.

At that time, the property consultant who did the study said that at five to six times, this was still managebale and was not a cause for concern.

About two months ago, another study was done by the same consultant. This time, more areas within the Klang Valley were included. It was during the course of this study when it was found that within the Klang Valley itself, the prices of certain locations have gone up far ahead of others. This is not something new, all of us know that. But what is startling is that property prices that used to be five to six times a household's annual average income has gone up to 11 times about two months ago.

While Kajang continues to have a household income/property price ratio of 4 times, in other parts of the Klang Valley, this has gone up to as high as between 17 and 20 times in some areas. There is a caveat: all of this is viewing house prices from an average household income of RM6,000 a month or RM72,000 a year.

As with the use of any statistics, there is always a margin of error. The prices of properties are for all to see in the classifieds. The question is: What is the average income in the Klang Valley?

The company which did the study used RM6,000 as an average monthly income in the Klang Valley. Another property-related professional said it is about RM7,500 a month, while an economist says it is slightly more than RM4,000. The figure varies even more for different states (see table Monthly average household income by state on page 24).

The fact that we, the average salaried workers, are ready to buy into properties that are many times our annual income is food for thought and cause for concern.

The other fundamental governing house prices is rental returns. In most of the areas that were included in this analysis between house prices and household income and rental returns, the trend is clear over the last 10 years, the returns are dropping.

In many of the areas where prices have increased, the rental returns of the typical terrace house have dropped below 3% net. In some areas, it is about 2% net.

With the situation the way it is today, real estate professionals are calling for the authorities to put in place greater measures.

In China and Singapore, various measures have been put in place to cool prices the past year or so. Since last year, the Chinese government has introduced a series of policy measures to cool the market. This includes raising interest rates, raising down-payment requirements, directly restricting home purchases, imposing price control targets in Beijing and Shanghai and finally charging a real estate tax, albeit on a trial basis, in Shanghai. Nevertheless, prices remain stubbornly high.

Early this year, the Singapore government required those who buy, and sell, residential properties within four years to pay a stamp duty, up from the previous requirement of three years. Other measures include making it mandatory for individual buyers, who are still servicing an existing loan, to borrow only up to 60 % of the new property's value, down from 70% previously. For corporate investors, the loan-to-value limit has been cut to 50%.

What is emerging today is Chinese developers and owners of malls are now offering investors their assets. According to a fund which is on an acquisition trail in Asia, the company is looking at commercial properties at a “flow rate” of one property a day, which, according to the source, is very high.

These developers and owners essentially want to make their exit. In the commercial segment in Malaysia, developers here are also beating a path to the same fund to sell their assets. Thankfully, not at a flow rate of one per day.

Assistant news editor Thean Lee Cheng is wondering what it takes to douse this madness.

By The Star (by Thean Lee Cheng)

Dijaya plans RM3.5bil projects

PETALING JAYA: Dijaya Corp Bhd will launch property projects worth RM3.5bil over the next two years.

The projects include W Hotel and Residences Kuala Lumpur, serviced apartments in Tropicana Danga Bay, Tropicana Gardens commercial centre, Tropicana Avenue business and retail centre, Tropicana Bayou mixed development and Tropicana Cheras bungalows, semi-dees and linked houses.

“With all these projects in the pipeline, the company is poised for growth,” said managing director Datuk Tong Kien Onn in a statement yesterday.

Meanwhile, for its first quarter ended March 31, Dijaya's net profit surged to RM18.14mil from RM464,000 previously.

The improvement is attributable mainly to higher profit margin contributed by its new property launches such as Tropicana Grande condominiums, Casa Tropicana Block E condominiums, and Pool Villas.

However, revenue fell to RM57.68mil from RM58.37mil previously.

By The Star

OSK Property receives takeover offer

PETALING JAYA: OSK Property Holdings Bhd executive director Ong Leong Huat and Land Management Sdn Bhd have offered to buy up the remaining OSK Property shares they do not own for RM119.56mil.

In a filing with Bursa Malaysia yesterday, the company said both Ong and Land Management collectively owned 49.96 million shares of RM1 in OSK Property, representing a 26.66% stake, and was looking to buy up the remaining 137.42 shares in the company for 87 sen per share.

They are also looking to buy 47.81 million warrants not owned by them for some 6 sen per warrant.

Ong is also a substantial shareholder and director of OSK Investment Bank and OSK Holdings Bhd as well as a director of Bursa Malaysia.

