Mitrajaya gets RM25.59m Putrajaya job

Mitrajaya Holdings Bhd (MHB)'s subsidiary, Pembinaan Mitrajaya Sdn Bhd, has secured a RM25.59 million project from Putrajaya Holdings Bhd, to build double-storey terrace and semi-detached houses.

Under the project, 37 double-storey terrace houses will be buit in Zone 9A, Precinct 11, Putrajaya.

Another 45 units of double-storey terrace houses and four double-storey semi-detached houses would also be constructed in Zone 10A, Precinct 11 of Putrajaya, MHB said in a statement today.

By Bernama

Property market to continue strong growth

A bungalow in Gamuda’s Ambang Botanic project in Klang.

DESPITE the move by Bank Negara last November to introduce a maximum loan-to-value (LTV) ratio of 70% for the third and subsequent house financing facilities to curb speculation on property prices, property consultants and analysts are convinced that there will only be a temporary setback for the property and banking industry.

Hwang DBS Vickers Research, in its recent report, says the property market this year could still see 10%-15% growth, driven by scarcity of land and higher input costs.

“While we believe the 70% LTV cap managed to control speculative activities to a certain extent, the strong underlying demand from first-second home owners and upgraders continued to support property sales, even at new benchmark prices,” it says.

It adds that this can be seen with the recent launches that saw strong takeups such as Capers @ Sentul East condos where more than 90% of the units been booked at RM600 per sq ft and Sime's USJ Heights Indigo zero-lot bungalows with 75% sold at RM2mil to RM3.3mil per unit.

“The others are Gamuda's Ambang Botanic, Klang where semi-D and bungalows are sold more than 90% at RM1.5mil to RM1.8mil per unit and Glomac Damansara serviced apartments (70% sold at RM600 per sq ft),” it says, adding that this supports its view that property demand should remain resilient, supported by positive macro factors (young population, robust economy, inflation hedging, urbanisation, shrinking household size, accommodative bank lending).

The research house says another factor helping to boost property sales this year is the mass rapid transit (MRT) project.

“While MRT completion may still be a while away, in 2016-2020, property prices (especially land) tend to move ahead as developers scramble for projects near potential stations (given the typical 5-year lead time to negotiate, plan, obtain approvals, sell and construct). Developers such as SP Setia have started pricing in potential of MRT interchanges in their launches (KL Eco-City commands ~30% premium),” it says.

“While track record is important, we see owners of large land bank near potential MRT interchanges (or strong deal-makers) having an upper hand given scarcity of prime land in KL, and there should be no shortage of suitors to minimise execution risk. Strong overseas track record may give an added advantage in attracting foreign demand (e.g. YTL's Sentosa Cove, Guocoland group's following in Singapore and China). MRT and plot ratio expansion will strengthen the case to speed up development of raw landbank,” it says.

A property consultant tells StarBizWeek that generally, there will be some impact on the mid-level to high-end property market due to the LTV.

“Property developers may feel a slight impact on sales of mid-level to high-end property products as a result of the LTV. The impact can be expected as these markets (mid-level to high end property) are normally the playgrounds for investors and speculators. As LTV imposes those who are buying the third property, the Government is taking steps to curb the property price increase based on speculation. So, there will be less speculation in the property market,” he said.

Bank Negara in its Financial Stability and Payment Systems Report 2010 says house prices in selected locations within and surrounding urban areas have shot up to four times that of the national house price index.

It also says there have been incidents of applications for financing of multiple residential units within a single development project from a single borrower.

“To address this, the LTV ratio is aimed at promoting a stable and sustainable property market by deterring speculative activity through higher equity requirements for transactions of this nature,” the report says.

Maybank Investment Bank Research said in its recent report that housing loan applications had declined for the last three months on a month-on-month basis, partly due to recent measures to curb property lending.

“Loans applications for residential purchases fell 3.8% month-on-month from December 2010 to January 2011, 7.1% from November 2010 to December 2010 and 9.6% from October 2010 to November 2010,” it said.

However, analysts say they are optimistic the LTV will not hamper residential mortgage loans growth this year or even reduce residential property prices significantly.

“Residential home loans growth might see a slight slowdown as the measure by the regulator would curb speculative investment activities but it will

not be drastic, as up to 90% of banks' mortgage loans are held by homeowners, who are not speculative investors but have purchased residential properties to live in,” an analyst says.

Another analyst says the decline in housing loan applications can be seasonal and can pick up as the year progresses.

“I still think it is early days to attribute the decline to the LTV imposition only. Generally, I do not see this new measure having much of an impact on residential housing loans growth this year,” he says

By The Star

Going up, down or sideways?

Mont’Kiara, predominantly an investor proposition, is facing a high rate of vacancy.

Is there a softening in the condominium market? Some locations seem to be doing better than others while others are not doing as well as before.

ABOUT two to three weeks ago, a developer promoted a friend-bring-friend sale, whereby if a friend were to buy a condominium unit, the introducer will get a small reward. That project, located in a desirable location, was launched last year, amid much fanfare.

In another project, a developer is offering a 20% rebate. This enables buyers to pay 10%, enjoy a 20% discount off the purchase price and get a 70% loan. This 30:70 ratio satisfies Bank Negara's ruling (announced last November) which requires buyers of third and subsequent residential properties to fork out a 30% down payment.

