Rate hike unlikely to impact on property market

PETALING JAYA: The property market will not be impacted by the recent increase in the overnight policy rate (OPR), said property consultants.

Last Thursday, Bank Negara raised the overnight policy rate (OPR) by 25 basis points to 3% and increased the statutory reserve requirement (SRR) by one percentage point to 3%.

Henry Butcher Marketing Sdn Bhd chief operating officer Tang Chee Meng said the slight increase meant that borrowing cost was still reasonable.


Tang Chee Meng

“With banks offering base lending rate (BLR) minus 2%, this means effective interest rates are still below 5%. However, property investors will look at the slight rate hike with caution,” Tang told StarBiz.

He pointed out that demand in the property market might be curbed slightly if the central bank raises the OPR by another 25-basis points before year-end.

“Property investors look closely at micro situations and factors such as location, possible further interest rate hikes in the short-term, rental yields and capital appreciation,” he said.

Zerin Properties chief executive officer Previndran Singhe said the recent rate hike was not significant.

KGV-Lambert Smith Hampton Sdn Bhd director Anthony Chua said the rate hike would not “put brakes” on the property market.

“It will not have a significant impact, although there may be some minor adjustment in buying sentiment,” said Chua.

CB Richard Ellis (CBRE) Malaysia managing director Allan Soo said the impact on property buying sentiment would be negligible.

“At this level, the property market is not interest sensitive,” Soo pointed out.

CBRE Malaysia executive director Paul Khong pointed out that property prices, especially in the Klang Valley, still soared despite a rate hike last July.

“Property buyers will continue to make decisions based on their repayment capability, and also factor in their expected rental yields in view of the rate hike,” said Khong.

By The Star

Bertam Alliance in property project

BERTAM Alliance Bhd wholly-owned UH Capital Sdn Bhd has sealed a joint development agreement with GJH Development Sdn Bhd to develop mixed properties worth more than RM400 million on 108ha in Johor.

In an announcement to Bursa Malaysia yesterday, Bertam said the project will be carried out over three to six years.

It will unlock the value of the land without having to fund the development cost of the project, the company added.

By Business Times

Timeframe extension for unit

PETALING JAYA: Ho Hup Construction Co Bhd's unit has extended the timeframe for the conditions precedent to the proposed disposal of its 3.32-acre freehold land in Bukit Jalil.

In a statement to Bursa Malaysia yesterday, it said that its 70%-owned subsidiary Bukit Jalil Development Sdn Bhd and Bayu Melati Sdn Bhd had mutually agreed to the timeframe extension to up to May 20.

Ho Hup gained its shareholders' approval for the land disposal for RM9.55mil cash to the unit of Melati Ehsan Holdings Bhd in February. The proposed disposal was part of the company's exercise to dispose of all non-core land bank.

By The Star

FDIs into Malaysia from Singapore to drop?

Foreign direct investments into Iskandar Malaysia and job opportunities for Malaysians could be affected by last week's Singapore general election outcome, says Provectus

Kuala Lumpur: The outcome of the recent general election in Singapore could spell the end of many Malaysians landing good-paying jobs there and worse, put a dent on foreign direct investments (FDIs) in top notch projects here such as Iskandar Malaysia, an industry observer said.

Provectus managing principal Sreedhara Naidu said the election, which saw the People's Action Party (PAP) lose 40 per cent of the votes, meant that Malaysia's dependence on Singapore's FDIs could also see a slight fall within the next three to four years as the island republic looks more inward in terms of investments.

He suggested that the government create more skilled jobs as Singapore immigration rules may be tightened, making it difficult for Malaysians to land jobs there.

"FDIs into Iskandar Malaysia and job opportunities for Malaysians, particularly in Johor, could be affected by last week's Singapore general election outcome as the Singapore cabinet addresses key election issues that lost them 40 per cent of popular votes.

"With only 60 per cent of voters happy with PAP, the leadership will pull out all stops to quickly remedy immigration, housing, urban poverty, health services and education issues.

"They may choose to tighten skilled and semi-skilled foreign worker intake, which will affect Malaysians' skill pool with Sijil Pelajaran Malaysia to diploma education that have traditionally looked to Singapore as an attractive destination (for employment)," Naidu said.

Iskandar Investment Bhd chief executive Datuk Syed Mohamed Syed Ibrahim, when contacted by Business Times yesterday, disagreed.

He said investments into Iskandar Malaysia would not be affected by the election outcome. He, however, did not elaborate.

Iskandar Regional Development Authority chief executive Ismail Ibrahim, meanwhile, reiterated that Singapore has been the top investor for Johor and Iskandar Malaysia.

"From 2006 to February 2011, Singapore registered a total investment of RM3.49 billion in manufacturing. For the services sector, until today, investments from Singapore was RM463 million in healthcare and education," he said.

Ismail added that the total cumulative committed investments into Iskandar Malaysia was RM73.24 billion from 2006 till the second quarter of this year. Of this, 59 per cent was domestic investment while the rest was foreign.

"So far, 40 per cent of the total committed investments has been spent on projects and developments. Investments came in from countries such as Australia, Singapore, Abu Dhabi, Kuwait, United States and India," he added.

Provectus is a performance transformation specialist which has advised Iskandar Malaysia, the Economic Planning Unit, the Prime Minister's Department on the Economic Transformation Programme, Government Transformation Programme, Sabah and Sarawak Bumiputera development and other programmes.

Elaborating on his views, Naidu said the Singapore government is expected to invest in new rail-based public transport, housing for locals, and more education and health facilities.

"Interestingly, these are the very same investments that Iskandar Malaysia is targeting to attract from Singapore businesses and government funds," he added.

Hence, he said, Iskandar Malaysia should now look at other countries such as China and India for investments in the future.

"It would be a paradox for Singapore to focus on external investments for commercial reasons when local social demands are not met. That would not be palatable for the population and the six new opposition parliamentarians will lose no time in pointing these out."

Naidu said Iskandar Malaysia aims to attract investments worth RM73.3 billion in the next five years, much of it from the Middle East, India, Singapore and China.

"But in reality, most it would come from Singapore businesses and government agencies.

"Relationship with Singapore, which has improved since Prime Minister Datuk Seri Najib Razak came to power, was supposed to facilitate faster and bigger investments from Singapore.

