2013 ISSUE 3
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SPOTLIGHT
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It will be an advantage to the industry if there is a joint venture between the MNCs and the SMEs as it can indirectly boost the local brands. - Teh Kee Sin PRESIDENT OF SMI ASSOCIATION
NEWSFLASH
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MALAYSIA GDP FORECASTED TO GROW 5 - 6% IN 2013 PENANG AMONG THE WORLD'S TOP RETIREMENT HAVEN
FACILITATING & PROMOTING INVESTMENT FOR MALAYSIAN REAL ESTATE
SINGAPORE
SINGAPORE
Today
1960s
MODELS FOR AFFORDABLE HOUSING ADAPTED FROM OTHER COUNTRIES SPECIAL REPORT
GRAPHICALLY SPEAKING
INVESTOR REQUEST
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OUTBOUND INVESTMENTS TO MALAYSIA FROM A JAPANESE PERSPECTIVE
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RESIDENTIAL SECTOR UPDATE, 2008 - 2012
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COVER STORY
2
AFFORDABLE
HOUSING MODELS ADAPTED FROM
OTHER COUNTRIES
by Veena Loh Why do we need affordable housing? Currently there is a gap between the supply and demand of housing within the RM100,000 to RM400,000 price range. As many as 2.5 million Malaysian citizens require affordable housing in Malaysia, out of which 862,185 do not own a property. For instance, in Selangor, 287,369 households earns between RM2,500 to RM7,500 and do not own their own property compared with only 6,941 housing units were available within the price range in the 4Q2011. Challenge for cities One of the challenges for cities is that its urban development remains sustainable. When a city grows, it attracts a continuous influx of immigrant labour who are vital and instrumental in providing services. Through innovation and joint-ventures with the government, the private sector can benefit from supplying affordable housing to the masses. Town planners need to ensure that living quarters of the lower income group do not fall into slums. Lessons from Singapore public housing Singapore’s successful affordable housing model offers lessons that others may learn. Housing Development Board (HDB) flats were built primarily to provide affordable housing for the masses. The success is seen through the mass ownership of HDB flats. 80% of Singapore’s population live in HDB flats. 95% of them own a HDB flat compared with 26% in 1970. The remainder live in rental flats. HDB flats are high-rise, high-density flats and selfcontained satellite towns. Singapore’s Success Formula The Singapore government is the sole planner, designer and builder with powers to acquire land. Through the Land Acquisition Act, 1965, 90% of land is now
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2.5 million
Malaysian citizens require affordable housing in Malaysia, out of which 862,185 do not own a property
This picture is for illustration purpose only
citizen or permanent residence (PR), 21 years of age and above. Eligibility income ceiling for homeownership has been periodically revised in step with economic growth. Flat owners may only sell their flats if they have met the Minimum Occupation Period.
Proposed Solutions Not all lessons from Singapore are applicable in Malaysia as the scale of the problem in Malaysia is much larger and the political and socio-economic conditions are different. Singapore only needs 20,000 homes a year whereas Malaysia needs owned by the state opposed to 49% in about 3 to 4 times more. 1965. HDB is also equipped with legal powers such as the power to resettle A Public-Private Initiative squatters. MPI proposes a combination of models from different countries via a Public-Private To ensure that the government builds Initiative. Instead of the Singapore form only to match demands from the public, a of Compulsory Acquisition, we propose Build-to-Order programme was launched a Voluntary Surrender of private land. in 2001. Commencement of construction The plot of land for affordable housing is can only occur when the BTO successfully first identified. Privately-owned land with attains 65%-70% sales. proximity to public transportation system and existing amenities nearby can be Transparent surrendered to the local authority for joint To ensure that the deserving have the development. opportunity to buy a HDB flat, clear transparent qualifications are spelled out for purchasers and made public. For (continued next page) example, a buyer must be of Singaporean
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COVER STORY
3
Figure 1: Rent-to-buy scheme structure
Through rent-to-buy scheme, investors receives a rental from tenants at 2.4% per annum for the first years and can exit with a capital appreciation of 20% in the 6th year Example of Affordable Housing projects by Program Perumahan 1Malaysia (PR1MA)
DEVELOPER
Land allocated for low cost housing 750 sq.ft per unit Block of walk up flats
HOME BUYER
Year 1 to 5
Year 6
Rental of RM550 per month
Accumulated sinking fund of RM18,000
Includes: RM300 sinking fund RM200 for investors RM50 for maintenance
10 to 12 units per block Cost of flat <RM100,000 MBSB to fund the development
Tenant to top up to 20% of purchase price Bank loans remaining 80% for 25 years at 4%
Conditions for homebuyer: 1) Cannot default on rental 2) Must reside in the unit Source: MPI Research, John Lee, Wealth Dragons
(from previous page) PR1MA Alam Damai
To entice the private sector, local authority could offer better planning permission in exchange for the land parcel. This is viewed favourably in the United Kingdom, as the land-owner could still clawback losses made from surrendering part of their land with higher approved plot ratio.