In another part of Kuala Lumpur, a developer launched a condominium and had 80% sales on the first day, prompting the company to open up its second block just a few days after the launch of the first block.

At the same time, analysts are reporting that there will be a re-rating of property prices and that prices will go up. If their judgement call is correct, why are developers coming up with innovative schemes in order to sell their high-rise condominiums while other projects are selling like hot cakes?

Says SK Brothers Realty Sdn Bhd general manager Chan Ai Cheng: “The term softening property prices' is selective, it depends on location, type of properties and pricing. That 30:70 ruling by Bank Negara has not affected the market where buyers buy to stay, but it has affected those who are buying for speculation, or buy in order to flip it after it is completed.”

Chan says that ruling has been very well-implemented because most of her buyers now are those who buy in order to stay, and that 30% downpayment is not an issue with them.

“Most of our buyers are serious buyers, they buy to occupy and when you buy to stay, that 30% down payment is not an issue. It is only when you are buying to invest, or to speculate that you think many times before forking out that 30% money up front,” Chan says.

Much of SK Brothers' work involves helping developers to market their projects.

Like S K Brothers, Reapfield is also seeking good sales from their negotiators. Senior vice-president Gerard Kho says the fact that the company increased its negotiators from 700 last year to 800 this year testifies that the market is good.

Unlike S K Brothers who help developers to market their projects, Reapfield's sales are from the domestic, secondary market.

“When Bank Negara announced that ruling, we were concerned but our agents told us not to worry, that developers and buyers will work around it and today, that is what we are seeing. Overall, the market is adjusting to it, and a rebate is one of the ways to do it,” he says.

Nevertheless, there are certain things to note in the condominium market, excluding the KLCC market because that market is different, a real estate professional says.

“Condominium prices are not the only things to watch out for, although that is one of them. The rate of rental and its rate of increase or decrease says a lot about a location,” he says.

Mont'Kiara, predominantly an investor proposition, is facing a high rate of vacancy. “You can see that when you go by that area at night. Although the “how many units are lit up” principle may not be entirely accurate, it provides a good gauge of how popular a condominium project is.

“The next thing to look out for is rental rates are they sliding? We are seeing that happening here in Mont'Kiara. Investors are accepting a lower rate of returns, of about 4% compared with 7% to 8%. Will it go down to 2.5%. I hope not, but how much further will investors go?”

He says these are signs of a market going down. Right now, because it is location-specific, there is not much concern. The company he works for is nevertheless, keeping tabs on that market. Mont'Kiara, on average, is priced about about RM600 to RM650 per sq ft today, although some may be launched at about RM800 per sq ft.

While Mont'Kiara offers mostly high-end condominium units, over at Damansara Perdana, the situation is slightly different. Prices are lower at Damansara Perdana and because of this, it enjoys a bigger market with both owner-occupiers and tenants. Because of its proximity to good amenities, it has a good rental market with a 430 sq ft studio unit at Ritz Perdana being rented out for RM1,200 to RM1,300. The older blocks in Perdana Exclusive (two rooms with 860 sq ft built-up area) are rented out for RM1,400 to RM1,500.

“The studio is doing better in both the rental and in the for-sale market,” he says.

In the event there is a softening, the condomininium market will be affected first, he says. Over at the KLCC market, there was much euphoria there and prices just escalated. Today, although prices have come down, that location seems to be holding well.

“The KLCC condominium market offers a different product and it is a market that does not follow the trend,” says Reapfield's Kho.

RAM Rating Services Bhd head of real estate and construction ratings Shahina Azura Halip says demand for residential properties will remain healthy. This is supported by domestic economic growth, healthy demographics with 40% of the population aged between 20 and 44 years and 37% below the age of 20, rural-urban migration (urbanites as a percentage of the total population in Malaysia increased from 68% in 2005 to 71% in 2009) and low unemployment rates (less than 4% between 2006 and 2010).

“The high-end condominium market is envisaged to be more challenging given the substantial incoming supply. In Kuala Lumpur, where the bulk of such properties are located, the inventory of high-end condominiums summed up to almost 31,000 units as at the end of the third quarter of last year. This is projected to be joined by over 7,000 units in the next five quarters. This is expected to cap the potential upside for the prices of these high-end abodes.

“The demand and supply dynamics vary according to location. The outlook on the broad sector may not necessarily translate into similar views on different locales. Areas such as Mont'Kiara and KL central business district are facing huge incoming supply, which probably explain the incentives that may be offered to push sales for certain developments. According to statistics from Ho Chin Soon, the incoming supplies in these two areas are expected to increase by a respective 24% and 25% between 2010 and 2012.

“Prices of high-end units in these areas had fallen in 2009 and had only shown slight increase in the second half of last year. Dampened by the supply situation, rental rates for high-end condominiums in these areas have also been reportedly declining in the last few years.

“We think they are unlikely to recover this year due to the large incoming supply. Rental rates for luxury condominiums in KLCC, for example, have fallen from about RM5 per sq ft in 2007 to around RM4 per sq ft in the third quarter of last year,” Shahina says.

By The Star

No reduction in property launches

SHOULD there be any softening of the broad property market, one of the first segments that may soften will be the high-end segment of the condominium market. The landed housing segment is still seeing strong demand, particularly in the Klang Valley and Penang, says OCBC Bank (Malaysia) Bhd country chief risk officer Choo Yee Kwan.