"But the (recent) general election changes everything and Iskandar Malaysia has to re-strategise.

"Even our Ministry of Human Resources will have to conduct an assessment on the potential impact as many young Malaysians may soon find it harder to land good-paying jobs in Singapore," he added.

By Business Times

Metroplex’s case on May 27

PETALING JAYA: Metroplex Holdings Sdn Bhd's suit against Sunway Real Estate Investment Trust (REIT) and seven other parties in relation to a building ownership dispute has been set for hearing at High Court Kuala Lumpur on May 27.

In a statement to Bursa Malaysia, Sunway REIT revealed that Metroplex was seeking, among other things, to nullify its purchase of Putra Place.

The plaintiff argued that Sunway REIT, being a trustee to unit holders and as a trustee could only take instruction from its beneficiaries through procedures in the Trust Deed dated May 20, 2010, the Capital Markets and Services Act 2007 and also the Guidelines on Real Estate Investment Trust issued by the Securities Commission on Aug 21, 2008. Hence, any action by Sunway REIT which breached the law was invalid.

Sunway REIT had bought Putra Place, a mixed-development comprising a shopping mall, hotel and office in Kuala Lumpur for RM513.95mil in a public auction earlier this year.

By The Star

SunCity to launch RM1b Ipoh project

SUNWAY City Bhd (SunCity) will launch a mixed use commercial project worth over RM1 billion at Sunway City Ipoh (SunCity Ipoh) in Perak, as one of the catalysts to recoup its investments in the township which started in 1995.

Managing director for property development Ho Hon Sang said the project, earmarked as a shopping village, will comprise a mall, retail, SOHO (small office/home office) and apartments.



"This project will revolutionise the shopping experience in Perak. We are banking on it," Ho told Business Times in an interview at Bandar Sunway, Selangor, recently.

Ho said new projects will include the development of 1,000 units of hillside bungalows, semi-detached homes and apartments, 16 units of lakeside bungalows worth over RM2.5 million each and a convention centre.

The properties are worth over RM300 million and will give good margins to SunCity when launched over the next few years, he said.

SunCity Ipoh, sprawled over 560 hectares, started with infrastructure development but was halted for five years because of the Asian financial crisis.

Work resumed in year 2000 and the first residential project comprising 452 units of semi-detached garden villas was launched in 2002.

As demand for high-end properties improved, SunCity launched bungalows, lakeside villas, cluster houses, and apartments.

The properties were slow to sell but sales picked up as the township grew. The prices had appreciated between 22 per cent and 66 per cent, Ho said.

"Now that the township is mature, we are launching new products, targeting the medium- to high-end segment to give us higher returns," he said.

Ho said SunCity will soon launch the second phase of MontBleu, which is the first gated and guarded community at the township.

MontBleu comprises 220 units of three-storey townhouses with selling prices from RM450,000 onwards. The units range from 1,680 sq ft to 3,336 sq ft with a 25ft backyard garden.

Ho is optimistic that the second phase will sell out, judging from the sales from phase one, which had 98 units and where 70 per cent of the units were sold within two months from its launch in December.

"Many foreigners are buying our properties as their retirement or holiday home under the Malaysia MySecond Home plan. We expect it to continue," Ho said.

By Business Times

HK group Cheung Kong wins bid for malls

Tycoon Li Ka-Shing's Cheung Kong Group is believed to have won a bid to buy the three TMW Asia Property Fund's shopping complexes put up for sale in Malaysia.

Business Times was informed that the party would pay less than the RM500 million asking price set earlier but above the RM400 million level.



Sources say that the due diligence process by the Hong Kong bidder had been completed and it was a just a matter of signing on the dotted lines.

It is understood that a sale and purchase agreement will be signed very soon.

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 (BT) to confirm the news, declined to comment.

Last month, BT reported that Cheung Kong Group had emerged as the front-runner for tender which closed on March 8 2011.

The German-based TMW had put the Klang Parade in Selangor, Ipoh Parade in Perak and Seremban Parade in Negri Sembilan on sale.

It acquired theassets in 2005 from the Lion Group for RM340 million.

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

However, it is unclear which company or fund under the Cheung Kong group is purchasing the assets.

Cheung Kong helps manage AmFirst REIT in Malaysia via its affiliate ARA.

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

By Business Times

Country View sees success in Nusa Sentral

JOHOR BARU: Country View Bhd is optimistic that the company's on-going property project, Nusa Sentral, will do well due to its strategic location.

Marketing manager Andrew Tan said prospective buyers would be attracted to the housing scheme's location within the development of Nusajaya in Iskandar Malaysia.

He said Nusajaya, which was also easily accessible from Singapore via the second link crossing, was another factor that would attract buyers.

“Most of our buyers for phase one are Malaysians working in Singapore who commute daily to the republic using the crossing,'' Tan told StarBiz.

He said other buyers were upgraders from nearby areas such as Gelang Patah, Ulu Choh, Pontian, Pekan Nenas and Skudai.

He said all non-bumiputra lots for the phase one comprising 312 units of five-room double-storey link houses with built-up areas ranging from 2,100 sq ft to 2,300 sq ft and priced from RM338,000 had been sold out.

Tan said Nusajaya was progressing well and completed and soon-to-be completed major projects would add value to the properties within the development zone.

Two major projects in Nusajaya Kota Iskandar, Johor Sate New Administrative Centre, and Puteri Harbour Waterfront development are already completed.

Other projects slated for completion within the next one to three years include the Newcastle University Medical Campus, Marlborough College, Netherlands Maritime Institute of Technology and Legoland Theme Park.

Nusajaya, spanning 9,600ha, is one of the five flagship development zones in Iskandar Malaysia. The other four are the Johor Baru City Centre, Eastern Gate Development, Western Gate Development and Senai-Kulai.

“Accessibility to the area will improve when the RM1bil New Coastal Highway linking Nusajaya and Johor Baru city centre is completed by the end of the year,'' he said.

Tan said Country View would be launching 217 units of double-storey link houses for phase two with indicative pricing of between RM358,000 and RM418,000 and three-storey shop offices this year.

Nusa Sentral is located along Jalan Gelang Patah-Lima Kedai on a 121.40ha site and the project will keep the company busy for eight years.