The shareholders of Land Management Khor Chai Moi, Ong Yin Suen, Ong Yee Ching, Ong Ju Yan, Ong Yee Min and Ong Ju Xing also held direct stakes in OSK Property amounting to 5.43%. Yin Suen, Yee Ching and Ju Xing are also directors of Land Management.

OSK Property's share price gained 7.5 sen within the day to end at 87 sen yesterday on news of the proposed takeover. Based on Thursday's closing of 79.5 sen, the offer price provides a 9% premium but that premium was wiped out yesterday when the company saw its share price end at the offer price of 87 sen.

For the financial year ended Dec 31, 2010 (FY10), the company posted a revenue of RM144.9mil against RM125.8mil a year ago. Net profit for FY10 was RM11.9mil against RM5.1mil in FY09.

As at the end of FY10, OSK Property's cash and cash equivalents stood at RM53.2mil.

The company currently trades at 11.25 times price/earnings ratio and has a market capitalisation of RM163.02mil.

Properties under the group's stable include luxury homes, townships and The Atria Shopping Complex in Damansara Jaya.

Proposed privatisation of smaller property companies seems to be picking up steam following an announcement earlier this year that Low Chuan Holdings Sdn Bhd, owned by the founding family of the Low Yat Group, was looking to privatise Asia Pacific Land Bhd.

The Low Yat Group had offered 45 sen per AP Land share, pricing the stock at 0.43 times its book value of RM1.05.

By The Star

Genting plans to build ‘Resorts World’ in Florida

PETALING JAYA: Genting Malaysia Bhd plans to build “Resorts World Miami” in Florida after buying a 13.9-acre land for some US$236mil from a US newspaper publisher, The McClatchy Co.

The company told Bursa Malaysia yesterday that its subsidiary, Bayfront 2011 Property LLC purchased the land, which includes a building currently housing The Miami Herald Media Co and an adjacent parking lot, with plans of building a mixed-use development.

Genting Malaysia said it was working towards developing a comprehensive master plan for the project called “Resorts World Miami”, which will include hotel, convention, entertainment, restaurant, retail, residential and commercial facilities.

The project aims to capitalise on Miami’s standing as one of the world’s leading tourism hubs.

“The acquisition involves large prime freehold waterfront properties facing the scenic Biscayne Bay. Located in downtown Miami, the properties are close to commercial, residential and shopping areas and are bordered by an extensive road network linking to Miami International Airport and South Beach, one of the world’s top beach destinations,” the company said.

The land is located directly across the street from the Adrienne Arsht Center for the Performing Arts of Miami-Dade County, which is among America’s largest performing arts centres. Miami’s new Museum Park development, the future home of Miami Art Museum and Miami Science Museum, is located immediately to the south.

Genting Malaysia is looking to fund the purchase through bank borrowings and internally-generated funds. It said that bank borrowings of US$200mil to partly fund the purchase, Genting Malaysia’s consolidated gearing ratio of 8.3% as at Dec 31 will increase to 12.4%, on a proforma basis.

“Resorts World Miami will be a landmark mixed-use development for Miami, Florida and the United States,” Genting Malaysia chairman and chief executive Tan Sri Lim Kok Thay said.

“Downtown Miami has experienced dramatic residential and commercial growth in recent years, and we believe the addition of a large-scale mixed-use and entertainment complex will be a welcomed addition, further elevating the area’s status as a global destination.”

Genting Malaysia said it was seeking to expand internationally in the leisure, hospitality and entertainment industry. The envisioned Resorts World Miami represents Genting Malaysia’s second venture in the US, after Resorts World New York at the historic Aqueduct Racetrack in the City of New York.

The seller of the land is the third-largest newspaper publisher in the US and is listed on the New York Stock Exchange. It is also the parent company of Miami Herald.

An analyst said based on the little information provided from the announcement said he was netural on the deal.

“It seems cheap, considering that they are buying at a property down cycle in the US and that this is prime property.”

However, he added, that it is not clear if Genting would be issued with a gaming licence. “If a casino is in the plans, then the move is a good one, considering that Miami is a top tourist site. But let’s see the details.”

By The Star

Tanco to resume property projects after settling debt

PUCHONG: Resort operator and developer Tanco Holdings Bhd plans to proceed with some of its property projects once it has paid its RM144.58mil debt to Lehman Brothers Commercial Corp Asia Ltd by the third quarter of 2012.

At an EGM on Tuesday, Tanco shareholders approved the ordinary resolution in relation to the proposed settlement scheme to Lehman Brothers.

Tanco group managing director Datuk Tan Jing Nam said the company's land was now locked up in the lengthy litigation process.