Choo Yee Kwan ... ‘The landed housing segment is still seeing strong demand.'

“For the residential segment, no clear signs of any softening have been observed. As the broad property market' would cover commercial properties, we have observed that the applications for the financing of commercial properties have held up in March 2011,” Choo says in an e-mail.

He says the indication is that there will be an increase in housing loan applications in March this year, higher than the comparative volumes they saw during the preceding first two months of the year.

It was reported earlier that housing loan application totalled RM12.56bil in January and RM10.26bil in February, which prompted questions whether the drop in application will lead to a slowdown in the property sector.

Choo says the drop in housing applications from November to Febuary is not conclusive as the period was also subject to seasonal trends relating to the year-end holiday period and festive season during the beginning of the year. Typically, volumes tend to be lower during this period.

“It is useful to note that there has, indeed, been no reduction in housing launches since the beginning of this year, and that the take-up rate has been good, particularly of landed properties in the more affordable price ranges. New launches for both landed property and condominiums (particularly those in the affordable price ranges) are still being well received.

“However, for the high-end segment of the condominium market, there have been comparatively fewer launches which can also suggest that the demand for luxury high-rise units has somewhat waned.

“The bottom-line is that we still need to observe developments over a longer period before making any conclusive assertions in respect of this matter,” he says.

Choo says generally, the bank has observed that the loan quantum has been steadily increasing in line with upward price movements of residential properties, notably in the key areas of urban concentration such as the Klang Valley and Penang.

One of the factors that can affect the selling prices of houses is the underlying cost of the core building materials like cement, steel and timber.

By The Star (by Thean Lee Cheng)

Long-term vision necessary in planning future cities

KLANG Valley folks are known for their ability to cope with heavily congested roads but even they are growing edgy these days as many public facilities are increasingly becoming inadequate and overstretched.

From the widely-publicised overcrowded buses, trains and other modes of public transport, parks, roads, public housing and recreational facilities are also over-stretched and need to be upgraded and expanded.

It is important to ensure there are adequate space provided for more public facilities to promote a higher quality of life for the people.

The level of livability of our towns and cities is to a large extent dependent on the overall environment and the adequacy and quality of public facilities provided for the people.

In planning for the Greater Kuala Lumpur (GKL) conurbation, it is imperative for our planners to benchmark against other global cities around the world and learn from them why these cities have become such great metropolis.

As the GKL covers quite a massive geographical area, together with the government land to be opened up for redevelopment, much can be done to improve things for Klang Valley folks.

The master planning for GKL should strive for a sustainable global city that takes into account the fast expanding population.

Development plans for housing, commercial facilities, schools, universities, hospitals and other infrastructure facilities should be able to cope with the expanding needs over at least the next 20 to 30 years.

Meanwhile, there should not be too much emphasis on maximising land use and plot ratio in property projects as this will lead to over high density developments and over crowding. Instead there should be a healthy balance between the built and unbuilt environment, and it is important to allocate land for public parks and other wholesome recreational facilities.

Although it is heartening to note that planning for a more efficient and better integrated public transport infrastructure for the GKL is underway, these facilities should be synchronised and be integrated with plans for other public facilities including new property developments.

The MRT factor

We can learn from Singapore how its mass rapid transit system (MRT) is planned holistically and meticulously to integrate with all the public housing apartments provided by the Housing Development Board (HDB).

Every MRT station in the city state is within walking distance to the nearby HDB housing precincts and shopping complexes. Commuters can safely walk along paved pedestrian walkways to the stations.

As the planning for the GKL's MRT infrastructure is still in the early days, the master planners should pay utmost importance to ensure the system can become a beacon for the greening of our cities. With proper planning, less people will need to drive around and there will be less road congestion and pollution.

Many Malaysians believe that one of the main factors contributing to the severe overstretched public facilities can be traced to the influx of too many foreign unskilled people, especially those who are here illegally.

Proper enforcement is necessary to ensure all the foreign workers in the country are here legally and are duly employed and properly supervised to prevent them from getting involved in undesirable activities.

Besides stretching our public resources to the limit, there are also social problems that are associated with the big number of foreigners, especially illegal immigrants, in our midst. These include the increasing number of illegal foreign colonies or settlements, and other accompanying problems like outbreaks of diseases.

It may be unfair to link crime to the immigrant population, but the fact is many people are uneasy when such settlements spring up near our housing estates.

Often, for peace of mind, people have no choice but to resort to surveillance measures such as fencing up their housing estates and employing 24-hour security guards.

The rising number of housing estates that are been fenced up and guarded this way, shows that this is a significant problem and more concrete actions need to be undertaken to return peace and security to our housing estates.

Deputy news editor Angie Ng believes that in the pursuit of growth and development, the spirit and values of the individual should not be compromised.

By The Star (by Angie Ng)

HK 'Superman' Ka-shing ahead in malls bid

Kuala Lumpur: The Cheung Kong Group, owned by Hong Kong tycoon Li Ka-shing, has emerged as the front runner to buy three shopping complexes put up for sale by TMW Asia Property Fund.