Separately, he said seven out of 12 bungalow units priced between RM3.8mil and RM4.6mil each, at Jalan Straits View facing the Straits of Johor, were already sold. “The buyers are foreigners based in Singapore and also those who have businesses all over the world and have chosen Johor Baru as their second home.''

For the financial year ended Nov 30, 2010 (FY10), Country View recorded a net loss of RM8.19mil on revenue of RM23.25mil compared with a net loss of RM3.74mil on revenue of RM51.49mil FY09.

By The Star

Rate hike to have little impact on property market

KUALA LUMPUR: Bank Negara Malaysia’s (BNM) recent hike in interest rates may do little to dampen the property market as demand is expected to continue amid rising inflation.

Analysts said demand for property was expected to continue growing as the trend of rising rates was merely a normalisation process as previous lending rates were “too low”. Additionally, there was still plenty of liquidity in the market.

“The rate hike was expected, and there is generally still a lot of liquidity in the market. And the demographic is such that there is still a lot of demand for property.

“Property is a big hedge against inflation so people are still looking at it. The rate hike would not have a significant impact on the property market,” an analyst told The Edge Financial Daily.

Given the rising fear and the uncertainty about inflation, the analyst said interest in the property market was not about to wane anytime soon.

BNM raised the overnight policy rate (OPR) by 25 basis points (bps) to 3% on concerns of inflation. The increase in the OPR will result in an increase in the country’s base lending rate (BLR) which could negatively affect domestic spending and the property market.

The central bank also increased the statutory reserve requirement (SRR) ratio by 100bps to 3%.

In a recent report, CIMB Research noted that loan applications for residential property showed a strong rebound in March with a 74.1% increase from the previous month. The research house said the rebound could have been driven by borrowers who rushed to lock in low interest rates in anticipation of higher borrowing costs in the near term.

Property prices have been on a steep uptrend in the last two years. CIMB said house prices in Malaysia rose last year at an average gain of 6.7%, the strongest in the past 13 years, including the mid-1990s property boom. The Klang Valley alone enjoyed a strong rebound from the contraction in 2009, with Kuala Lumpur recording the steepest appreciation of 12.2%.

However, the analyst noted that the increase in property prices had moderated.

“While property prices are not going down, the increase is slowing down or stabilising. Still, it may be a bit too soon to say property prices are cooling,” he said.

Industry observers noted that property prices in Southeast and North Asia, especially in heavily ethnic Chinese populated areas, had generally been resilient.

Apart from blips caused by financial crises, prices rarely pulled back due to strong demand because culturally, properties are viewed as good investments or a hedge against inflation, the observers noted.

CIMB noted that the 33% jump in property transaction value in 2010 came as a surprise as it expected the rebound to be 10% to 15%.

“For the overall market, we expect transaction value growth to slow down to around 15% to 20% as historically, growth has never sustained at 30% for more than a year and the base of comparison is also much larger,” CIMB said in its report.

Escalating property prices have been a much talked-about topic of late as the rapid inflation in asset prices has made it difficult for young adults to own houses.

CIMB said the affordability index for residential properties in general slipped slightly last year.

Additionally, Malaysia’s household debt was growing making home ownership difficult.

BNM’s Financial Stability and Payment Systems Report 2010 showed that an average Malaysian household’s debt service ratio (the ratio of the debt payments to disposable income) was at 47.8% last year.

This implied that nearly half of Malaysian households’ disposable income went towards repaying debt, a ratio which suggests that either household debt is too high, or incomes are too low.

The government is embarking on means to make housing more affordable. It was reported that it was in the initial stages of establishing a national public housing authority similar to the one in Singapore that would build affordable, quality homes.

In the longer term, some quarters expected more supply to come onstream in the near future, which could ease property prices.

Some expect to see a correction in prices later this year or early next year, as interest rates continue to rise and governments around the region take more steps to cool property demand.

An industry observer also noted that a number of properties sold with minimum upfront and deferred payment schemes would also be completed within the next year.

By The EDGE Malaysia

Bertam unit in venture to develop land

UH Capital Sdn Bhd, a wholly owned subsidiary of Bertam Alliance Bhd, has entered into an agreement with GJH Development Sdn Bhd to jointly develop a land located in Ledang, Negeri Sembilan.

In a filing to Bursa Malaysia today, Bertam said the 109-hectare piece of land is expected to have mixed development including residential and commercial shop lots or other such development approved by the relevant authorities and landowner.

The last recorded market value of the land was RM48 million.
UH said the name and type of project, number of units in respect of each type of development of the proposed joint development have yet to be confirmed.

"We expect to commence construction after getting approvals from the relevant authorities and the whole development is expected to be completed within six years from the signing of the agreement," it added.

The deal with GJH will allow Bertam, through UH Capital, to unlock the value of the land without having to fund the development cost of the project.

"There would be general cost saving arising from the interest savings from bridging loans, which would have been required if UH Capital were to develop the land on their own," it said.

By Bernama

Bertam Alliance inks deal for RM400m mixed development project

KUALA LUMPUR: BERTAM ALLIANCE BHD’s unit has inked a joint development agreement for a mixed development project of residential and commercial shoplots in Johor with a gross development value (GDV) estimated at no less than RM400 million.

In a statement Monday, May 9, Bertam said its wholly owned unit UH Capital Sdn Bhd had entered into an agreement with GJH Development Sdn Bhd for the joint development of 270 acres of land at Mukim Seroh in the district of Ledang in Johor.

UH Capital owns the land, and GJH is the developer.

Bertam said the land would be developed in two phases and the planned joint development was expected to commence upon receiving approval from the relevant authorities, with completion expected within six years.

It said all the costs and expenses to be incurred in relation to the proposed joint development would be borne and paid by the developer.

Bertam said that under the agreement, the developer guaranteed that the GDV for the two phases shall be not less than RM200 million each, and that the landowner’s entitlement would be no less than RM40 million for each phase.

On the rationale for the agreement, Bertam said the proposed joint development would allow it, through UH Capital, to unlock the value of the land without having to fund the development cost of the project.

“Furthermore, there will be general cost savings arising from the interest savings from bridging loans, which would have been required if UH Capital were to develop the lands on their own,” it said.

As for the funding of the project, Bertam said UH Capital was not required to finance the development and that GJH shall be solely responsible to meet and defray the development costs in the implementation of the project.