PR1MA Penang
PR1MA Seremban Sentral
walk-up 3-room flat. To ensure low interest costs to developer, Malaysia Building Society Bhd funds the developer.
To finance the purchase of the flat at RM100,000 each, investors such as Private Equity, High Net Worth Individuals, Insurance Companies and Pension Funds are invited to invest. To keep costs low, stamp duty is waived. Investor receives a rental from tenants at 2.4% per annum for the first 5 years and can exit with a capital If it is Government land, then the appreciation of 20% in the 6th year. Government will gazette the land for public housing. The Government may then call For the first five years, the flat is rented out to the public to register interest. Built- to a tenant who has an option to buy only if to-order approach seen in Singapore can he pays his rent and stays in the premises be administered as construction is only for five years. The tenant of this affordable tendered out once the development has housing scheme pays a rental of RM550 garnered a certain threshold of public per month, of which RM300 is sinking interest. A balloting process is needed to deposit fund, RM200 to the investor and allow homebuyers to apply only if he or she RM50 maintenance fee. After five years, meets the eligibility criteria. the RM300 sinking fund will accumulate to RM18,000. This RM18,000 belongs to the Rent-to-Buy Scheme: The developer tenant who now has to option to buy at builds a block of 10-12 unit flats on land RM120,000. The tenant tops it up to make allocated for low-cost housing at a cost 20% of purchase price and finance the rest below RM100,000 per unit and sells at of the 80% through bank loans for the next RM100,000. Each 750 square feet unit is a 25 years.
SPECIAL REPORT
4
日本から見
るマレーシアへ
の 海 外 投 資 Outbound Investments to Malaysia from a Japanese Perspective by Tetsuro Ikeda
マレーシア政府主導で進められている、海外か らの不動産投資の誘致活動が活発化してい る。なかでも、ターゲットにしているのは日本の 法人・不動産事業者だ。すでに多くの個人投 資家がマレーシア不動産に投資しているが、こ れからは個人マーケットだけでなく、法人向け誘 致活動を強化し、日本からの投資資金を合計 US100億ドルまで増やしたい考えだ。 Lately, the Malaysian government agency, MPI has actively encouraged foreign investments in Malaysian real estate. One of the targets is Japanese corporate and real estate companies. Japan is a country where many individual investors have already invested in Malaysian real estate. MPI is now looking for Japanese Corporate investments. They seek a total of US$100 million investment capital from Japan. 昨年11月、マレーシアの２大デベロッパーが日本 を訪れた。来日したのはグループ総売上で1兆円を 超えるマレーシア最大手のサイムダービー社と、マレ ーシア南部ジョホールで大型開発を行うUEMランド 社。 彼らは日系大手銀行２行を通じて、ジョーン ズラングラサール、スターツ、東急不動産、三菱地 所、三井不動産、野村不動産、森ビル、パルコなど ２０日間で３４社と面会したという。訪問先では、 マレーシアの認知度を上げるため、外国人に開放的 な法制度、拡大する経済規模などマレーシアで不 動産事業を行う魅力を伝えてまわった。これら政府 主導の誘致活動はまだ、韓国や中国では本格的 に行っていない。日本が他の国に先行して誘致活 動をするのは、日本に対する期待感の表れだろう。 In November last year, two major developers of Malaysia visited Japan; namely Sime Darby, one of Malaysia’s largest companies (over 1兆円) and UEM Land, a major developer in Johor. They met with 34 companies in 20 days including Jones Lang LaSalle, Tokyu, Mitsubishi, Mitsui Real Estate, Nomura, Mori Building, and Parco through two major Japanese banks. The visits are to raise the awareness of Malaysia and ex-
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As large corporates tend to consider mature markets, Malaysia would be considered most attractive to small and medium-sized corporates
the tenant network which Malaysian developer can leverage. According to the Chief Marketing Officer from UEM Land, she was impressed with Japan’s commercial facilities and stores which handle a variety of products and services. She wishes to bring Japanese retail tenants to Iskandar.