Cheung Kong, which also helps manage AmFirst REIT in Malaysia via its affiliate ARA, is said to be going through the books of Ipoh Parade in Perak, Klang Parade in Selangor and Seremban Parade in Negri Sembilan.

Sources told Business Times that Cheong Kong was selected after its offer thumped those made by two other listed companies.

However, it is unclear if Cheung Kong (Holdings) Ltd made the bid directly or through one of the funds affiliated to it.

Li, who is also Asia's richest man, is known as "Superman" in Hong Kong due to his deal-making ability. His Cheung Kong conglomerate is one of Hong Kong's biggest property developers and owns the world's largest operator of container ports, among others.

German-based TMW Asia Property Fund is selling the three shopping complexes which it bought in 2005 in a tender. The tender closed on March 8 2011.

The fund is managed by Pramerica, the real estate investment management business of Prudential Inc from the US.

It is understood that the asking price for the three assets was set at RM500 million.

International property consultant Rahim & Co was appointed as the exclusive agent to handle the tender.

Real estate agent, Rahim & Co's managing director Robert Ang, when contacted by Business Times to confirm the bidders declined to comment.

TMW Asia bought the properties which then belonged to the Lion Group for RM340 million.

According to previous reports, Seremban Parade has a nett lettable area of 316,847 sq ft and sits on 1.97ha, Ipoh Parade has a nett lettable area of 594,414 sq ft on 4.14ha and Klang Parade has 696,045 sq ft of space.

Cheung Kong's affiliate, ARA Asia Dragon Fund, bought two properties in Malaysia last year - One Mont' Kiara in Kuala Lumpur and Aeon Bandaraya Mall Melaka - for a total of RM710 million.

By Business Times

W Hotel makes its mark in KL

It’s official: (From left) Rohana, Dijaya Corporation Berhad deputy managing director Dickson Tan, Dijaya Corporation group chief executive officer Tan Sri Danny Tan, Ng, Abbott, Starwood Asia Pacific development director Rajit Sukumaran and Dijaya Corporation Berhad managing director Datuk Tong Kien Onn at the signing ceremony to develop W KL.

A 150-room hotel will be built in the heart of Kuala Lumpur offering guests a unique dining experience, entertainment and signature spas.

Property developer Dijaya Corporation Berhad has partnered hotel and leisure company Starwood Hotels & Resorts Worldwide Inc to develop W Hotel. The brand has 41 hotels worldwide.

The signing ceremony was held at the Tropicana Golf and Country Club recently.

Tourism Minister Datuk Seri Dr Ng Yen Yen, who attended the event, said the collaboration of the two major brands in the leisure industry to bring in the W brand to Malaysia would boost tourism.

“Although ranking fifth in terms of contribution towards the economy, the tourism industry in Malaysia is growing. Hotel occupancy last year was 66.9% which is a 4.2% increase compared with 2009.

“Looking at this increasing rate, we will still be short of 40,000 rooms in 2020. We welcome every addition and are convinced that W KL will inject a design-led lifestyle in our city,” she said.

Dijaya independent non-executive chairman Datuk Rohana Mahmood said the move underlined the company’s commitment to continued growth.

“Dijaya is looking at the needs of tomorrow’s jet-setters while also addressing a wider range of environmental challenges facing the industry,” said Rohana, adding that Dijaya will also work towards a Green Building Index rating with W KL.

Starwood Asia Pacific regional vice-president (South East Asia) Chuck Abbott said they were delighted with the signing of the W brand in Kuala Lumpur as the city was cosmopolitan a business hub.

“Malaysia has developed a reputation for its standard of hospitality and customer service and we are proud to contribute to the continuing growth of Malaysia as a key business and leisure destination,” he said.

The hotel will feature 1,200 sq m of meeting space, one ballroom and five meeting and function rooms. All guest rooms will be fitted with the signature W Bed. Among the facilities are a fitness centre, food and beverage outlets, a full service spa and a nail bar.

W KL will be located in the Golden Triangle in Jalan Ampang.

By The Star

MRCB to buy 59 Inc for RM110mil

PETALING JAYA: Malaysian Resources Corp Bhd plans to acquire 59 Inc Sdn Bhd for RM110mil to expand its land bank.

It told Bursa Malaysia yesterday that it entered into a share sale agreement with Fadzil Ahmad, Usman Suratman and Mohd Shamir Mohd Hassan to buy 59 Inc - a company granted approval by the land office as the owner of three plots of vacant government land in Setapak measuring 27.41 acres for purposes of mixed development.

The land is to be developed from 2012 over eight years into a mixed development comprising both commercial and residential properties with a gross development value of RM1.5bil and a total development cost of RM1.2bil.

By The Star

Dijaya unit to buy land for RM19.5m

PETALING JAYA: Dijaya Corp Bhd’s wholly owned subsidiary Tropicana Golf & Country Resort Bhd, through its subsidiary Mawar Hebat Sdn Bhd, has signed an agreement with Mentari Land Sdn Bhd to buy 36 parcels of vacant leasehold land totalling 7,131 sq m near Sunway Mentari in Selangor, for RM19.5mil.

Dijaya said in a filing with Bursa Malaysia that the land parcels had 99-year lease expiring April 11, 2101.

By The Star

Taiwan to impose tax to curb home prices

A planned "luxury tax" that aims to rein in property speculation in Taiwan came a step nearer on Wednesday when it breezed through its first reading.