By The EDGE Malaysia

RM50m facelift for Hilton PJ

PETALING JAYA: Hilton Petaling Jaya will undergo its first major renovation in more than a decade, beginning this month.

The makeover, which will involve all its guest rooms, meeting rooms and the ballroom, is expected to involve some RM50 million.

General manager Chris Ehmann said that the renovation will be done in stages and it is expected to be completed in August 2012.

Hilton, which has been managing the property for the past 27 years, has been signed on to manage the hotel until December 31 2025. The hotel is owned by Tradewinds Corp Bhd.

"We will start with six floors on May 9," Ehmann told Business Times in an interview recently.

The hotel has 553 rooms, 17 meeting rooms and a ballroom that can accommodate 600 people.

"The investment will involve all infrastructure such as hot water, new televisions, telephone lines and the back of house," he said.

Ehmann said that its most recent makeover was in 2005/2006 which involved all its food and beverage outlets, main lobby and the public area.

Once completed, Ehmann expects both occupancy and average room rates to increase in line with its new product offerings.

"We pride ourselves on our service and we are excited about the products that will match our service," he said.

When asked about the surrounding competition, he said "It is the people who make the difference."

About 75 per cent of its guests are business guests as the hotel is focused on corporate travellers.

The hotel is essentially divided into three parts: the Main Block (10 storeys), the East Wing and the West Wing, each with 21 storeys.

The hotel, which started as Jaya Puri, came under the Hilton management in 1982. It closed for two years, underwent a RM40 million renovation, added a tower and reopened as Petaling Jaya Hilton.

In 1992, another tower block was added at a cost of RM75 million. Later, the hotel was renamed Hilton Petaling Jaya.

Ehmann said that Petaling Jaya residents will be particularly happy with the refurbished product as it is an iconic building in the area and most people have fond memories of the place. "We are putting Hilton Petaling Jaya back to her glory days," he said.

By Business Times

AmFIRST REIT posts lower profit of RM45m

AmFIRST Real Estate Investment Trust recorded a lower pre-tax profit of RM45.362 million for the financial year ended March 31, 2011, compared with RM54.057 million recorded last year.

In a filing to Bursa Malaysia, the company said revenue decreased to RM88.539 million, for the period under review, from RM98.188 million registered previously.

Meanwhile, Am ARA REIT Managers Sdn Bhd, the manager for AmFIRST, declared a final income distribution per unit of 4.94 sen for the six-months ended March 31, 2011.

Taking into account the interim distribution payout of 4.81 sen, the total dividend was maintained at 9.75 sen, similar to the previous year.

By Bernama

Putrajaya to become model green city with new development

Inspired by ships: Syed Farouk briefing the media on the Maritime Residences.

Driving into Putrajaya is like entering a magical kingdom consisting of buildings with various architectural styles, including from India, the Middle East and Europe.

One of the early buildings is the Perbadanan Putrajaya complex, a landmark in Persiaran Perdana, Precinct 3.

The building is a contemporary interpretation of traditional Islamic architecture. The main feature is the gerbang (gateway) with a public

viewing deck on the top level where one can take in the city skyline including the Palace of Justice and the Grand Mosque. The gateway also providing a vantage point during parades.

The 10-year-old administrative capital has some designs that are marine-inspired with structures resembling ships.

Over the years Putrajaya has been a popular spot for wedding photography as it is a melting pot of natural and man-made beauty.

The development of Putrajaya is carefully planned to maximise the beauty of the various architectural styles and the city also attracts movie-makers.

Among the top 10 structures are the Putra Bridge, Seri Saujana Bridge, Putrajaya Lake, PICC, Putrajaya Botanical Garden, Putra Mosque, Millennium Monument, Putrajaya Corporation Complex, Seri Gemilang Bridge and the Putrajaya Landmark.

Putrajaya Holdings Property (PjH) services division head Syed Farouk Azlan Syed Abdul Aziz said the development plans and the international hub in Precinct 8 which are part of the Putrajaya Master Plan 2011-2016, would attract foreign investments and the expatriate community.

He said the Central Business District on the core island where more futuristic buildings were planned, include office towers, business suites, retail complexes, hotels, institutions of higher learning, recreation and entertainment centres.

“All PjH projects carry the master developer’s signature and developed in line with the Government’s aim to develop Putrajaya as a model green city,” he said during a briefing on the futuristic buildings under construction.

He added that some of the buildings which started construction in 2007 were completed last year and designed with green open spaces.

Syed Farouk said one building that would have visitors talking about in the future is the Maritime Residences, a main residential complex conceived like a fleet of boats floating in the lagoon.

The Waterfront Complex once completed would blend well with the Seri Wawasan Bridge, a cable-stayed bridge.

“This is the iconic building of Putrajaya. One need not go to Dubai to see modern and futuristic buildings. They are all here in Putrajaya,” said Syed Farouk.

He added that a modern waterfront commercial centre — Promenade @ 8, facing the Alaf Baru monument, which is now under construction would be the business and commercial hub of Putrajaya.

Syed Farouk said the landscape of Putrajaya was changing fast and hopefully some of the new building designs would steer the city forward.

The residential population of Putrajaya stands at 80,000 and the working population at 120,000.

PjH hopes for a four-fold increase in the residential population in the near future.

By The Star

Iskandar Malaysia projects a boon for Johoreans, says Ghani

Project boom: The Johor Baru city which is located within Iskandar Malaysia economic growth corridor will benefit from the influx of local and foreign investments.

JOHOR BARU: The roll out of infrastructure projects in Iskandar Malaysia is fuelling demand for houses, land and properties in the economic zone, resulting in price appreciation.

This trend causing a spurt in economic activities was a boon for the people as evidenced by higher wages, improved business opportunities and better living standards, said Menteri Besar Datuk Abdul Ghani Othman.

He said this clearly proved that the development of Iskandar Malaysia not only benefited big contractors and businessmen but also the ordinary people in Johor.

“Ordinary people are beginning to enjoy the fruits of Iskandar Malaysia projects and the massive injection of Federal funds of RM6.8 billion under the Ninth Malaysia Plan to boost infrastructure facilities,” he said in giving a briefing on the progress of Iskandar Malaysia.

The event was organised by Danga Bay Sdn Bhd, the custodian of a privatisation contract awarded by the Johor State Government in early 2000 to develop 1,800 acres of waterfront land along Johor’s Lido Beach.