Tan says the company ’s land is now locked up in the litigation process.

The land bank includes 430 acres in Palm Springs Resort City, Port Dickson, and 170 acres in Duta Lakes, Lake Kenyir, Terengganu.

“From the waiver of the remaining secured debts pursuant to the settlement scheme, Tanco will have net exceptional gain of some RM118mil that will improve the company's net tangible assets by 35 sen per share,” Tan told StarBiz.

Group executive director Datuk Lynne Tan said there would also be a significant drop in the company's net gearing ratio to 0.09 from 1.83 now.

Tanco had, on Feb 21, reached an agreement with Lehman Brothers for the settlement sum of RM144.58mil which would involve RM44mil cash as well as the transfer and vesting of certain properties at an agreed value of RM100.58mil.

According to Tanco's circular to shareholders, these properties include parcels of land, houses and shophouses in Rawang and Seremban as well as a parcel of beachfront vacant resort development land in Port Dickson.

Tanco and its affected subsidiaries have signed a settlement agreement with Lehman Brothers Commercial, Lehman Brothers Pan Asian Investments Ltd and Malaysian Trustees Bhd to formalise the settlement scheme.

The settlement sum of RM144.58mil was arrived at on a negotiated basis.

Lynne said the cash settlement sum would be paid in five instalments over 12 months from the date of “consent judgment”.

The cash settlement sum would be funded through internal funds and bank borrowings.

“There is also the possibility for the cash settlement sum to be settled earlier,” she added.

Lehman provided a two-year loan facility of about RM239.6mil in November 2007 to repay Tanco's debt obligations which saw Tanco coming out of PN17 classification on Jan 17, 2008 after completing its debt restructuring exercise.

By The Star

Dijaya Corp to launch projects with GDV RM3.5b

KUALA LUMPUR: DIJAYA CORPORATION BHD reported net profit of RM18.54 million in the first quarter and announced projects with gross development value (GDV) of RM3.5 billion over the next two years.

It said on Friday, May 27, that its earnings jumped 489% from RM3.15 million a year ago, boosted by higher profit margin contributed by its new property development launches.

The earnings were underpinned by the new launches including Tropicana Grande golf-fronted condominiums and Casa Tropicana final Block E condominiums at Tropicana Golf & Country Resort as well as Pool Villas at Tropicana Indah Resort Homes.

Dijaya added the 3Q earnings included net gain of fair value adjustment of RM5.16 million arising from marketable securities and recognition of RM4 million in liquidated and ascertained damages compensated from a contractor.

Its managing director Datuk Tong Kien Onn said that given the current set of results and the good location of the company’s current development, he was optimistic Dijaya would continue to post an improving set of results.

“The Company also has projects under planning to be launched over the next two years worth RM3.5 billion in GDV.

“These projects include W Hotel and Residences Kuala Lumpur, serviced apartments in Tropicana Danga Bay, Tropicana Gardens commercial centre, Tropicana Avenue business and retail centre, Tropicana Bayou mixed development and Tropicana Cheras bungalows, semi-dees and linked houses. With all these projects on the pipeline, the Company is poised for growth.”

By The EDGE Malaysia

China, Malaysia to develop industrial park

China is looking to incorporate a joint venture company with Malaysian developers to undertake the construction of the Qinzhou Industrial Park (QIP), said Deputy Director Qinzhou Municipal Commerce Bureau Xiao Xiao.

She said the joint venture company would cooperate in land acquisition, infrastructure construction and investment promotion.

"We chose Malaysia as our JV partner as it our biggest trading partner in the China-Asean Free Trade Agreement with bilateral trade having grown eight times since 2000.

"Qinzhou offers easy access via multiple options, including direct sea route, Pan-Asia railway and the highway network," she told Bernama in an interview today.

She said the QIP was planned to focus on equipment manufacturing, electronic information, new energy and materials, agriculture products, food processing and modern services industries.

"In terms of industrial layout, we welcome any constructive suggestion and advice from Malaysia," Xiao added.

She also said to formulate preferential policies, the bureau has defined three aspects which included sharing land development profits, local tax revenue and to strive for early harvest.

"Tax revenue retained for local public finance, in the start-up stage, will be granted to the JV company as follow-up development funds," she said.

In order to promote practical progress in the joint development of QIP, Malaysians enterprises that invest in Qinzhou can enjoy a favorable industrial land price of RM35 per square metre.

QIP, to be sprawled over 50 square kilometres, will be developed over 10 to 15 years close to port and high-tech industries, and have an anticipated population of between 300,000 and 350,000.

By Bernama