The Finance Committee gave the go-ahead to the first draft of the bill after President Ma Ying-jeou ordered legislators in his Kuomintang party, which holds a majority on the committee, to help push it through.

The move comes as house prices in Taiwan have soared, leading to tensions over the widening gap between the island's rich and poor that has seen Taipei become one of Asia most expensive cities.

"The approval of the bill today marks a triumph of social justice ... hopefully it will help crack down on short-term speculation," Kuomintang legislator Fei Hung-tai, a committee convenor, told reporters.

Fei expected the committee to pass the second and third and final reading of the bill before it is voted on by parliament towards the end of the month.

Under the provisions of the bill anyone who sells non-residential properties and vacant land within two years of buying it will face a levy of up to 15 percent.

It also includes plans for a 10 percent special sales tax on luxury goods such as yachts, private jets, furs and high-end furniture.

The bill was introduced as various government data indicate Taiwan, once a relatively equal society, is gradually seeing a more unequal distribution of wealth, with property prices emerging as a key public bugbear.

The most prosperous 20 percent in Taiwan reported average disposable incomes of Tw$1.79 million ($60,700) in 2009, more than six times that of the poorest 20 percent -- the largest gap since 2001.

At the end of October, the average price of property in Taipei hit $4,614 per square metre ($430 per square foot), up 15 percent from last year, according to property agency Taiwan Realty.

By The Star

US housing system a bad model: IMF

The International Monetary Fund on Wednesday singled out the United States as a poster child for bad housing policies, calling on Washington to reform for the sake of global financial stability.

"The US housing finance system, which has several unique features, needs to be reformed," said the IMF in its twice-yearly Global Financial Stability Report.

Four years after the US subprime mortgage crisis unleashed a global meltdown, the IMF offered up the United States as an example of what not to do.

Analyzing mortgage finance systems in 33 countries, the IMF painted a dysfunctional US model.

The United States generously subsidizes homebuying, but poorly regulates lenders, maintains financing mechanisms that are opaque and has a housing market today that is difficult for the poor to access.

According to an index developed by Fund economists, the United States is among the countries where governments intervene the most, topped only by Brazil, Singapore, India and Indonesia.

The US housing sector still has not recovered from the collapse of a price bubble in 2006 which triggered the subprime crisis as homebuyers with patchy credit began to default on payments.

For the 187-nation IMF, the fundamental problems in the US remain.

"The US housing finance system is unusual in many respects. An overhaul of important aspects of this system is needed," said the IMF, citing a fragmented regulatory structure and generous tax breaks.

"Such reforms would have a significant positive effect on the US financial system and would help bolster global financial stability," it said.

The IMF recommended three broad areas of "best practices": Enhanced regulation of mortgage lending, careful use of government participation in the housing sector and better transparency in the market for housing related securities.

The IMF offered a lukewarm assessment of the US government's housing finance reform plan proposed in February.

"While an overhaul of the housing finance system will take years to complete, US authorities need to step up their efforts now to develop and implement an appropriate action plan.

"The Washington-based institution supported the US government's plan for a progressive unwinding of the country's two mortgage finance giants, Fannie Mae and Freddie Mac.

The federal government took over the two collapsing companies in September 2008 in a bid to stabilize the financial system and agreed to pump money into them to keep them afloat.The IMF was clear in its criticism of US homeowner tax breaks, which enjoy broad support across the political spectrum.

"Apart from financial stability concerns, the US mortgage interest rate deduction is also costly -- at $104.5 billion in fiscal year 2011 it is the second-largest tax expenditure," it said, noting it had not shown a "discernible" impact on the home ownership rate.

Jan Brockmeijer, the IMF's deputy director of the monetary and capital markets department, underlined the reluctance of elected officials to address these questions.

"These are big issues, they have been recognized but they have not been dealt with. And it's not surprising that they have not been dealt with adequately, because they're very complex, politically complex in the sense of the housing market," he said at a news conference in Washington.

By The Star

Downtrend in property loans

PETALING JAYA: Bank Negara's move to require house buyers to pay a higher deposit seems to be weeding out speculation in the property market, some analysts said.

Its monthly statistical bulletin last week showed that for fourth consecutive months since November, the number of loan applications to buy residential property has reduced.

On Nov 2 last year, the central bank announced a 70% loan-to-value (LTV) cap on a borrower's third and subsequent house-financing facility, meaning that these buyers would have to fork out 30% of the purchase price.

The move was prompted by fears of a retail credit bubble fuelling speculation on the prices of residential properties. Certain areas reported price spikes that are indicative of speculation and multiple-unit purchases by individuals.

However, analysts cautioned that the data was not conclusive.

Some analysts said the decline in the first couple of months might be seasonal and believed data from March would accurately show the effects of the LTV rule.

RAM Rating Services Bhd's head of financial institutions ratings Promod Dass said: “Household financing facilities now account for approximately 55% (or RM489bil) of the local banking system's loans, with loans for the purchase of residential property comprising about half (RM238bil) of total household loans.

“Although the full impact of this move has yet to filter through given the short time since its implementation, loan applications for residential property purchases have started slowing down in the last two months of 2010 and January.