Ghani said the focus on fiscal priority for Johor will be continued under the 10th Malaysia Plan (2011-2015) with an additional budget of RM1.39 billion.

The Johor state government has also been in the forefront of the development drive with RM313.33 million set aside under its 2010 Budget for a host of other infrastructure projects.

Ghani said almost all the planned Iskandar Malaysia projects had economic elements designed to boost productivity and efficiency, impact the local economy and improve the quality of life of Johoreans.

“The highway projects, for instance, will significantly improve accessibility and connectivity and help open new business hubs, while creating more jobs and contribute in wealth distribution.

Ghani noted that several private sector projects were derailed by the global financial crisis, especially the property market. However, most of these projects are now starting to come on-stream, particularly the residential segment.

The massive infrastructure development in Iskandar Malaysia has resulted a big boost not only in terms of interest but also the commitment from many local property companies either from local or overseas.

Among the players are UEM Land, Australia’s Walker Corporation, Dijaya Corporation, SP Setia Bhd, UDA Holdings, Bandar Raya Developments Bhd, Mah Sing Group, IOI Properties Bhd, Asiatic Development Bhd and Hua Yang Bhd.

Ghani said property players are bullish on the prospects of Iskandar Malaysia and this has created demand for land for their projects, which in turn will for Johoreans.

He said Johoreans will benefit from property value appreciation or land and huge employment opportunities, adding that the challenge for the state government now is to produce skilled workers to meet the future demand.

To ensure the lower and middle income group also benefited from the development of Iskandar Malaysia, Ghani said there are also properties for these category and also rehousing and relocation for the Orang Asli.

Meanwhile, KGV-Lambert Smith Hampton (Johor) Sdn Bhd executive director Samuel Tan said development in Iskandar Malaysia has resulted in appreciation in property and land value.

“Property value for residential, commercial, industrial and land for development have increased substantially. Developers continued land banking in Johor because they are bullish on Iskandar Malaysia,” he said.

Tan said commercial land in Danga Bay has appreciated 181 per cent from RM220 per sq ft to RM400 per sq ft, adding that it has resulted in capital and rental appreciation.

He said the suburbs in Johor will grow due to improved infrastructure and commercial decentralisation, while rural areas will be opened for development due to cost factor.

By Bernama

Prices surge in Iskandar

Setia Tropika, a mixed property development project by SP Setia Bhd Group in Kempas, Johor Baru.

PROPERTY prices in certain areas within Iskandar Malaysia rose dramatically last year, after nearly a decade of lacklustre demand, according to property consultants interviewed by StarBizWeek.

The soaring property prices mainly involves new commercial, industrial and high-end residential units around Johor Baru, the Tebrau corridor and Nusajaya, all within the economic growth corridor in Johor.

KGV-Lambert Smith Hampton (Johor) Sdn Bhd executive director Samuel Tan says that property prices have appreciated by between 45% and 160%, depending on the type of property and location, compared with prices five years ago.


V. Sivadas ... ‘The residential sector around Johor Baru is split into two different worlds.’

“A Danga View Apartment unit that was valued at RM240,000 five years ago can be sold at RM350,000 today,” says Tan.

A similar trend in property prices is noted in double-storey terrace houses in Taman Bukit Indah, Johor Baru, which Tan says are fetching RM380,000 (compared with RM250,000 in 2006). A vacant land in the Southern Industrial Logistics Cluster (SILC) in Nusajaya is now being valued at RM37 per sq ft (compared with RM21 per sq ft previously) and a piece of commercial land around Jalan Datuk Abdullah Tahir, is fetching RM320 per sq ft (compared with RM150 per sq ft in 2006).

Rahim & Co (Johor) Sdn Bhd executive director Loo Kung Hoe says the property boom has resulted in “peak excitement” at auctions.

“In the past, people were careful and there was little interest in auctions. Nowadays, they bid as high as they can for both residential and commercial properties,” says Loo.

Factors behind rise

According to Tan, the strong demand for property is being fuelled by fears of inflation, real needs for housing and the purchasing power of Malaysians working in Singapore.

“There are an estimated 300,000 Malaysians working in the republic and property buyers are impressed by the rapidly developing infrastructure and road networks they see in Iskandar Malaysia.”

Tan notes that the housing and commercial landscape in Iskandar Malaysia has transformed with the entry of property developers such as UEM Land Holdings Bhd, SP Setia Bhd, UDA Holding Bhd, Bandar Raya Developments Bhd, Mah Sing Group Bhd and IOI Properties Bhd.

“In the past, buyers were satisfied with basic one-storey houses. Today, buyers look at factors such as prestige, security and the developer's track record. In another five years, when new residential and commercial areas mature in Iskandar Malaysia, prices will be even higher,” says Tan.

He opines that there is still a lot of upside for the property market in Iskandar Malaysia, especially around the Johor Baru city centre, compared with the Klang Valley.

“The year 2012 will be the tipping point, when projects such as Johor Premium Outlet in Indahpura and Legoland Theme Park in Nusajaya are up and running,” says Tan.

CB Richard Ellis (Johor) Sdn Bhd director Wee Soon Chit adds that the buying euphoria in Johor is also being fuelled by speculation from Klang Valley investors.

Wee says investors' confidence in the region is also boosted by recent reports of a joint venture between Khazanah Nasional Bhd and Temasek Holdings for a “Wellness City” development in Danga Bay.

Strong demand

Loo says there is a strong demand for high-end residential properties such as Leisure Farm Resort in Gelang Patah (developed by Mulpha International Bhd), as well as East Ledang (developed by UEM Land Holdings Bhd) and Horizon Hills (a joint venture between UEM Land and Gamuda Land Sdn Bhd) in Nusajaya.

Another “hot” growth area in Johor Baru is the Tebrau corridor which encompasses the Setia Indah township, Taman Desa Tebrau, Taman Pelangi Indah, and Sunway College in Taman Mount Austin, according to Wee.

However, PA International Property Consultants Sdn Bhd executive director V. Sivadas, who is based in Johor Baru, says the strong demand for high-end properties has not translated into higher prices in the secondary market for older single and double-storey houses in Johor Baru. “The residential sector around Johor Baru is split into two different worlds,” he says.