また、期待するのは、オフィスや商業施設の分野だ けではない。土地柄シンガポールに近く、安価なコ ストでかつ、労働力も豊富なジョホール州では、工 場や倉庫など産業用不動産の開発が活発化して いる。それらを利用するクライアントニーズにこたえる ためにも日本の投資家、不動産事業者の力を借 りたいという想いがある。デベロッパーAMEとAXIS リ ートが空港近くに共同開発する「i-Park」という大型 産業パークには、海外から製造拠点、集積拠点を 移す企業が増えているが、日系企業はまだ数社し plain about the charm of doing business in かいない。日本の不動産業者からも資金力、技術 Malaysia real estate market as well as the 力、テナントリレーションの面で協力を得て、開発を open legal system. These promotions are すすめていきたいという。 done in Japan and not South Korea and China. This would show the expectations of Malaysian on Japanese corporate Besides, Japanese investors are looking partners and customers. to invest not just in retail, office and commercial sectors, but also factories and warehouses in the industrial areas in マレーシアのデベロッパーが日本に期待するのは単 Johor, a place where companies can enjoy に投資資金だけでない。日本の技術力、運営ノウ a lot of benefits from low cost, rich foreign ハウ、テナントネットワークにも大きな期待を寄せてい labor force, with easy access to Singapore. るという。UEMランド社のマーケティング責任者による “i-Park”, a JV Industrial park project of と、東京を視察した際、さまざまなサービスや商品で AXIS and AME Group which is close to 展開する日本の商業施設や店舗が魅力的に映っ the airport. There is increasing demand たようだ。これから開発が本格化するイスカンダル計 of foreign companies to move in. Yet, only 画（シンガポールに面したマレーシア南部ジョホール a fraction of Japanese investments are 州の大型開発計画）で商業施設を活性化させる here. We see a need to appeal to Japanese べく、独自の運営ノウハウやテナントリレーションを持 agents. The cooperation in terms of つ日系企業と共同開発したいと語る。 financial power, technological strength, and tenant relations from Japanese real estate agents will help develop Iskandar The expectation towards Japanese projects better and faster. partners is not simply funds, but also construction technological capabilities, (continued next page) property management expertise, and
SPECIAL REPORT
5
(from previous page) こうした企業がパートナーを探しているのは国内大 手だけに限らない。むしろチャンスがあるのは、中小 不動産事業者や投資家だろう。海外投資が活発 化する中、大手や多くの機関投資家は、アメリカや イギリスなど、規模が大きく成熟し安定したマーケッ トに目を向けがちだ。一方、大手に比べ海外での 実績が少なく、リソースに限りがある中小にとって、こ うした成熟したマーケットでシェアを確保するのはハ ードルが高い。また、アジア事業でも中国やシンガポ ールは市場規模が拡大しているとはいえ、今から新 規参入するには後れをとっていると言わざるを得な い。そういった環境下で、中小にとって親日なマレー シアは魅力的ではないだろうか。大手が欧米にリソ ースを投下する間に、ニッチで成長性の高いマレー シアマーケットを攻めるという戦略はありうるだろう。 Malaysian companies should not just look for large corporate partners, but small and medium-sized corporation. For outward foreign investment from Japan, large corporation usually would consider relatively mature markets such as US and the UK. Whereas for small and mediumsize corporation would have greater difficulty entering these mature markets. Moreover, outward investor may consider abit late to enter Asia markets such as China and Singapore. Under such circumstances, Malaysia would be considered attractive for small and medium-sized corporations. The best strategy for these corporations would be putting resources in Malaysia which has a niche market and high potential growth, rather than having direct competition with large corporations.