“The heftier down payment because of the more stringent 70% LTV cap is aimed at discouraging excessive over-leveraging in the property market. While the early signs are that this move has weeded out a degree of speculation in the residential property market, it will take at least six more months to gain a conclusive feel on whether such speculation has been curbed,” Promod said in an e-mail.

Malaysian Rating Corp vice-president and head of financial institutions ratings Anandakumar Jegarasasingam said the LTV ruling was insufficient to control the level of household sector debt in the economy or an unhealthy property price appreciation.

“Any individual who is purchasing a third residential property is either likely to be affluent or a reasonably savvy property speculator. If property speculation is to be curbed, the authorities should perhaps explore more direct measures involving taxes and prudential restrictions,” he said.

Another issue was whether the current trend of lower applications for housing loans could eventually lead to a softening of the property market.

ECM Libra said in its banking report yesterday that “residential property and non-residential loans approved have shrunk and are set to continue their downtrend.”

ECM Libra's analyst Bernard Ching said “loans growth are expected to taper off due to our expectation that property sales growth may slow down later this year as a result of the imposition of loan-to-value cap.”

Another analyst said the drop in housing loan applications, and the reduction in the number of loans approved, would eventually lead to a softening of the property market. “Increasingly, developers will find it more difficult to push sales and this will lead to a softening,” he said.

By The Star

Plenty of land for affordable housing

JOHOR BARU: Johor still has large tracts of lands in the suburban areas of the Johor Baru City for My First Home Scheme’s residential property development.

This will enable developers to build residential properties with decent built-up area to cater for first-time house buyers.

Unlike in Penang and the Klang Valley, developers in Johor are not hampered by the excessively high prices of land.

My First Home Scheme allows buyers earning less than RM3,000 monthly income to secure 100% financing from banks to buy houses costing between RM110,000 and RM220,000 to be repaid over 30 years.

Developers here agreed that while Iskandar Malaysia would continue to be the driving factor to boost demand for high-end residential properties in southern Johor, there is a big market for first-time house buyers.

“In fact, we have started the affordable housing scheme for first-time house buyers ahead of the Government’s initiative,’’ Seri Alam Properties Sdn Bhd acting head of subsidiary Frankie Tan Kiat How told StarBiz.

He said the company had allocated Phase 4A of Bandar Seri Alam township to develop 1,280-units of four-storey walk-up apartments, each of 1,000 sq ft and priced at RM130,000. It has sold 1,112 units.

Tan said the company would be launching 78 new four-storey walk-up apartment units in September with similar built up area but selling at RM140,000 each.

He said the higher price was due to escalating costs of building materials and labour. However, he claimed that the price was still attractive for those earning less than RM3,000 monthly.

Tan said the company chose to build four-storey walk-up apartment blocks as no lifts were required under the building by-laws for this type of building.

“We are able to sell the units at affordable prices as no extra money is needed to install lifts and to maintain them.’’

However, Tan said Seri Alam would be launching its seven-storey apartment blocks in the first quarter of 2012. Each unit has a built-up area of 1,100 sq ft and an indicative selling price of RM180,000.

Tan said the integrated transportation hub for the Eastern Gate Development Zone would improve connectivity from the zone to other parts of Iskandar Malaysia and a possible link-up with Singapore’s mass rapid transit system.

Seri Alam, is a wholly-owned subsidiary of United Malayan Land Bhd.

To date, 60% of the 1,348ha Bandar Seri Alam project has been developed with 10,000 residential and commercial properties. Launched in 1992, the township now has 50,000 residents.

Meanwhile, KGV-Lambert Smith Hampton director Samuel Tan Wee Cheng said the State Economic Planning Unit was supposed to come out with the new housing policy for first-time buyers in Johor two years ago.

He said among others, the new policy entailed the development of affordable houses priced between RM190,000 and RM220,000.

Wee Cheng said he did not understand why the policy was not implemented.

He said areas outside the district of Johor Baru suitable for the My First Home Scheme included Gelang Patah, Kulai, Pasir Gudang, Senai and Ulu Tiram where the demand for houses within that price range was strong.

He said the majority of house owners in these areas were either working class or entrepreneurs.

Furthermore, the children of these buyers who left home for work or marriage also preferred to live nearto their parents, he said.

“Building more houses here will create economic spillover effects to the other areas and they will eventually be developed in the long run,’’ he said.

Apart from houses, developers would also build shop offices, commercial centres or hypermarket-cum-shopping complex to complement the project.

He said if developers were to build houses for buyers under the scheme, they should go for single or double-storey link houses and not high-rise apartments.

Wee Cheng said although Kulai, Pasir Gudang and Senai were components of Iskandar Malaysia, prices of high-end houses in these areas were lower than those in Nusajaya, the administrative city of Iskandar Malaysia.

For instance, the selling price for new double-storey link houses in Nusajaya starts from RM450,000, and up to several million ringgit for semi-detached and bungalow houses.

SP Setia executive vice-president Datuk Chang Khim Wah said the company would be launching houses for buyers under the scheme towards the end of the year.

He said the scheme would be carried out at its ongoing Bukit Indah township due to its close proximity to the Malaysia-Singapore Second Link, which will cater for Malaysians working in the republic.

“We are going for high-rise apartment blocks with good security and landscaping as we believed that even first-time house buyers deserve good things in life,’’ he said.