“New housing units feature the latest designs and many are in gated and guarded developments. A premium is attached to such units, due to security concerns. Within this housing segment, prices have been strong with upward movements of between 10% and 30% over the last two years. These areas include Austin Heights, Taman Sutera Utama, Adda Heights and Horizon Hills.

“Double-storey terrace or cluster units in these schemes are now averaging between RM380,000 and RM500,000. Larger units such as semi-detached houses continue to attract a steady demand, in both the developer and sub-sale markets. Prices here are in the RM500,000 to RM1 mil range.”

However, demand for new double-storey terrace houses which are not located in gated and guarded developments, in the secondary market is very weak.

“There is little price appreciation upon building completion. In most instances, we note a reduction in sub-sale transaction prices,” says Sivadas.

A recent PA International report also points out that there is little demand for old landed housing units around Johor Baru, with some units even priced at pre-1997 rates.

“We do not expect price escalations here due to these being older schemes, as well as due to the continuous offerings of new landed housing units in the market. However, older schemes in the city area such as Kim Teng Park, Serene Park and Taman Pelangi are an exception to this pricing.”

In the condominium sector, the report says that demand remains strong in Johor Baru, due to limited supply in the market.

Prices for high-end condominiums such as that of Petrie Condominium, Johor Baru and the Straits View in Bandar Baru Permas Jaya have exceeded RM350 per sq ft.

The Straits View condominiums which had transacted sales in the region of RM250 to RM300 per sq ft in 2008, are fetching between RM300 to RM350 per sq ft at present.

Service apartments like Ujana in Nusajaya are sold out, while D'Esplanade Residence @ KSL City in Century Gardens, Johor Baru is expected to “do well” as it nears completion, says the report.

However, the PA International report paints a depressing picture for low- and medium-priced apartments.

Apartments in the RM150,000 price range over the last few years, have dipped to below RM100,000 in the secondary market in most areas.

“The number of units put up for sale by public auction companies continues to be be high. This is happening in areas such as Masai, Pasir Gudang, Plentong and Kulai,” says the report.

Boom time

Sivadas says double- and 3-storey shop offices in newer housing estates such as in Taman Nusa Bestari in Nusajaya and in Taman Sutera Utama and Taman Molek in Johor Baru have appreciated in prices over the last two years.

“In most instances, units facing busy main roads and those in established commercial areas, have appreciated by 50%. New 3-storey units offered by developers are at substantially higher prices. All riding on the wave of this euphoria,” says Sivadas.

The PA International report notes that, 3-storey shop offices in Taman Molek that were launched at RM800,000 (intermediate unit) in mid 2000, have an asking price of RM1.3 million today.

In Taman Desa Tebrau, Johor Baru, a 3-storey shop office launched at RM768,000 three years ago, is hovering between RM900,000 and RM1mil today.

The report also notes that rentals for 3-storey shop offices are in the region RM5,000 to RM8,000 per month (intermediate unit), and RM15,000 to RM25,000 per month (corner unit).

Sivadas adds that gross yields for such properties are lower. They have dropped from 6% to 7% two years ago, to about 5% per annum for intermediate units as rental levels are generally unchanged.

Loo points out that some transactions did not seem to be sensible like the shoplots that were launched last year in Taman Sutera Utama, Johor Bahru at RM2.08mil (intermediate unit) and RM2.3 to RM2.6 million (corner unit).

“Currently, the monthly rental is about RM7,500 (intermediate unit) and could go up to RM13,000 (corner unit). So, the yield is between 4.3% and 6% per annum if rentals remain at the current levels when the new shoplots are completed. Perhaps buyers are expecting higher rental yields in the near future.”

He adds that the existing intermediate shoplots in Taman Sutera Utama, launched in mid 2000 were sold at between RM700,000 and RM750,000 per unit and were presently priced at between RM1.5mil and RM1.7mil per unit in the sub-sale market.

Sivadas says that generally, the office space market has fared poorly since the Asian financial crisis of 1997 and 1998.

“Rentals within office towers in and around the city centre continue to hover at RM1.50 to RM2.50 per sq ft per month, inclusive of service charges, thus making this sector a less attractive investment option.”

Also, the retail sector within the city centre have been stagnant over the past year in terms of pricing and rental levels.

Sivadas places part of the blame on the relocation of the Customs, Immigration and Quarantine (CIQ) to Bukit Cagar in December 2008, which he says has diverted traffic and pedestrians away from the city centre.

He also says that there are abandoned retail complexes in Johor Baru, such as Pacific Mall, Kemayan City in Tampoi, and Lot 1 Waterfront City.

There is also ample supply of commercial complexes, such as Aero Mall at Senai, Tesco at Bukit Indah and Giant at Nusa Bestari.

“With massive commercial projects being planned in Danga Bay and Nusajaya, we expect office rentals in the city centre to remain stagnant for the next year.”

Positive near-term outlook

Areas such as Tampoi, Kempas, Seelong, Senai and Nusajaya have seen a gradual increase in the values of industrial land.

The PA International report says converted industrial lands in Tampoi were sold at between RM30 and RM40 per sq ft within the last two years (compared with between RM20 and RM25 per sq ft in mid-2000).

Prices of converted industrial land in Seelong, Kulaijaya and along Jalan Kempas Lama have doubled or more than doubled within the last two years (compared with mid-2000 prices).

“Nusajaya is also a hotspot. Prices in the Nusa Cemerlang Industrial Park, developed by Crescendo Corp Bhd is up by 50% when compared with 2008,” says Wee.

Sivadas says that while the immediate outlook for Iskandar Malaysia is positive, with various projects in the region expected to have a multitude of effects resulting in more job opportunities and higher incomes, it remains to be seen whether the property boom for new developments can be sustained in the long term.

“The key factors now are sustaining demand, and ensuring that supply does not go out of hand,” says Sivadas.

By The Star

Is the 5/95 housing loan scheme a better option?

When Lehman Brothers fell in September 2008, the Malaysian property market entered a challenging period. There were few takers and developers were at a loss as house buyers were few. In the first quarter of 2009, one of Malaysia's largest property developer, SP Setia group coined what was soon to become popularly known as the 5/95 scheme.

Soon after, other established property developers such as Glomac Bhd, Mah Sing Group Bhd, Malton Bhd and Sunrise Bhd followed suit with their 5/95 home loan schemeswith different degrees of success. Some of these schemes could be 10/90, where a buyer paid a 10% downpayment.