Tetsuro Ikeda [Macromeister] 池田哲郎 [マクロマイスター]
Mr. Ikeda has been involved in real estate fund management business for institutional investors. He currently runs Malaysia Real Estate Investment Club and focused his efforts on investor relation. Prior to the career, he was Investment Analyst at Morgan Stanley Real Estate Fund (MSREF) and Merrill Lynch Japan Securities. He started his career at NYSE listed Investment Company and was in charge of corporate accounting and SEC filing. He received MBA in finance from McGill University in 2009. 愛知県出身。海外大学卒業後、2003年にNYSE上場日系投 資会社に入社。その後モルガン・スタンレー・キャピタルでMSREF のInvestment Analyst としてモデリング、ポートフォリオ管理を 担当。メリルリンチ日本証券を経て、マレーシア不動産投資クラブ を主宰している。カナダ マギル大学 経営学修士 ファイナンス専攻。
A joint-venture industrial project between Axis REIT and AME Group
SPOTLIGHT
REPOSITIONING
THE MALAYSIAN
SMEs MARKET
Nurturing and developing SME players to boost private investment into the country by Aisyah Mahzan Teh Kee Sin is currently the president of SME Association of Malaysia. He is also the president of SME of South Johor. SMI Association is an association with the objective of promoting, providing support, services and solution towards the best interest of small and medium industries (SME) in Malaysia. The Association has been organising numerous events and dialogues with ministries of Malaysian Government to reflect and provide feedback on the needs and improvements for SMEs that represents 99.2% of the Malaysian economic establishment.
6 promote and create awareness about the SME industry. PQ: The Transformation Programme (ETP) introduced in 2010 has been one of the major instruments in driving private investment into the country, how has this helped the SMI to grow in recent years? TKS:The Economic Transformation Programme (ETP) has a positive outlook for 2013 with growth expected at 5.1 per cent. The five regional corridors have been planned under the Ninth Malaysia Plan and expedite in the Tenth Malaysia Plan. These five regional corridors have clear cut zones that are clear in terms of directions as the land has been segregated for specific developments. For example, the Iskandar Region in Johor, whereby there are specific zones such as commercial, residential and industrial zones. SME supports the industry by supplying parts, components and materials to the bigger industry players. Although it may not benefit the SME directly, I believed that there will be a chain reaction and soon SME will get the chance to reap in the benefits.
PQ: In your opinion, will there be more SME collaboration with foreign countries such as Singapore, Indonesia and Japan in the near future as seen with the recent signing of MoU Mr. Teh holds a bachelor degree and MBA between Malaysia and Russia? in Business. He is also a businessman specialising in the electric and electronic TKS: As overseas countries deploy industry. stringent control on foreign workers, face scarcity of land plus high cost of Property Quotient (PQ) interviewed him operations, the foreign SMEs are forced recently to gain an insight on what SME to seek cheaper landbanks to set up their can offer to promote Malaysian real estate operations especially in Iskandar Region and the regional outlook that influence the which provides all the facilities needed. property market. They see Malaysia as a good country to expand or relocate as Malaysia has a PQ: Can you briefly tell us a little bit stable economy and is politically sound. about small and medium enterprise Another advantage is that the Iskandar (SME) and its missions? Malaysia is strategically located near Singapore and Indonesia, making it an Teh Kee Sin (TKS):The SMI associates have ideal place to invest. been established for more than 17 years by a group of local businessmen volunteers in Taking Singapore as an example, the Johor. It was then nationalised and called Singaporean SMEs are venturing towards SME association. The main objectives of Iskandar as the scarcity of land continues SME are to gather the voices of the SME and the higher operation cost became community and voice the concerns of the more eminent supported by the recent community to the related parties. To act announcement of Temasek Holdingsâ&#x20AC;&#x2122;s as a bridge or a platform for the SME to joint venture with CapitaLand Malaysia to get the financial funding from Financial build a $3.2 billion township in Iskandar. Institution as it is quite difficult for local SMEs to get financial help on their own. Malaysia and Singapore can also SME also liases with government agencies complement each other to create more in organising roadshow events across the business and job opportunities for the country to locals.