Chang said SP Setia’s four ongoing projects in Johor – Bukit Indah, Setia Indah, Setia Tropika and Setia Eco Gardens – would keep the company busy for at least eight years. It will continue to look for new lands for future projects.

By The Star

MBSB ready to help first-time house buyers

KOTA KINABALU: Malaysian Building Society Bhd (MBSB) is "more than" ready to provide financing for first-time house buyers, although it is involved in the recently-launched "My First Home" scheme.

Chief executive officer Datuk Ahmad Zaini Othman said MBSB was not part of the 20 commercial banks under the scheme as it was not licensed to do so. "But that does not mean we cannot offer good prices to buyers.

"We can still be as competitive as those under the scheme. We sometimes provide 100 per cent financing anyway and we have several competitively priced packages now.

"It all depends on the loan applicants, how stable their income is and so on," he said.
Ahmad Zaini was speaking to reporters after launching their relocated branch in Lintas Jaya here yesterday.

"My First Home" was launched by the government with the collaboration of national mortgage company, Cagamas Bhd, and financial institutions to reduce the burden of the younger generation. It covers those earning les than RM3,000 a month. They can apply for 100 per cent financing from selected financial institutions for houses costing between RM100,000 and RM220,000 with a repayment period of 30 years.

Currently, 50 per cent of MBSB's business portfolio comes from mortgage loans and 30 per cent from personal financing loans.

By Business Times

Dijaya ventures into hotel biz in JV with Starwood Hotels & Resorts Worldwide

KUALA LUMPUR: Property-based DIJAYA CORPORATION BHD is venturing into the hotel business with US-based Starwood Hotels & Resorts Worldwide, Inc. to develop a W Hotel in Kuala Lumpur.

Dijaya said on Wednesday, April 6 the 150-room hotel is scheduled to open in 2016 and will mark the entry of the W brand to Malaysia.

Its independent non-executive chairman Datuk Rohana Mahmood said Dijaya was proud to collaborate with Starwood Hotels & Resorts Worldwide, a company with a long history of designing, building and managing world-class hotels and resorts.

“We have chosen a proven partner that is in line with our focus to grow with a dynamic presence,” she said.

Rohana said Dijaya’s venture into the hospitality industry underlined the company’s commitment to continued growth.

“Dijaya is seeking differentiation with regards to sustainability practices. With W Kuala Lumpur, Dijaya will work towards a Green Building Index (GBI) rating,” she said.

The hotel would be along Jalan Ampang, across the Petronas Twin Towers and 500 metres from the Kuala Lumpur Convention Centre (KLCC).

W Kuala Lumpur is designed by Skidmore, Owings & Merrill LLP from New York. Scheduled to open in 2016, W Kuala Lumpur will feature 150 rooms and suites with urban views.

By The EDGE Malaysia

Japan project will fare well, says AP Land

KUALA LUMPUR: Asia Pacific Land Bhd (AP Land) is confident its maiden residential overseas project called Shiki, to be built at Niseko, Japan, will fare well despite the recent earthquake and nuclear scare there.

Its joint managing director Low Su Ming said at present, many investors are still keen but “have taken a wait and see approach”.

“We have had three pull outs so far but at the same time we have had 20 confirmed buyers even before the groundbreaking ceremony which will take place on April 10,” she told the media yesterday.

Shiki, a fully furnished serviced apartment project, is being built by APL Niseko Property TMK, a subsidiary of AP Land Bhd with gross development value of about RM220 million.

Each unit of the freehold property, which comes in one to three bedrooms, is priced between RM1.8 million and RM4.97 million.

The project would be completed and delivered on schedule by December 2012.

“Construction cost would not escalate as we have already locked in the prices,” she said.

On whether the company would take a different marketing approach (now), Low said: “This is not the time to talk about selling. We are very confident in Niseko as it still holds the promise of a growing wealth in Asia, which we truly believe in.”

Niseko resort brand manager Derek Kennewell said AP Land expected to sell at least half of the 69 units before completion date while the rest would probably be sold once its completed.

Kennewell works for LJ Hooker, an Australian-based real estate company which has been roped in by AP Land to promote Shiki.

“So far all the buyers are Malaysians and Singaporeans. We may target Chinese buyers now.

“This is definitely a good investment with a yield of between 4 and 5 per cent,” added Kennewell.

By Business Times

AP Land to complete resort project despite March 11 quake

KUALA LUMPUR: Asia Pacific Land Bhd (AP Land) plans to complete the Shiki Niseko project in Niseko, Japan by the end of 2012 despite the March 11 earthquake and tsunami in the country.

AP Land joint managing director Low Su Ming said the ground-breaking for the project would be held next week.

“We have awarded the contract for the construction of the project and locked in the cost. So, we won't be affected by the expected increase in the cost of construction materials in Japan as a result of the reconstruction of the devastated areas caused by the earthquake and tsunami. Despite the catastrophe, we are not overly concerned over the impact to our project as the disaster area is located more than 600km away from Niseko.

“We are still confident in the vast untapped potential of Niseko as an international ski resort to cater to the growing affluence in various Asian markets,” Low added.

The company would be organising road shows to Australia and other target markets, she said, adding that the buyers were from Hong Kong, Singapore, China, Malaysia and Australia.

Shiki Niseko is AP Land's maiden development in Japan. The project comprises 69 units of one, two and three bedroom high-end residences with commercial component in the heart of the ski village, known as central Hirafu.

About 60% of the project have been booked and of this, 30% of the buyers have paid the downpayment.

While most investors had taken a long-term position and were prepared to ride out any short-term volatility, two to three buyers might pull out from the deal due to concerns about radiation from the quake-stricken nuclear plant in Fukushima, she said.

To address the concerns, AP Land had invited property consultancy LJ Hooker Niseko Resort branch manager Derek Kennewell to brief the project's buyers and the media on the actual situation in Niseko.

According to Kennewell, Niseko is located more than 600km from the disaster zone and there is no threat of radioactivity contamination.

By The Star

New Age buys land in Kuantan from EPF for RM12m

KUALA LUMPUR: Boutique developer New Age Portfolio Sdn Bhd is buying a piece of land in Kuantan, Pahang, from the Employees Provident Fund (EPF), which has potential to generate RM120 million in gross development value.

New Age is buying the 10.4ha land for RM12 million, said its chief executive officer Lai Yeng Fock.

The land is part of the 200ha Indera Mahkota 2 township, in which Pasdec Holdings Bhd is one of the major developers.

"We are negotiating the terms of the sales and purchase agreement with the EPF. We hope to start building the houses by the third quarter of this year," Lai told Business Times in an interview recently.

According to Lai, the project will be undertaken by a new company called Armada Bayumas Sdn Bhd, controlled by him and two other property investors.

Lai said he is also talking to a land owner in Klang, Selangor, for a big project.

"I want to be a long-term player in property development and some day develop a township that I can be proud off. My initial target is Klang Valley," Lai said.

Lai has over 20 years of experience in property development, starting with Talam Corp Bhd in 1986 and Brisdale Holdings Bhd. His final post was at WCT Land Bhd as its executive director.

At WCT, Lai was involved in key projects such as Bandar Bukit Tinggi in Klang, d'Banyan Residency @ Sutera Harbour, Sabah, and The Platinum Plaza in Vietnam.

He left WCT in 2008 to set up New Age with four partners, all businessmen. Its first project was Kinrara Hills in Puchong, Selangor, featuring 50 units of semi-detached houses that were fully sold.

"My selling point is extending the defect liability to 36 months from 24 months and offering three-year after sale service," Lai said.

New Age is planning a luxury condominium project in Kota Kinabalu due for launch this year, via its associate, Laser Plus Sdn Bhd.

Lai expects New Age to generate revenue of RM40 million in the current financial year to December 31, with two-digit growth year-on-year.

By Business Times (by Sharen Kaur)

Iris Corp in Senegal property JV

PETALING JAYA: Iris Corp Bhd (ICB) through its subsidiary Iris Land has entered into a joint venture agreement (JVA) with Caisse Des Depots Consignations (CDC), a Senegalese government-owned trust company, for the proposed joint venture (JV) to construct and complete a mixed development of residential and commercial units in Senegal with gross development value of RM800mil.

The group told Bursa Malaysia yesterday that Iris Land will hold 49% stake in the JV while the remaining will be own by CDC .

It said Iris Land will finance its obligations via a combination of bank borrowings and internally-generated funds.

It added that the JV is an additional opportunity for ICB to venture into the property development sector in Senegal and this proposed JV represented an additional revenue stream to ICB.

ICB said the JVA would not have any effect on the issued and paid-up share capital, substantial shareholder's shareholding earnings, earnings per share, net assets per share and gearing of ICB group for the financial year ending Dec 31, 2011.

Barring unforeseen circumstances, the board is of the opinion that the JVA will contribute positively to the earnings and earnings per share of the ICB group in the future.

By The Star

MRCB expects to land more govt jobs

KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB) is expecting more government jobs under the Economic Transformation Programme (ETP), having bid for projects worth over RM2 billion.



Chief executive officer Datuk Mohd Razeek Hussain said one of its key performance indicators for 2011 is to grow the company's revenue by 20 per cent to RM1.3 billion and achieve RM150 million in profit before tax (PBT).

For fiscal 2010, MRCB posted a PBT of RM97.6 million on revenues of RM1.1 billion.

Among the projects MRCB is bidding for are package A and B of the LRT extension project, worth some RM1 billion and RM600 million respectively.

"If we can get one of the two packages, we would have achieved 40 per cent of our target," he said yesterday after the company's shareholders meeting.
MRCB has secured two projects under the ETP - the development of the 6-star St Regis Hotel at Kuala Lumpur Sentral in Brickfields, and the River of Life project.

Razeek said MRCB is negotiating with the government on the scope of works for the project, where it holds the letter of intent with its joint-venture partner, Ekovest Bhd.

The project includes cleaning and beautifying the Klang and Gombak river, and planning some developments along it. He declined to reveal the project cost.

OSK Research estimates the project to be worth RM8 billion to RM10 billion.

Meanwhile, MRCB, which has RM4.2 billion worth of ongoing property projects, plan to launch three new developments valued at RM2.6 billion between May and December this year.

These include an office tower and residences at KL Sentral and a high-end condominium project at Jalan Kia Peng, Kuala Lumpur.

MRCB is also aiming to launch Penang Sentral soon, Razeek said.

"We are looking at substantial growth this year, majority of that will be contributed by our existing projects," he said.

By Business Times