Essentially, the 5/95 scheme was meant to help boost property sales which was then being threatened by a slowing economy. Under the scheme, house buyers need to pay 5% of the downpayment while the rest will be financed through a loan. Servicing of the loan starts only when the property is up and ready.

Are these schemes beneficial to house buyers? Or is it another marketing tool of developers?

In the short term, it may seem attractive. After all, one only has to pay 5% or 10% of the price of the house and the next payment is only when one takes delivery of the house. The developer will also bear other entry costs such as legal fees, stamp duty on the sale and purchase agreement and loan agreement as well as memorandum of transfer for purchases under the campaign.

A mortgage loan officer who has done his rounds being on the panel of bankers for various developers says the conventional loans and not the interest-bearing ones, are better options in the long run.

He says that no developer will bear legal fees, interests or stamp duty for free. All these are in fact factored into the price of the house. He says that 5/95 schemes are popular particularly among entrants to the job market because they have problems forking out the downpayment, which is usually the biggest challenge when purchasing big ticket items such as a property.

Because they are young, time is on their side. Such schemes are also popular among speculators because their intention is to sell the house the minute they take delivery of it.

While it is understandable that developers need to sell, what may be prudent for buyers is to ask for an option, to either enter into a 5/95 or to go for the conventional mortgage. And if a conventional loan is possible, whether the developer will reduce the price of the house. However small that percentage may be, it will add up.

A developer of a high-rise condominium project in Petaling Jaya gave buyers an option of a 5/95 scheme or pay more for the downpayment. If a buyer were to opt for the conventional scheme, the price of the house is reduced.

Given the sharp rise in property prices last year, it may appear that most of these house buyers could be sitting on potential profits.

While house prices in the Klang Valley grew by an average of 10% a year in the last two years, selected areas saw astounding growth of 25% annually.

As most of those who bought houses under this scheme, particularly in the Klang Valley, likely comprise those from the middle to upper income bracket as well as speculators, chances of them facing difficulties servicing their loans may be low.

“These days, one can stretch the repayment period from 35 to 40 years, especially if one is in his or her late 20s or early 30s. Thus, the 5/95 scheme, together with the long repayment period, is very helpful for first time buyers,” says a banking analyst. “People like 5/95 because the initial capital outlay is low, hence it doesn't hurt so much. One reason why property prices remain high could possibly be because the hidden cost of 5/95 is already imputed in the price. High as it may be, people continue to buy anyway,” said KGV-Lambert Smith Hampton Sdn Bhd director Anthony Chua.

Another property consultant added that 5/95 was popular because of the affordability factor.

“Many people can't afford the down payment for the 10/90 scheme and are digging into their Employees Provident Fund. So even if 5/95 may be perceived to be more expensive, it will still remain popular, ” said the property consultant.

Chua added that with 5/95, the buyer might be paying more but he wont feel the pinch as the loan period was over a longer period.

“Furthermore, with the real property gains tax at 5%, coupled with our inflationarry environment, it also keeps the risk of buying homes under the 5/95 scheme even lower, as the house price is more likely to increase in tandem with inflation,” said the property consultant.

A banking and property analyst says the difference between 5/95 and 20/80 schemes is merely in the interest portion paid.

“When you pay interest on a 95% down payment versus interest on 80% down payment, of course the interest payment on the 80% is lower.”

She adds that there is a perception of savings under the 5/95 scheme and the buyers' salary could increase after three years, hence reducing the stress on their balance sheet.

Zerin Properties founder and chief executive officer Previndran Singhe adds that when purchasing properties, it is all about the purchasers' cashflow abilities. The buyer will decide based on his monthly income and his ability to service his monthly commitments.

“At the end of the day, it is only an interest issue. Everyone claims that the interest fees and other costs are built into the 5/95 scheme,” he says adding that if a property product is good and developed by a reputable property developer and in a good location, he would encourage the buyer to purchase the property via the 5/95 scheme, especially if the interest rate was low.

“What is more important is to look at the interest rate at the time, not whether it's 5/95 or 20/80,” he says.

With interest rates going up today, the bigger question is this: Will those who buy properties under the 5/95 or 10/90 be committed to their mortgage payments, or will they take the opportunity to cash out?

By The Star

TA plans RM596mil projects this year

Radisson Blu Plaza Hotel in Sydney is owned by TA Global Bhd.

TA Global Bhd is building up its presence as a more robust property player with developments and investment assets in both the local and foreign markets.

The reorganisation of its parent, TA Enterprise Bhd, in 2009 that involved the disposal of TA Enterprise's property assets to TA Global and the listing of TA Global in the Bursa Malaysia Main Market, has paved the way for the group to flex its muscles in the property arena.


Datin Alicia Tiah

TA Global is now a 74%-owned subsidiary of financial services group TA Enterprise.

According to TA Enterprise managing director cum chief executive officer Datin Alicia Tiah, contribution from TA Enterprise's property subsidiary is set to grow with the higher number of project launches these one to two years.

In property development, projects worth RM596mil in the Klang Valley, Australia and Canada, are among the projects scheduled for launch this year. Last year, only RM180mil worth of projects were launched.

The latest launch is that of Azelia Residence @ Damansara Avenue in Sri Damansara, Kuala Lumpur, comprising 250 condominium units with estimated gross development value of RM210mil. The launch today is only limited to 43 low-rise residences and 58 high-rise units worth some RM120mil.

Tiah says Damansara Avenue is a 48 acre master planned development with a balanced mix of signature office suites, lifestyle retail and alfresco styled F&B outlets, corporate office towers, a business class hotel and lifestyle retail mall.

Launch last August, it is targeted for completion in 10 years.

Located within the growth corridor of Desa Park City, Mutiara Damansara and Sungei Buloh, she says some RM100mil will be expended to build dedicated infrastructure accesses for the development.

Other project launches coming up in the third or fourth quarter this year will be condominium projects in Dutamas and Cheras in Kuala Lumpur.

The Dutamas project will feature residences of between 1,500 sq ft and 1,700 sq ft while the project in Taman Permata, Cheras, will be smaller residences of 500 sq ft to 1300 sq ft.

TA Global is also planning to launch its two overseas projects in Canada and Australia this year.

The C$170mil Gardens project in Richmond, British Columbia in Canada featuring 470 apartments and about 70,000 sq ft of retail cum office space, is earmarked for launch around June or July.

The Little Bay project in Sydney comprising townhouses and courtyard homes with estimated GDV of A$600mil, is for launch in the fourth quarter this year.

Tiah, who is also a non-independent non-executive director of TA Global, says the property group is also enlarging its base in the property investment and hospitality arena.

A number of its upcoming projects in Kuala Lumpur will comprise mixed commercial projects.

Its pipeline of new projects include the TA3 and TA4 development which will feature twin 50-storey blocks of mixed development comprising a hotel tower and a residential tower with retail podium.

Located on 2.47 acres in Jalan P. Ramlee, Kuala Lumpur, the project, targeted for launch in 2013, will have an estimated GDV of RM1.38bil.

Another commercial project in the drawing board is the Nova Square development on 3.075 acres at the corner of Jalan Imbi and Jalan Bukit Bintang, Kuala Lumpur.

The project, scheduled for launch in 2014, will comprise three office and residential towers and have GDV of RM1.35bil.

In the hospitality sector, TA Global has made a number of hotel acquisitions in recent years.

Tiah says the hotel assets were acquired during the bad economic times and the group managed to get quite good deals for them.

Radisson Blu Plaza Hotel in Sydney was bought in 1997 for A$120mil; the deal for Aava Whistler Hotel in Vancouver, Canada, was concluded in 2008 for C$35mil; Swissotel Merchant Court in Singapore was purchased in 2009 for S$260mil; and Westin Melbourne was also bought in 2009 for A$160mil.

Its latest hotel acquisition was concluded on April 6. It paid US$60.75mil for Swissotel Kunshan, a five-star hotel in the city centre of Kunshan in Jiansu province, China.

Tiah says TA Global is mulling plans to set up a hospitality real estate investment trust to unlock the value of its five hotel assets that have a combined asset value of more than RM2bil.

She adds that the plan is still preliminary and will only materialise when the timing is right. TA Global's property investment assets include two office buildings the 37-storey Menara TA One in the vicinity of Kuala Lumpur City Centre, and Wisma TA in Petaling Jaya. It also owns the 24-storey Fortis BC Centre located in the central business district of Vancouver, Canada.

By The Star

St Regis KL aims to be rates leader

KUALA LUMPUR: Luxury hotel St Regis Kuala Lumpur may very well be the rate leader in Kuala Lumpur when it opens its doors in 2014.

"We expect to see St Regis as a market leader from a rate stand point ... although not necessarily from an occupancy stand point," Starwood's regional vice-president Southeast Asia Chuck Abbott said.



"It would be great to see rates in KL reach RM1,000 (per night), which would be in line with other destinations for luxury hotels like St Regis," he told Business Times in an interview.

The St Regis here is expected to open in 2014. Currently, rate leaders in Kuala Lumpur rake in an average room rate (ARR) of between RM550 and RM650.

St Regis competitive set in countries across the region includes the Four Seasons, Ritz Carlton, Mandarin Oriental, Park Hyatt, The Peninsula and The Raffles.

According to Abbott, who is also responsible for Singapore and Indonesia, the St Regis in Singapore and Bali are both leaders in their competitive set.

The St Regis here, located in KL Sentral, is a RM1.2 billion development that will include a 208-room hotel and 160 units of apartments. The lower floors of the 48-storey building would be the hotel portion.

St Regis hotel rooms are expected to be a minimum of 60 sq m and its largest suite will measure 300 sq m.

The residences, meanwhile, which is yet to be launched, will have one bedroom up to four bedroom units. There will also be two penthouses.

Starwood has a management contract with the owner One IFC Sdn Bhd. The shareholders of One IFC are CMY Capital (60 per cent), Malaysian Resources Corp Bhd (30 per cent) and Jitra Kerkasa Sdn Bhd (10 per cent).

Meanwhile, when asked about Starwood's performance in Malaysia, Abbott said that year to date Malaysia continues to show solid growth in occupancy and a double-digit growth in revenue per available room (revpar).

Revpar multiplies the hotel's average daily rate with its occupancy.

Earlier this month, Starwood announced that it has signed up with Dijaya Corp Bhd to manage a W hotel in Jalan Ampang, KL.

The W Hotel will have 150 rooms and will be part of the 50-storey hotel-cum-residential block being built where the Bok House used to sit. It will open in 2016.

With this addition, Starwood will operate a total of 13 hotels in Malaysia in the next five years.

Starwood hotels in Kuala Lumpur now include Westin, Le Meridien and Sheraton Imperial. Starwood also has a 49 per cent stake in Sheraton Imperial.

In Langkawi, it operates the Sheraton Langkawi, The Westin Langkawi Resort & Spa, The Andaman Langkawi and a Luxury Collection. The Four Points by Sheraton Langkawi Resort is scheduled to open end-October 2011.

In East Malaysia, it has the Le Meridien Kota Kinabalu and Four Points by Sheraton Kuching, and will be opening later this year the Four Points by Sheraton Sandakan.

By Business Times

Property expo sale in state

JOHOR BARU: Prospective property buyers have some 8,000 units of residential, high-rise homes and commercial developments to choose at the Malaysian Property Exposition (MAPEX) sale here.

The four-day fair at City Square, which will end tomorrow, is aimed at attract Johoreans to buy these properties under the ‘My First Home Scheme’, which was launched by Prime Minister Datuk Seri Najib Tun Razak.

MAPEX organising chairman Wong Kuen Kong said the total properties put up for sales were valued at RM4.1bil.

“I believe the scheme will prompt first time buyers to look into buying residential properties such as semi-detached houses, terrace houses, condominiums, apartments and flats.”

Wong said with the demand for high-end properties, the industry can expect a boost in their sales this year.

He said there is a trend among Johoreans to look for semi-detached houses and bungalows to own.

Real Estate and Housing Developers’ Association Malaysia (REHDA) Johor branch deputy chairman Koh Moo Hing said the local property market is going to benefit following improvement in the bilateral ties between Malaysia and Singapore.

He said the development of Iskandar Malaysia would be another pulling factor to attract Singaporean buyers.

“Local properties are still comparatively cheaper compared to those in Singapore with the strong Singapore currency,” he said.

The fair opens from 10am and 10pm.

By The Star