Teh Kee Sin, President of SMI Association of Malaysia
PQ: As a closing statement, what is the outlook for SMI in 2013? TKS: Malaysia is strategically situated between two giants; China and India. Malaysia is also the second most developed country within the region behind Singapore. Malaysia has several advantages compared to other countries in the region such as expansive landbank, economically stable, politically sound, multi-lingual nation and free from natural disaster. I believe it will be an advantage to the industry if there is a joint venture between the multinational corporations (MNCs) and the small medium enterprise (SMEs) as it can indirectly boost the local brands. The government should encourage this by giving tax rebates or exemptions or attractive remunerative packages or even incentives to ease the merger or joint venture between these two groups of companies. As a closing statement, we wish all related parties can work together to lift up and uphold the local SME industry making it into one of the thriving contributors to the Malaysian economy and indirectly bring a surge of inflow to the Malaysian real estate sector in various aspects including land and building acquisitions.
For more information about SMI Association of Malaysia, please visit http://www.smisme.com
NEWSFLASH
7
MALAYSIA
GDP FORECASTED
TO GROW 5 - 6% IN 2013 by Heng Yeh Khai Malaysian economy is expected to remain resilient in 2013, with GDP growing steadily at 5 - 6%. This optimistic outlook is driven by strong domestic demand, robust private investment and a better global outlook, said Bank Negara Malaysia (BNM) Governor, Tan Sri Dr Zeti Akhtar Aziz. IMF, International Monetary Fund also made a revision on its growth forecast of year 2013 for Malaysia to 5% from its previous projection of 4.7% on October 2012. IMF resident representative from Singapore, Dr Ravi Balakrishnan even mentioned that Malaysia has done remarkably well during global crisis, marking a 5.6% growth for 2012. BNM’s 2013 forecast of 5 - 6 % os higher than the Finance Ministry’s forecast of 4.5 - 5.5% made last year. Domestic demand is expected to grow at 8.1% while private investment at 15.6%. With continued growth expected from the private sector, the government intends to lower its budget deficit to 4% in 2013 from 4.5% in 2012 by reducing public investment growth from 9.6% in 2012 to 7.5% in 2013. By sector, the construction sector is expected to grow the most at 15.9% on implementation of major infrastructure projects. Inflation rate is forecasted to range from 2 to 3 % this year which will be the focus of the monetary policy for 2013 as BNM manages the risk of rising consumer prices while supporting sustained domestic economic growth.
PENANG AMONG THE
WORLD’S TOP RETIREMENT HAVEN by Heng Yeh Khai
Area
Minimum foreign investment value (RM)
Limitation
Any areas in Penang for MM2H participants
500,000
2 units only
Island & Sbg. Perai for Strata Title only
1,000,000
No limit
Sbg. Perai area for Landed Property only
1,000,000
No limit
Island area for landed Property only
2,000,000
No limit
Source: MM2H Centre
International Living has ranked Malaysia as third out of 10 countries as the retirement haven for the year 2013. Georgetown a UNESCO World Heritage Site and the capital city of Penang has been selected as one of the great place to retire abroad by a U.S based magazine, Kiplinger. A total of 8 cities were chosen whereby the selections are based on the climate, cost of living which is US based, ease of travelling to the U.S and accessibility to health care services. This city is recognized for its fascinating architecture and street food. The city is populated mainly by ethnic Chinese. However English is widely spoken and this ease the communication for foreigners who intend to stay at Penang. Implementation of Malaysia My Second Home (MM2H) provides incentives to house purchase, car purchase and tax break to the applicants. Foreign investors are encouraged to invest in Penang with the minimum foreign investment value for residential property as table above.
Georgetown, a UNESCO World Heritage Site
Besides, foreigners can easily obtain affordable yet quality medical and dental services in Georgetown. In terms of low living cost, the research show that an American couple can get along quite well on $ 1,500 (RM 4,650) monthly which again strengthens Penang as one of the hotspot by US residents who consider retiring abroad.
GRAPHICALLY SPEAKING
8
3Q2008 - 3Q2012
MARKET VALUE OF
RESIDENTIAL UNITS IN MAJOR STATES GROWS POSITIVELY
WITH STABLE INCREMENT IN INCOMING SUPPLY
Average Price per unit of Residential in Selected States, 3Q2008 to 3Q2012p 3Q2008
3Q2009
3Q2010
3Q2011
3Q2012p
Kuala Lumpur
RM 667,136
RM 632,416
RM 613,818
RM 665,102
RM 820,670
Selangor
RM 281,000
RM 294, 815
RM 307, 423
RM 366,153
RM 392,293
Johor
RM 174,076
RM 180,957
RM 199,123
RM 225,743
RM 254,102
Penang
RM 260,859
RM 323,313
RM 315,523
RM 379,738
RM 404,514
Note: p = preliminary data Legend:
Source: NAPIC & MPI Research
Existing supply: Total Unit
SELANGOR Volume (Unit ‘000)
Incoming supply: Total unit
Total Value (RM’billion)
Total Value (RM’billion) 600
1,600 1,400
500
1,200
400
1,000
KUALA LUMPUR Volume (Unit ‘000)
Total Value (RM’billion)
500
400
450
350
400
300
350
250
300 300
800 600
200
400 100
200
250
200
200
150
150
100
100
50
JOHOR Volume (Unit ‘000)
Total Value (RM’billion) 200
900 800 700
150
Volume (Unit ‘000)
160
400
140
350
120
500
250
300
Total Value (RM’billion)
450
300 100
p
PENANG
600
400
100 80
200
60
150 50
200
40
100
20
3Q2012
3Q2011
3Q2010
0 3Q2009
0
3Q2008
3Q2012
3Q2011
3Q2010
3Q2009
3Q2008
0
p
50 p
100
0
3Q2012
3Q2011
3Q2010
3Q2008
0 3Q2009
0
3Q2012
3Q2011
3Q2010
3Q2009
3Q2008
0
p
50
0
CROSS-BORDER QUERIES
9
LOOKING FOR
INVESTMENT
Source: MPI Research
Request
Malaysia Property Incorporated (MPI) receives foreign investor queries on an ongoing basis. For any parties interested to pursue these investment requirements, please contact the MPI team at research@malaysiapropertyinc.com
Client
Requirement
Location
Hiroshima, Japan
Development land less than RM 15 million for high-end condominium project
Greater KL
Landbank
Guangzhou, China
10 - 20 acres of land for furniture mall
Greater KL
Landbank, Development rights
Dhaka, Bangladesh
5 - 7 acres of land for development
Greater KL (Southern part)
Dubai, UAE
10,000 square feet area
Klang Valley
Landbank, Development rights
Singapore
10 acres and above of freehold land to built a logistic park
Klang Valley (Shah Alam, Bukit Raja)
Landbank, Development JV
Singapore
Mixed development with medical component, medical resort e.g medical themed service apartments, retirement village
Klang Valley, Johor, Penang
2Q 2012 Landbank
1Q 2012
4Q 2011 Factory cum distributor office
3Q 2011
ABOUT US Malaysia Property Incorporated is a Government initiative set up under the Economic Planning Unit to drive investments in real estate into Malaysia. As the first port-of-call for real estate investment queries, Malaysia Property Inc. connects interested parties through an extensive network of government agencies, private sector companies, real estate firms, business councils and real estate-related associations. MPI has two core objectives; to create international awareness and to establish connections between foreign interests and Malaysian real estate industry players, ultimately contributing to real estate investments into the country.
For further information and up-to-date tracking of Malaysian real estate data, visit: www.malaysiapropertyinc.com For further enquiry, write to: info@malaysiapropertyinc.com
Disclamer: This report contains information that is publicly-available and has been relied on by Malaysia Property Incorporated on the basis that it is accurate and complete. MPI is not liable if the case proves to be otherwise. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and the same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed.