Property Hunter Magazine Issue 55 by Victor

/// COVER STORY

T1 @ BUNDUSAN Transforming The City’s Architecture

JUNE 2014

ISSUE 55 RM8.90

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/// HOT TOPIC The Booming of Greater Kota Kinabalu /// PROPERTY LAUNCH DONGGONGON AVENUE A New Phase of A-class Exclusive Offices

Residential Projects Nearing Completion in Kota Kinabalu Public Outcry at Even More Reclamation Planned for Tg Aru in KK Draft Plan 2020 Insights: Sabah’s Property Market Report 2013 by the Ministry of Finance Malaysia How Sustainable is Iskandar Malaysia?

06  07 | Cover Story /// Contents

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What’s inside... Disclaimer, Permission & Reprints This publication is not an investment advice. It is intended only to inform and illustrate.

No reader should act on the basis of any matter contained in this publication without first seeking appropriate professional advice that takes into account their own particular circumstances.

Cover Story T1 @ BUNDUSAN Transforming The City’s Architecture

Feature Property Launch DONGGONGON AVENUE A New Phase of A-class Exclusive Offices

Feature Property Event SHAREDA Property Hunter Expo Tawau Edition 2014

Exclusive Interview Bringing Your Favourite IKEA Furniture To You

Hot Topic Public Outcry at Even More Reclamation Planned for Tg Aru in KK Draft Plan 2020

Hot Topic Insights: Sabah’s Property Market Report 2013 by the Ministry of Finance Malaysia

Hot Topic The Booming of Greater Kota Kinabalu

Special Feature Development Milestones Residential Projects Nearing Completion in Kota Kinabalu

Feature Property Event Manhattan Loft Malacca, Old World Charm with Modern Amenities

Contributor: Dr Daniele Gambero The Rise of the High-Rise

Hot Topic How Sustainable is Iskandar Malaysia?

Contributor: Chris Tan Trending Up Legally in View of The Property Boom in Malaysia (Part 2)

Contributor: Chris Tan Lining Up for Real Estate 2014 Legally

ABX Express (M) Sdn Bhd

Contributor: Michael Yeoh Klibor Pegged Home Loan Is This The Right Loan Package For You?

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04 T1 @ BUNDUSAN Transforming The City’s Architecture

Established in the 1980s, the Tan Brothers Machinery Company (TBMC) is a popular car dealership in Kota Kinabalu and Sarawak. After growing the business for 30 years, the management decided to take a leap of faith and venture into property development. Thus, TBMC Development was born! ...

08 DONGGONGON AVENUE A New Phase of A-class Exclusive Offices

It was a spectacular event last Friday 25th April 2014 at the launching of Donggongon Avenue by ...

44 How Sustainable is Iskandar Malaysia?

Johor is predicted to be the richest state in the country supported by investments brought upon via Iskandar Malaysia by 2025.

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How the Public Views Kota Kinabalu’s Local Plan 2020 Hot Topic

Why Property Transactions Fell by 50 Percent?

Hot Topic

The Upcoming Southern Corridor of Kota Kinabalu

Hot Topic

Through the Eyes of an Architect

/// Cover Story

T1 @ BUNDUSAN

/// COVER STORY

Transforming The Cityâ&#x20AC;&#x2122;s Architecture

stablished in the 1980s, the Tan Brothers Machinery Company (TBMC) is a popular car dealership in Sabah and Sarawak. After growing the business for 30 years, the management decided to take a leap of faith and venture into property development. Thus, TBMC Development was born! T1 @ Bundusan will be the first project launched by TBMC Development and an exciting future lies ahead for this novel property developer. Award-winning Sabahan architect Mak Thur Pei who received the inaugural Tan Sri Chan Sau Lai Architecture Award by the Malaysian Institute of Architects (PAM) is behind the fresh and innovative design. The first of its kind in Kota Kinabalu, T1 @ Bundusan is set to transform building typologies in Sabah. It is located along Jalan Bundusan, a bustling thoroughfare surrounded by existing commercial and residential developments. The state-of-the-art structure will have a vibrant character, and will be a celebrated landmark in the neighborhood.

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T1 @ Bundusan aims to provide a multi-faceted, round-the-clock amenity that will revitalize the surrounding vicinity. The medium scale commercial building comprised of multiple clusters of building. A signature typology of the architect, the commercial block in front is composed of three blocks of five-storey clusters with multiple units designed to accommodate offices and retail outlets. These clusters are interconnected at all floors to all the facilities for convenient circulation and movement. The topmost level houses the F&B outlets and is linked directly to the other commercial block via an ultra modern overpass that will light up brilliantly at night. The uppermost floor entitled the Sky Terrace features a dramatic cantilever supported by a unique structural system. This bold overhang is the key architectural statement that signifies the distinguishing appeal of the development.

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/// Cover Story

The first of its kind in Kota Kinabalu, T1 @ Bundusan is set to transform building typologies in Sabah.

terrace. This double volume will offer a magnificent visual scope, allowing visitors to appreciate the surrounding streetscapes from an unusual perspective, thus creating a delightful dining experience. It also promotes natural ventilation through the entire level, eliminating the need for a mechanical system and lowering operation costs.

In addition to providing an extra floor to cater to the popular alfresco dining culture in Sabah, it also sets itself apart from all other levels, creating a spectacular visual impact. This is essentially the methodology of framing the prestigious element, with the cantilever protruding and brought to light in the same way as a precious gemstone on a ring.

The massive span of the cantilever â&#x20AC;&#x201C; which projects more than 6m out at its farthest â&#x20AC;&#x201C; calls for an unprecedented structural system that incorporates specially designed floor-to-ceiling height trusses to suspend the floor slab and support the huge canopy roof overhead. The trusses are deliberately exposed and partially clad with sleek perforated screens that perform as an aesthetically beautiful sun-shading device which is also essential for reducing wind pressure at high levels.

All the F&B outlets being located on the highest floor will benefit customers as they can enjoy their meals comfortably without worrying about the pollution from the road. The storefront of each shop will also come with an outdoor

The complex truss system with its strategic cladding is intended to be a contemporary reinterpretation of the classic archway. An alley-like pathway is achieved along the dining outlets through the unclad parts of the trusses, providing an impressive

direct visual connection from one end of the building to another. A bonus associated with the large cantilever is its function as a roof overhang that shelters the clusters below from the harsh tropical sun. With its intersecting volumes and intuitive placement of skylights on the canopy roof, the clusters are subjected to a play of lights and shadows, creating a unique effect at every interior space.

faux timber cladding for the exterior of the clusters as well as the interior fit-outs. It stands to remind the community about the significance of timber and its extensive use as a primary construction material in Sabah before modernization came along. This landmark project is expected to be completed by year 2017.

Majority of this development will be constructed out of the modernist combination of concrete, steel and glass, but with an attempt to bring in a sense of warmth and familiarity through the choice of a

For more information on TBMC Development or T1 @ Bundusan Email : tbmc.development@gmail.com Call : +6088-386 979 Fax : +6088-386 978

The modern and iconic architecture masterpiece

Prestigious pocket plaza

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Signature dual volume Sky F&B terrace

Perfect picture of T1@Bundusan under shimmering city light

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/// Feature Property Launch

/// FEATURE PROPERTY LAUNCH

DONGGONGON AVENUE

A New Phase of A-class Exclusive Offices

well as upcoming residential developments not just in Donggongon but also in the nearby vicinity all of which are within short driving distance of Penampang making this property every business owners dream and a must have on the list. Among its features includes a signature façade with spacious interior, private lift, 24-hour gated and guarded security, and a private rooftop which is one of its kind in Sabah. With only 18 units, these structures speak of exclusivity like no other. Being physically segregated from one another, these building’s capability to exude its own identity and prestige is none but enhanced.

During the launching ceremony, 80% of its units have been successfully sold.

During the launching ceremony, 80% of its units were successfully sold. Due to its low density and high market demand for such commercial property which is likely to be seen in Kota Kinabalu, the value of this property is expected to increase.

t was a spectacular event last Friday 25th April 2014 at the launching of Donggongon Avenue by Homesign Network Sdn Bhd (HS), the Shangri-la’s Tanjung Aru Resort. Mr. William Sampil the district officer of Penampang was the guest of honour among the distinguished guests who graced the event.

HS is expected to generate approximately RM100 million in sales from this development. The 80% take up rate is an indication that the property market in Sabah still remains bullish. After the launching, the price will be increased by another 10%. In view of this overwhelming response, HS foresees an appreciation of not less than 30% when it is completed. HS would like to extend their appreciation and gratitude to Mr. William Sampil the District Office of Penampang for officiating the event and making it a successful and memorable one.

Donggongon Avenue is an exclusive development by HS. In particular, it is situated in one of Penampang’s fastest growing areas. The whole development spans across approximately 3.04 acres which is the first and only of its kind in Penampang. Donggongon Avenue is a product beyond expectation which consist of 18 units of 6-story semi-detached A-class boutique offices which have a builtup of approximately 9,620 square feet. The exclusive development is an iconic landmark with one of its kind identity which is set to change the skyline of Penampang. The project is expected to be completed by the end of 2016. Donggongon Avenue is highly suitable as a business hub especially for R & D companies, oil and gas, agriculture, service and call centres due to its proximity to the city centre. It has a large population catchment area, and it’s just a 15 minute drive to Kota Kinabalu. As there are also numerous businesses in the area with many existing as

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/// Feature Property Event

SHAREDA Property Hunter Expo Tawau Edition 2014

/// FEATURE PROPERTY EVENT

Sabah Youth and Sports Minister, YB Datuk Haji Tawfiq Titingan making a helpful donation together with Chua Soon Ping of Remajay Sdn Bhd and John Tan of Hap Seng Properties Development Sdn Bhd

VIP Guest cutting the ribbon to mark the official opening of SHAREDA PH Expo 2014 Tawau edition

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/// Feature Property Event

East Coast of Sabah Property Sales Dropped in Excess of 50% in Q2 2014

roperty developers are starting to feel the crunch brought on by various cooling measures that were announced in the 2014 budget. It was a knee-jerk effect that brought Sabah’s property market’s uptrend to a standstill with developers and buyers adopting a wait and see attitude as to how far the implications will affect the market. As anticipated, the first half of 2014 was a testing time with many property developers holding back on their sales targets. Sales figures from the recent SHAREDA PH Expo 2014 in Sandakan (11 – 13 April) and Tawau (16 – 18 May) reflected this downturn with a significant drop in figures compared to last year.

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According to director of Property Hunter, Michael Hiew, despite a 30% increase in developer participation, SHAREDA PH Expo Sandakan posted a significant drop of 56% in property sales from RM43.5 million in 2013 to RM18.9 in 2014. Visitor numbers mirrored the weakened sales figures with a drop of 53.1% from last year. Hiew commented, “Although the company had increased its advertising and promotion budget by 20% for both exhibitions over last year’s spending in anticipation of a higher turnout, numbers has declined.” SHAREDA PH Expo Tawau fared slightly better with a drop of 44% in sales figure from RM79 million in 2013 to RM43.8 million this year. Property developers continued to show strong support with a 19% increase in number of

exhibitors from 25 in 2013 to 31 exhibitors. Visitor numbers however experienced a slight 20% drop. Hiew also revealed from the random market sentiment survey conducted by Property Hunter during the exhibition, “The major factors in the turnout rate and transaction figures decline was due to homebuyers and investors inability to obtain loan approval with reasonable margins, harsh Bank Negara lending policies and the rapid rise of property prices in which many could not keep up.” The increase in fuel price, commodities and electricity tariffs has further reduced the disposable income of potential buyers which leads to decreased demand for houses and forcing them to reconsider their loan repayment ability.

Although it is estimated that 15,000 property units are needed annually in Kota Kinabalu to cater to the increase in population, stringent loan process and approvals by banks have softened the market demand and has created a higher market risk. Analysts believe that that the property market might need at least two years to recover from the cooling measures but expect it to gain some traction in the second half of 2014 and surge forward again in 2016.

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/// East Malaysia Property News

Sarawak Assembly Passes Resolution Calling for 20 Percent Oil Royalty to Boosting Local Economy

EAST MALAYSIA

PROPERTY NEWS

Keep track of the latest property and real estate news plus reviews in the property market in Sabah and Sarawak

The Sarawak Legislative Assembly has unanimously voted in favour of a resolution to request the Federal Government for an increase in oil royalty from 5% to 20%.

SHAREDA Made Calls to Minister of Special Task

A motion on the increase was originally tabled by Chong Chieng Jen (DAP-Kota Sentosa) but an amended motion, which included seeking more development grants from the Federal Government aside from the royalty, was subsequently tabled by Abdullah Saidol (BN-Semop) and approved. Abdullah said his motion was in line with Chief Minister Tan Sri Adenan Satem’s recent statement in support of an increased royalty.

The Sabah Housing and Real Estate Development Association (SHAREDA) council members recently visited the Minister of Special Task, Datuk Teo Chee Kang at his office. During the visit headed by SHAREDA president Francis Goh, the minister was briefed about the 2013 Property Development Annual Report which was recently released by SHAREDA. Goh discussed major topics that are

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covered in the report including the importance of the property development industry to Sabah’s economy. The report aims to be a relevant source of reference for related government departments, professional bodies, real estate players, SHAREDA members and counterparts such as REHDA and SHEDA.

“We plan to invite the Federal Government to revisit the royalty arrangement, which includes reviewing the relevant legislation. The Chief Minister’s statement was not mere political rhetoric but a representation of the genuine sentiment of all Sarawakians. “This motion is about our desire to review the royalty rate to a quantum more favourable to us. It can be also construed as a request for more development funds which we can channel to rural areas where basic

needs like electricity, clean water and roads are still needed,” he told the House. Abdullah added that the state wished to mutually negotiate a revision of the royalty with the aim of achieving a better deal in order to accelerate development. “We don’t want the Federal government to accommodate our request on humanitarian grounds but must be able to impress upon them that we have the right to be treated equally as a partner when we jointly formed Malaysia,” he said. However, he said the pursuit of a higher royalty rate must not affect the close working

relationship, mutual respect and cordiality between the state and Federal governments. Meanwhile, Chong said he did not mind that his motion had been amended by a Barisan backbencher. “Once a motion is passed, it is the House motion. It does not matter who originates the motion. This day we will make a unanimous decision and give our full support even if the motion comes from Barisan. “What is important is that our state gets this money,” he said.

This motion is about our desire to review the royalty rate to a quantum more favourable to us. It can be also construed as a request for more development funds which we can channel to rural areas where basic needs like electricity, clean water and roads are still needed,” he told the House.

Families Struggling to Buy Homes Due to Bank Negara’s Rules

Local lenders should provide more accessible financing to ordinary Malaysians in order to help the government build 1 million low-cost houses, according to Francis Goh Fah Sun, President of the Sabah Housing and Real Estate Developers Association (SHAREDA). “We have concluded during the meeting that we should have a discussion with Datuk Seri Najib Razak, who is also the Finance Minister, [to forward] our suggestion” because it is vital to provide more accessible financing facilities to home buyers, particularly low income groups so that they can actually afford these units. He said this during the 19th Malaysian Developers’ Council (MDC), which was also participated by the Sarawak Housing and Real Estate Developers Association (SHEDA) and Malaysia’s Real Estate and Housing Developers Association (REHDA). Due to Bank Negara Malaysia’s (BNM) tough lending guidelines, low income families are having difficulties in buying a home despite the many assistance provided by the government, Goh explained.

To address this, the loan criteria for housing schemes such as MyHome should be more flexible, he suggested. Local lenders are also urged to adopt a quota system as part of their social corporate responsibility (SCR) programme. “There are over 2,000 branches of local banks across the country. If each of them adopts a quota of 500 affordable home applicants, we will meet the 1 million target in no time. Perhaps, Bank Negara can impose this as some kind of requirement for the banks,” added Goh. Another proposal is that the government should slash the upfront cost paid by home buyers, which include utility charges levied on developers but were transferred to the total unit price, according to REHDA President Datuk Seri Michael Yam. “Instead of charging the cost up front to developers, who in return add the additional cost to their selling price, why not have the buyers, for instance, pay higher tariff for 20 years. This will increase the affordability of the houses as they would be sold at lower prices.”

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/// East Malaysia Property News

Housing Market Plagued by Labour Shortages, Tough Mortgage Rules

New ID Tag System to Protect Buyers

Curb on Collective Purchase of Property for Easy Profit

Sabahan Developers Grab Top Awards in SME 100 Fast Moving Companies

Urban Well-being, Housing and Local Government Minister Datuk Abdul Rahman Dahlan The local housing sector is facing labour shortages, particularly for licensed land surveyors, while the central bank’s tough lending guidelines contravene the government’s efforts to promote lowcost homes, according to Malaysian Developers Council (MDC). Represented by REHDA President Datuk Seri Michael Yam Kong Choy, his SHEDA counterpart Zaidi Ahmad and SHAREDA head Francis Goh, the council raised both issues during the 19th MDC meeting at Wisma Kinsabina, Penampang. “Whilst the Government’s objectives and policies to increase affordable housing is to be applauded, the MDC is concerned that the financing facilities for these affordable units are not aligned,” said Goh. With loan rejection rate at worrying levels, members of the three associations have revealed that buyers are facing great difficulty in securing housing loans, especially first-time buyers. Hence, it appears that Bank Negara Malaysia’s stringent mortgage rules that were implemented in 2012 are going against the government’s initiatives on affordable housing. “We understand that the prime intent of BNM for introducing the guideline is to curb household debt, but the government should look at other better mechanisms and qualifying criteria to facilitate first-time buyers,” he noted.

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On the lack of skilled workers, the authorities should amend its anti foreign labour measures as the Economic Transformation Programme had significantly increased the demand for manpower in the construction industry. “Unless the government reviews the measures taken against the use of foreign labour, this shortage of human resource would lead to delivery problems and legal implication arising from contractual obligations.” “As such, we appeal to the government to engage the various stakeholders to quickly resolve this serious problem, otherwise projects, development and delivery will be in jeopardy and may even cause labour fees to surge upwards.” In regards to the dearth of licensed land surveyors, the authorities are urged to open up the practice to those from peninsular Malaysia and Sarawak.

Board of Valuers, Appraisers and Estate Agents official website A new identification (ID) tag system for genuine real estate agents and negotiators will be implemented this month, said the Board of Valuers, Appraisers and Estate Agents (BOVAEA). The move is in line with efforts to enhance professionalism within the real estate industry, which is valued at over RM100 billion, and protect buyers from being deceived by illegal agents and negotiators. To date, over 50 percent of the property transactions in Malaysia are being handled by illegal agents. According to Foo Gee Jen, honorary secretary of the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS), who is also a board member of BOVAEA, the board receives around 60 complaints per month relating to various misconducts by illegal agents and negotiators. These include misrepresentation of property size, failure to return deposits and miscalculation of assets valuations. In 2012, the value of property transactions within the country reached RM142 billion. Out of that figure, 60 percent was

handled by illegal agents, said Foo. He revealed that it will cost BOVAEA over RM1 million to introduce the ID tag, which will include details of the property agent or negotiator, like his or her firm’s name and identification card number. The ID tag will also include a Quick Response code, which will allow buyers to double-check the details online through their smartphones. While the tag is not a licence, there is an annual registration fee of RM100. Applicants are mandated to attend a course and submit their application along with their certificate of attendance. So far, around 16,500 people have attended the course and only 12,000 applied for registration as negotiators, said Foo.

The government is to enforce an initiative on May 15 to curb the collective purchase of real estate for subsequent sale at a higher price for easy profit. Urban Well-being, Housing and Local Government Minister Datuk Abdul Rahman Dahlan said the government would enforce the collective purchasers register whereby the developer would have to register the name of buyers of more than four houses at one time with the ministry. He was replying to a question raised by Senator Yunus Kurus on the measures taken to curb the activity by the socalled ‘Real Estate Investors Club’. Abdul Rahman said the enforcement of the regulation was in addition to an earlier initiative of restricting loans to 70% of the purchase price for individuals who had more than two housing loans since 2010. He said the ministry would also co-operate with the relevant authorities to monitor any manipulation of real estate prices. The ministry would collaborate with the police, Bank Negara, the Communications and

Multimedia Ministry and the Domestic Trade, Cooperatives and Consumerism Ministry to monitor and prevent the so-called Real Estate Investors Club from influencing real estate prices. Abdul Rahman said the government did not intend to formulate legislation to curb the activities of the club because the country practised free enterprise where prices were determined by demand and supply. “However, we are prepared to look into a proposal for a new regulation to deny discounts to collective purchasers to stop them from buying houses at prices way below the market price,” he said.

Minister with Special Task, Datuk Teo Chee Kang handing the award to Hap Seng Properties Development, COO Mr John Tan SME Magazine recently awarded 31 companies from Sabah and Sarawak in the first edition of the SME 100 Award for East Malaysia. The Fast Moving Companies Award recognizes the outstanding achievement of small and medium enterprises (SMEs) using a stringent judging and evaluation process to assess growth and resilience. The award, which was only been held for companies in Peninsular Malaysia previously, received overwhelming response from East Malaysian companies with a record number of 212 nominations. A total of 500 SMEs were initially surveyed for the award between December last year and May this year and the winners had been selected among the nominated companies. Judging was done based on quantitative criteria, such as revenue growth and profit, and qualitative criteria such

as business outlook, investment in training, and research and development efforts. Hap Seng Properties Development and Pembinaan D.G.E from Sabah were recipients of the award. Hap Seng Properties Development has more than 40 years of expertise in property development and holding of investment properties, comprising residential, commercial and industrial properties. The company has established an excellent track record of building affordable high quality houses, which are well planned and attractively designed to provide ideal living spaces. The on-going developments are Taman Kingfisher Sulaman in Kota Kinabalu, Taman Sri Perdana in Lahad Datu and Bandar Sri Indah in Tawau. The Bandar Sri Indah project is the largest commercialresidential township development in

Sabah, equipped with modern infrastructure and landscapes for homeowners to experience modern lifestyle. Pembinaan D.G.E the developer for Suria Inanam is speared by Dato’ Wong Hai Ming who is also the managing director for the Dong Guan Group which is well known for supplying concrete products, piling, civil engineering and construction works in Sabah. The company was established in 1981 and is a specialist in both onshore and offshore piling works, having up to date undertaken and completed projects exceeding RM500million. Pembinaan D.G.E has a fleet of piling plants and equipments worth more than RM20million. The company is currently handling government and private sectors projects in East Malaysia valued over RM50million.

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/// East Malaysia Property News

Property Buyer Wins All-Expense Paid Holiday at Expo

The Biggest Property Expo Returns to Tawau the deducted purchased price. Tawfiq said that the assistance provided by all fellow SHAREDA members in fulfilling the promise of building affordable homes is greatly appreciated by the government. By working together, he hopes that it will ensure that Sabah progresses fast as a state without neglecting any industry.

Artist’s impression of Eco Garden @ Jalan Bunga Raya, Tawau

Purchasing her dream home from the exclusive ECO Garden property development came with a pleasant surprise for Shim Pey Yee at the recently concluded SHAREDA Property Hunter Expo in Tawau. She was the big winner of the BUY & WIN Draw for property buyers who made purchases during the expo and can now look forward to a 9D/7N holiday for two to Shanghai inclusive of return airfare, accommodation and tours. The prize was presented by Candy Ting (Event Project Manager) to a delighted Pey Yee at the close of the expo.

For the third year in the row, the flagship exhibition, SHAREDA Property Hunter Expo (PH Expo) which is jointly organized by the Sabah Housing and Real Estate Developers Association (SHAREDA) and Maxx Media (S) Sdn Bhd returns to Tawau. This free-to-attend event was held from 16 to 18 May 2014 (10:00am to 8:00pm) at the Lau Gek Poh Foundation Hall. It featured over 32 exhibitors consisting of local and international developers, property agents and banks. An array of properties ranging from residential developments and commercial projects will be showcased at the SHAREDA PH Expo in Tawau. And visitors will have a preview of some of the latest and highly anticipated projects such as Eco Garden in Tawau by Solidus Development. This high-end residential development located on Jalan Bunga Raya will consist of 34 exclusive units of semi-detached houses and 16 units of terrace houses. Prinsip Hasil will also be launching 100 shoplots, sized from 1,200 sq ft to over 2,000 sq ft in downtown Semporna where there is still a high demand for commercial space. Each unit block is priced from RM630,000 onwards. Major property developer, Hap Seng will also be featuring their project Bandar Sri Indah on Mile 10 Jalan Apas in Tawau. The single storey terrace houses will have a built up area of 1,205 sq ft (Type A) and 1,006 sq ft (Type B). These quality affordable homes are embraced by nature and

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landscaped spaces. SHAREDA recently made a courtesy visit to the Sabah Minister of Youth and Sports Yang Berhormat Datuk Haji Tawfiq Datuk Seri Panglima Haji Abu Bakar Titingan to invite him as Guest of Honour at the SHAREDA PH Expo in Tawau. Tawfiq said, “I applaud the efforts by the organizers to bring in property development projects from all over Malaysia and overseas to be showcased to the people of Tawau. I believe that this is also a good platform to promote local property projects developed by our local developers in Sabah.” “In the midst of exuberant growth in the property market, I encourage the developers to continue to deliver high quality products at a reasonable price. As property buyers become more sophisticated and well informed, it is important that the products evolve along with the changes in the market,” he added. Tawfiq also mentioned the importance of developers committing to build more affordable housing, as a gesture to contribute back to the community as a corporate social responsibility programme. And he encouraged first time home buyers to apply for the My First Home Scheme. Through this scheme, first time house buyers will be able to obtain an incentive of RM30,000 to pay for the initial 10% deposit instead of a “subsidy” which is deducted from the selling price of a housing product. But the purchaser still needs to pay the 10% deposit of

“As the economy continues to prosper, it is natural to see the demand for property to increase, particularly for investment purpose. I would like to take this opportunity to remind all property investors to be cautious when investing in a property, and to avoid speculative investment behaviour. Whilst property is a good tool in preserving wealth, it should be treated as a steady long term investment tool,” Tawfiq said. During the courtesy visit, SHAREDA President Francis Goh also presented Tawfiq with the SHAREDA 2013 Property Development Annual Report. The report reveals data which reflects the importance of property development industry to Sabah’s economy. The report aims to be a relevant source of reference for related government departments, professional bodies, real estate players, SHAREDA members and counterparts such as REHDA and SHEDA. Plus, it also indentifies numerous pressing issues and problems faced by SHAREDA members. The SHAREDA PH Expo is an annual Business-to-Consumer (B2C) event that aims to bring investors and home buyers to property developers with the ever growing demand in premium property. For more information, visit www.propertyhunter.com.my.

/// East Malaysia Property News

Tawau Project Launching, Top International and Malaysian Properties Featured in Property Hunter Expo Tawau unit renders the homes in perfect harmony with nature, with an excellent flow of ample natural light, the absence of unsightly pillars and a good angle for tasteful interior decoration. Other participating developers that featured overseas projects include APAD Australia Properties and Development that featured the Promenade Townhouses in Brisbane and Gold Coast, Far East Organization that highlighted The Scotts Tower in Singapore, Jalin Realty that showcased several properties in Australia and UK, and Myland Partners Corp. that promoted the Kingfisher Project in Great Lake Taupo, New Zealand.

Setia Sky 88 in Johor Bahru centre by SP Setia The SHAREDA Property Hunter Expo (SHAREDA PH Expo) took place recently place at the Lau Gek Poh Foundation Building in Tanjung Batu, Tawau. This three-day event was held from 16 to 18 May starting from 10:00am to 8:00pm. Public entrance is free to this flagship expo jointly organized by the Sabah Housing and Real Estate Developers Association (SHAREDA) and renowned property exhibition organizer Maxx Media (S) Sdn Bhd. During the opening ceremony, guest of honour YB. Datuk Hj. Tawfiq Datuk Seri Panglima Hj. Abu Bakar Titingan said, “I would like to thank the President of SHAREDA, Francis Goh, for inviting me to officiate the opening ceremony of this event. I am glad that this event will be able to allow investors and home buyers in Tawau to explore projects by different property developers especially with the ever growing demand in premium property.” Organizing chairman Dato’ Jimmy Pang added: “This Expo features properties from affordable housing to upmarket condominiums as well as commercial properties. I am proud to notice that the quality and types of properties showcased have improved tremendously through the years. This is a testimony of the professionalism of developers who have now become a self regulated

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industry in line with our country’s vision to move towards a developed nation status by the year 2020.” Over 32 exhibitors consisting of local and international developers, property agents and banks took part in the expo. Masama-Winquest JV and Koperasi Serbaguna Kakitangan Sawit Berhad (KOSAWIT) featured the Sungai Balung Taman Sawit Commercial Centre and Housing Development in Tawau. Strategically located near the Tawau Airport, Taman Sawit consists of four phases with the first phase comprising 94 units of double-storey shop offices and 10 units of three-storey shop houses; the second phase with 139 units of single-storey terraced houses; third phase with 193 units of single-storey terraced houses and the fourth phase with 166 units of single-storey terraced houses. Another project in Tawau that was featured is Eco Garden by Solidius Development. SP Setia on the other hand will showcase the highly raved about Setia Sky 88 located in Johor Bahru. This freehold, high-end residential development offers 588 units with various layouts. The built-up areas range from a 484 sq ft studio to a 1,389 sq ft three-room apartment. Residents can enjoy facilities such as theatre room, infinity swimming pool, gymnasium, spa zone, sun deck and so much more.

GuocoLand Malaysia introduced Damansara City, their flagship project which is the first integrated development project in the exclusive Damansara Heights enclave. The iconic landmark will include two luxury condominium blocks, two corporate office towers, a lifestyle mall and an international-class hotel. The integrated project, located adjacent to the Damansara Town Centre, will be developed on a prime freehold site of 8.5 acres with a total development area of about 2.2 million sq ft. Another property highlight was Concerto North Kiara by BCB Berhad. Spread across a 5-acre plot of freehold land in the Dutamas area, units measure approximately 1,707 sq ft to 2,084 sq ft in size, comprising 3+1 bedrooms and 4 bathrooms. The artistic construction of each

Home buyers had an opportunity to enter the Buy & Win contest and walk away with a 9D7N trip for two to Shanghai fully sponsored by Airworld Travel & Tours. Buyers also received free vouchers from Louis Pang Studio worth RM800 (for properties under RM500,000) and RM1,080 (for properties above RM500,000). Visitors on the other hand could enter the Visit and Win contest and stand a chance to win Acer smartphones each sponsored by Acer Malaysia. All attendees also were able to get free lottery tickets and copies of the Property Hunter magazine. The SHAREDA PH Expo is an annual Business-to-Consumer (B2C) event that aims to bring investors and home buyers to property developers with the ever growing demand in premium property. For more information, visit www. propertyhunter.com.my

This Expo features properties from affordable housing to upmarket condominiums as well as commercial properties. I am proud to notice that the quality and types of properties showcased have improved tremendously through the years.

/// Exclusive Interview

Bringing Your Favourite IKEA Furniture To You

/// EXCLUSIVE INTERVIEW

orget all the clichés you’ve heard about stay-at-home moms. A new generation is starting their own businesses, juggling family life and work at home. 25 year old Doreen Liau started the KK IKEA Shipping Service last September when she was pregnant with her first child. She never intended to start this business; it happened by chance. What was initially a shopping spree ended up developing into a business model that has been steadily growing.

Right now I only take orders through Facebook. Every two months there are about two or three collections, and customers are required to make a minimum order of RM200. Once we have enough orders, I will coordinate everything and items will be delivered in the next three to four weeks. Sometimes the shipment gets a little delayed, but you don’t have to worry because I will keep you updated on a regular basis regarding the status of your purchases,” she adds.

Liau explains, “When I was still pregnant, I was looking for a baby cot for my daughter and found the prices very expensive in KK (Kota Kinabalu). It was cheaper to ship it over from IKEA but there was a minimum order that I had to meet. There’s a group on Facebook called KK Mommies, and I wrote a post and asked the mothers if they wanted to order anything. A lot of the mothers love IKEA products too and orders kept coming in so my husband suggested that I turn this into a business. That’s how I got started.”

According to Liau, one of her favourite items in the IKEA catalog is the Expedit Shelf. The design is simple and clean, plus it’s flexible and versatile. You can use it for multiple purposes: stack it up, mount it on the wall, use it as a room divider, display your treasures or hide your clutter. Other hot items that are often purchased by Liau’s customers are the Detolf Glassdoor Cabinet and Trofast Storage Combination.

Since young, Liau has always had a knack for interior designing and she has always been a fan of IKEA products. And what she loves most about IKEA is the wide selection that is both innovative and affordable. According to Liau, another great thing about IKEA is that they have a 100-day return policy where customers can exchange purchases that have manufacturing defects. “A lot of people from KK travel to KL just to go to IKEA and with the travel cost, it can be very expensive. With the services that we provide, all you have to do is visit the official IKEA website, choose your products, and write down the article numbers. I will quote you accordingly and I will process your order once you have made full payment. If an item is out of stock or discontinued, you can get a refund or you can select a replacement item or wait for it to be restocked.

“For me personally, I like my home to have a warm and cozy feeling. Sometimes I feel like buying everything on the IKEA website! Price is always a concern with my customers, but if you really love the design and you think it will suit your space then just go for it. If your walls are a neutral colour like white or cream, it’s easy to mix and match your furniture. You can always add a pop of colour to bring life to the space and make it more vibrant,” she said. Liau believes that changing the space around you or redecorating your home or office can change your mood and the way you operate in it. Whether you want to completely redesign your room or simply make a few small changes, redecorating is always fun. It can help you create a relaxing and comfortable space, plus make it more practical to suit your current lifestyle.

Taking care of her four-month old daughter and juggling her expanding business is not always easy, but Liau tries to get work done in between the day. “I try to do as much as I can when my daughter is sleeping and when my husband is around, he looks after her so that helps a lot!” she quips. For more information about KK IKEA Shipping Services WhatsApp +60 16 832 3380 or visit https://www.facebook.com/ kkikeashippingservice.

Price is always a concern with my customers, but if you really love the design and you think it will suit your space then just go for it. PHOTO: LOUIS PANG STUDIO

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/// Hot Topic

/// HOT TOPIC

Public Outcry at Even More Reclamation Planned for Tg Aru in KK Draft Plan 2020 The Sabah Environmental Protection Association (SEPA) expressed shock and disappointment at the latest Zoning for the Draft Kota Kinabalu Local Plan 2020 which sees Sabahans losing even more public spaces to make way for even more hotels and resorts. “We were shocked when we saw the new draft plan produced by Kota Kinabalu City Hall (KKCH) for Tanjung Aru beach area which shows three areas on water, zoned as ‘Hotels & Resorts’ which in turn leaves an extremely small patch of beach for members of the public,” said SEPA President Lanash Thanda. Describing it as unacceptable, the SEPA President said that the needs of the majority of regular people of Sabah should come ahead of big business, tourist and the wealthy. Sabahans have already lost so much. “This new reclamation areas and zoning for Hotel & Resorts such as those described in the Tanjung Aru Eco Development (TAED) for example is unacceptable and goes against what the majority of people want,” stressed Lanash. SEPA also called for an immediate extension to the timeline of up to the 22nd May 2014 given by KKCH to make comments on the draft plan. “The deadline must be extended, as all necessary documents are not ready for the public to view. and they have nothing online which would ease public access to all the documentation,” said the SEPA President. In addition, SEPA also stressed that a proper stakeholder consultation be held with all represented parties and concerned individuals invited, and that all material and documentation be given in advance of the meeting. “When Sutera Harbour was being built the then Minister of Tourism and Environmental Development promised all Sabahans that we would have a public park and a

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Current draft Kota Kinabalu local plan 2020 overlay with google earth public beach, where is it? We refuse to lose Tanjung Aru beach, it’s the last of KK’s beaches and it belongs to all of us and not just the rich,” stated Lanash. SEPA together with many other non governmental organisations and groups have also started a Facebook page, “Save Tanjung Aru Beach” to disseminate information to members of the public. “We also question why the area where the Royal Turf Club used to have horse racers is now zoned as ‘Mixed Uses’? The public was

told that this space was being handed over for airport runway extension and safety and now it’s for development? This is just ridiculous and wrong,” lamented Lanash. Another issue is that members of the public were told to purchase a RM1.00 form from KKCH if they wished to lodge an objection. However in the KKCH’s own brochure it clearly states under No.9 and No.13 that members of the public can lodge complaints via email, fax and letters.

“We called just to make sure and we were informed that it is mandatory to purchase the form if you want to make an objection. How can you call this public consultation?” asked Lanash. SEPA urged members of the public to visit the Save Tanjung Aru Beach Facebook page to see how they could lodge an objection to the KKCH and keep up to date on information regarding pressures on Tanjung Aru beach by developers.

/// Hot Topic

/// HOT TOPIC

Insights: Sabahâ&#x20AC;&#x2122;s Property Market Report 2013 by the Ministry of Finance Malaysia

Pergerakan Harga Purata Rumah Teres di Sabah Average Price Movements of Terraced Houses in Sabah

Pergerakan Harga Purata Pangsapuri di Sabah Average Price Movements of Apartment in Sabah

(RM â&#x20AC;&#x2DC;000 Seunit Sebulan/Per Unit Per Month)(

RM â&#x20AC;&#x2DC;000 Seunit/Per Unit )

250

350 325

Meanwhile, Taman Teluk Villa was sold at RM260,000, noted a huge increase of 17.6%. In Keningau, similar units in Taman Luagan was transacted between RM170,000 and RM190,000 per unit, up by 7.8%. in Tawau, similar units in Taman Megah Jaya, Batu 3 recorded gains of 3.3% per unit almost level to that in Penampang but average land area lesser than 150 s m. Double storey terraced houses were also in the upward trend. Taman Bukit Sepanggar in Kota Kinabalu recorded increase of 12.1% and changed hands between RM510,000 and RM530,000 per unit with average built-up area 142 s m. Golden Hill Garden also grew at 5.5% and sold at

he Malaysian economy continued to grow in 2013, achieving 4.7% despite the challenges affronting the global economy. The property market recorded a decrease in the volume of transactions but an increase in the total value. A total of 381,130 transactions valued at RM152.37 billion were recorded against 427,520 transactions worth RM142.84 billion in 2012, denoting a drop of 10.9% in volume and 6.7% appreciation in value. Market moderation cuts across all subsectors of the property market. The residential sub-sector continued to spearhead the property market activities, talking up to 64.6% share. Housing approvals reduced substantially by 22.5% compared to 47.4% expansion in 2012. SABAH In 2013, the review period recorded 9.116 transactions with a total value of RM4.71 billion. Against 2012, the number and value of transaction noted reductions of 17.4% and 5.8% respectively (2012: 11,043 transactions worth RM5.0 billion). The residential property market accounted for 59.1% of the market

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share, followed by agricultural property at 18.6% and commercial property at 13.0%. Performance of the sub-sectors was less encouraging. All sub-sectors recorded decreases in volume of transactions between 11.8% and 27.1%. Value of transactions in the residential, commercial and development land sub-sectors move in tandem with volume whereas industrial and agricultural sub-sectors recorded otherwise. Three landmark sales were noted in 2013 involving a hotel, a purpose built office and several estates. Wisma TWB, a purpose-built office building at Lorong Dewan, Kota Kinabalu and Ochard Hotel were transacted in the year with combined consideration of RM9.10 million. The estate land registered 36 transactions whilst two in Semporna. Tungod, Kota Kinabalu and Beaufort noted one each. Total value of estate land transactions was RM702.39 million. Prices of residential property were on the whole stable with increases noted in established schemes. In the east coast area, single storey terraced houses with average land area of more than 150 s m especially in Penampang showed transacted prices at RM265,000 to RM420,000 for being near to the Kota Kinabalu town city.

In the high-rise segment, limited supply on the landed units in Kota Kinabalu city centre has driven prices to increase especially in flats and apartments. Low cost flat in Taman Putera Jaya and Sri Maju Apartment recorded significant increase of 13.5% and 11.3% respectively and transacted at RM75,000 to Rm88,000 and RM80,000 to RM100,000. In Penampang, similar units in Taman Ketiau noted higher growth of 17.5% and sold between RM78,000 and RM140,000. Medium cost flat in Beverly Hills noted increases from 6.2% to 14.6% whilst Country Height Apartment Phase 1 saw price up by 3.9% to 10.9%. University Apartment in Phase 1 and 2 also in the same league which noted prices increase of

In the high-rise segment, limited supply on the landed units in Kota Kinabalu city centre has driven prices to increase especially in flats and apartments.

prices pexceeding RM700,000. In Penampang, similar unit in Bukit Vor Villa recoded increase of 20,0% fetching RM480,000. Meanwhile, Millennium Height as also in the league, up b 15.9%, ranging from RM427,000 to RM500,000. Taman Gaya, Taman Hotspring Jaya, Taman Kuhara Indah and Taman Serene in Tawau experienced marginal increase of 2.9% to 5.2%, transacted at RM400,000 and below. In Lahad Datu, similar unit noted increases ranging between 3.9% and 8.0% to fetch commendable range of RM260,000 to RM423,000.

2.1% to 10.4% depending on floor size and level fetching between RM143,000 and RM230,000 per unit. Condominiums are also on the uptrend in Kota Kinabalu. Marina Court commanded price at RM630,000 up by 13.5%. The residential rental market was equally stable with few exceptions. Rental of single storey terraces in Kota Kinabalu and Penampang fetched between RM500 to RM900 per month. In Tawau, similar units in Taman Hill Top and Taman Tawau noted significant increases of 16.7% and 23.1% to command good rental range of RM600 to RM800 per month.

260 255 210 200

180

190

210

250 215

200

190 150

180

100

2009

215

134

225

140

142

145

2012

2013

108

2010

2011

Taman Inanam Laut

Double storey terraces in Taman Sempeleng obtained good demand and drove the rental up by 13.8% to record at Rm650 to RM1,000 per month. On a similar note, Taman Friendship and Taman Pasir Putih saw higher increases of 33.3% and 53.8% ranging from Rm800 to RM1,2000 per month. In the high-rise segment, rentals were generally stable. However, apartment units in Grace Court attained monthly rental at RM700 to RM1,100, up by 13.6%. Apartments units in Taman Anugerah Tawau noted rental exceeding RM1,000 per month. In the commercial property subsector, double storey shops were the most sought after. In central town secondary Kota Kinabalu, double storey shops were transacted up to RM1 million depending on location. In Penampang, similar units fetching between RM700,000 and RM1.2 million. Three storey shops in Grace Square, Kota Kinabalu saw prices improvements of 11.7% to change hands at RM1.38 million. Four storey shops in Sandakan Harbour Square recorded price at RM1.45 million, up by 11.1%. Rentals of ground floor shop and office space in shops were generally stable. The central town prime areas of Kota Kinabalu continued to secure premium rentals of ground floor shops between RM3,000 and RM6,000 per month whilst in the secondary area, rental fetched at RM20,000 to RM4,3000 per month. Rentals of retail space in

2012

2013

Taman Tuan Huat

shopping complex and office space in purpose-built office remained stable. In the agricultural sub-sector, prices were generally stable. Main road frontage oil plan smallholdings in Tawau ranged from RM98,000 per hectare and 10 hectare transacted at the price range of RM61,980 to RM148,300 per hectare. In the primary residential market, there were 1,287 units of new launches, higher than 343 units launched in 2012. Of the total 574 units were sold, recording an overall sales performance of 44.6%, almost equal to the 2012 performance (44.9%). Condominium and apartment units formed the bulk of the launches (812 units). By location, Kota Kinabalu District had most of the new units, comprising primarily condominium/apartment and terrace units. The property overhang situation in the state was unfavorable. As at year-end, the residential overhang stood at 251 units worth RM149.31 million, up from 105 units worth RM34,62 million recorded in 2012. Conversely, the unsold under construction houses decreased by 11.7% to 2,207 units whilst the not constructed units declined 14.4% to 220 units (2012: 257 units). In the shops sub-sector, the overhang units increased by 9.8% but value dropped by 5.7% to record 180 units worth

50 2009

2010

Indah Court (KK)

RM67.45 million (2012: 164 units worth RM71.50 million). The unsold under construction ships were down by 9.1% to 209 units whilst the unsold not constructed recorded 64 units. The industrial overhang units increased tremendously from 7 units worth RM3.43 million to 79 units worth RM45.62 million. The unsold under construction shops was improved as the number shown from 93 units (2012) to 20 units in 2013. At the year-end of 2013, total retail spaces in the state stood at 532,782 s m of which 477,044 s m were taken up indicating an overall occupancy rate of 89.5%. the performance was slightly better than 85.3% recorded in 2012 with annual takeup also increased to 22,593 s m. the purpose-built office buildings decrease slightly to register an overall occupancy rate of RM88.8% (2012: 89%). Correspondingly, the annual take-up also took a downturn of 1,1783 s m. Vacant office space available in the market increased to 75,826 s m as compared to 74,043 s m in 2012, in the absence of new completion. The leisure sub-sector was encouraging as the three to five star hotels in the state recording an average occupancy level of 60.5%, higher than 54.5% achieved in 2012.

2011

Sentosa Apartment (Sandakan)

completions, starts and new planned supply. Shops also saw increase in completions and new planned supply but lesser starts. The numbers of industrial starts were more whereas completions and new planned were nil. The shopping complex and office sub-sector did not witness any new completion, starts and new planned supply. On the general outlook of the property market, prices of residential units in the state as expected to be in the upward mode in the next few years in selected locations. Selfcontained development and better accessibility in Luyang, Penampang, Damai, Likas, Jalan Lintas and Jalan Bundusan is expected to attract high demand. The planning of Tanjung Aru Eco Development as a premier tourism destination combined with residential, leisure and commercial in beachfront site spanning 260 hectares would provide significant impact to the property industry. Likewise, the development and activities from the Sabah Oil and Gas Terminal located in Papar and Beaufort is expected to spur property development as well as enhance market activities in the state.

The property development front generally strengthens. Residential sub-sector noted increases in

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/// Hot Topic

The Booming of Greater Kota Kinabalu

/// HOT TOPIC

in Penampang (leasehold; 90% take-up; average selling prices (ASP): RM360per sq ft), Taman Rimba phase 2 terrace houses in Bandar Sierra, Menggatal (56% at RM400,000 per unit), and Loft C at KK Times Square phase 2 in town (50% with ASP at RM900 per sq ft). The research firm also noted that there was a new trend where condos were becoming more popular with their variety of facilities and because they were more affordable than landed properties which had appreciated significantly in the secondary market. Influx of Foreign Interest

The construction of Kota Kinabalu convention centre begin in Tanjung Lipat with over 100,000 sqft of exhibition space

reater Kota Kinabalu refers to the urbanised areas surrounding the city of Kota Kinabalu which is fondly known as KK. The contiguous built-up urban agglomeration around Kota Kinabalu goes beyond the city boundary on the south side and into the districts of Penampang and Putatan, and to a lesser but growing extent into the districts of Papar (38 km t o the south) and Tuaran (34 km to the north). The term Greater KK is normally used by the state and federal government in relation to social and economic development planning and strategy such as the Sabah Integrated Coastal Zone Management, Sabah Economic Development and Investment Authority, Sabah Town and Regional Planning Department. Greater KK is also referred to as Kota Kinabalu Urban Area, Conurbation of Kota Kinabalu or Kota Kinabalu Metropolitan Area. Kota Kinabalu is the main business hub in Sabah providing higher order services with an international airport and a dedicated container port, making it one of the fastest growing cities in Malaysia. Promoted activities under Greater KK encompass investments in the services, tourism and transportation sectors, focusing on education and training, health and wellness tourism, the

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creative and leisure industry, waste management, real estate, hotels and resorts, integrated waterfronts, and Meetings, Incentives, Conventions and Exhibitions (MICE). Growing Population Based on historical growth rates of 2.42% and data from the Malaysian Department of Statistics, it is estimated that the population of Kota Kinabalu alone will reach nearly one million by 2020. Prime areas that are located within five kilometre of the city centre are very limited and a lot of these areas have to be redeveloped and upgraded as high density residential zones or mixed used zone. To fulfil the housing requirement and demand, the Kota Kinabalu City Hall (DBKK) wants to increase the population within the prime area. In 2013, the Sabah Housing and Real Estate Development Association (SHAREDA) concluded that due to the increasing cost of land, most landed property developments in Kota Kinabalu are moving out to suburban areas beyond 15km from the KK city centre. Many landed residential were developed in areas such as Kinarut, Tuaran, Pulutan Menggatal and Jalan Sulaman.

On the Rise By year 2030, DBKK aims to have 100,000 new residential properties to cope with the expected increase of population, plus replace transition houses or squatters and houses that are dilapidated and not fit for living. According to assistant director of the City Planning Department Stanley Chong, DBKK wants to encourage mixed used developments to help reduce the movement of traffic. They have identified areas such as Menggatal and Tepilok that is considered adequate in size for such developments. High rise developments are also going to be increasing and the biggest challenge will be to ensure that the infrastructures such as the roads, sewerage system, plus water and electricity supply are improved. Hwang DBS Vickers Research noted that there is strength seen in KK with new condo launches hitting RM600 to RM900 per sq ft and some breaching the RM1,000 per sq ft mark. The research house which conducted a site visit there noted that the peak pricing in the secondary market was RM1,400RM1,800 per sq ft. Launches in Greater KK also saw healthy take-ups, for example the Lido Four Seasons Residences

Sabah is currently facing rapid economic development, and this will make it an exciting and vibrant place for foreigners. The state has Kota Kinabalu International Airport, which is the second busiest airport in Malaysia. Tourist arrivals have been increasing each year to the point they almost doubled every four years. There is a young and growing population that is largely multilingual and fluent in English. Coupled with the multicultural diversity and hospitable nature of the locals, foreign investors will find Greater KK to be a very business-friendly environment. Developing Commercially In 2013, Kota Kinabalu experienced a momentous growth in retail malls with new launches coupled with ongoing developments in the suburban areas such as the Tuaran By-pass, Menggatal and Penampang. The mall culture gradually flourished with the intensifying number of upcoming complexes and it is expected that the market would experience a substantial increase in retail space supply and also stronger competition in the retail sector when all these developments are completed. The commercial and retail scene progressively moved towards the suburban areas with their captive catchment market along main roads due to the intense competition in the city centre. For instance,

Construction of Bandar Sierra along side Grand Merdeka Mall and Taman Rimba Grand Merdeka Mall in Menggatal is offering prices at RM136,000 per unit and retail units in suburban areas can fetch up to RM520 to RM1,00 per sq ft. A total of nine commercial property developments were launched in 2013 consisting of two to three-story shop offices. The selling price ranges from RM300 to RM500 per sq ft. The Kota Kinabalu Industrial Park

(KKIP) is also poised to be a regional distribution hub with the Asia Pacific Regional Distribution Centre. KKIP has to date attracted more than RM2.528 billion in investment value in various industry clusters, mainly from small and medium industries (SMIs). KKIP Sdn Bhd had developed 1,577 acres of the 4,005 acres of land gazetted to it. About 795

acres are currently in progress of being developed. That shows that almost 60% of the gazetted land area is under progress. The remaining 1,017 acres of land are reserved for future development. There are 260 entities currently in operation in KKIP, comprising 223 industrial clusters, 15 research and development and institutions, and 22 commercial entities.

Valley Monorail Transit System.”

Improved Infrastructure

Future Transformation

The Sabah government has been urged to focus on a monorail rather than the recently mooted tram public transport system for the city whose roads are rapidly reaching a state of gridlock. According to estimates, some 20,000 new vehicles are joining the traffic in the city every year and a more efficient public transport system than the current bus transport system in place is needed to reduce traffic.

The Economic Transformation Programme has provided a tremendous boost to the Sabah Development Corridor (SDC). The Entry Point Projects (EPP) identified to be implemented in SDC and Greater Kota Kinabalu will no doubt make an indelible impact on Sabah‘s economic performance and liveability, including in the real estate and property sector.

According to STAR Sabah chief Jeffrey Kitingan, “A monorail public transport system is a proven system. If not, there is no reason for the federal government to invest RM36 billion to build the Greater Klang

He proposed that the monorail system can link the Kota Kinabalu city centre to the various important centres bordering it such as Karambunai, Sepanggar, Donggongon, Putatan and others. The construction of such a monorail transportation system is guaranteed to boost the local economy, he said.

The projects, identified by the Corridors and Regional Cities Lab Programme, were launched in February 2012 to help align the regional economic corridors‘programmes with the government‘s ETP. These EPP with a target investment of RM77.5 billion by 2020, is expected to generate RM35.5 billion incremental gross national income and 140,000 jobs. Among the real estate and property projects under the EPPs are: Kota Kinabalu City Waterfront Development, Karambunai Integrated Resort City (KIRC), International Technology and Commercial Centre (ITCC), Sabah International Convention Centre (SICC), Ming Garden Hotel, YTL Resort Pulau Gaya, Jesselton Waterfront project, Aeropod and C Park. The total cumulative committed investment in SDC since its launching had been recorded at RM114 billion as of December 2012. SDC has attracted increasing amounts of new investments in the services, and especially tourism and the real estate and property sector. SP Setia for example is developing the Aeropod project in Tanjung Aru, which is opposite the Kota Kinabalu International Airport while PJI Holdings Bhd is developing a designer suites and hotel in KK. They have secured two contracts for a commercial property project along Jalan Tun Fuad Stephens valued at RM209.09 million.

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/// Special Feature

Development Milestones

/// SPECIAL FEATURE

Residential Projects Nearing Completion in Kota Kinabalu Jade Residence by Sara Timur Realty Sdn Bhd

Tropicana Landmark by Tropicana

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Corporation Berhad

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/// Feature Property Event

/// FEATURE PROPERTY EVENT

Manhattan Loft Malacca, Old World Charm with Modern Amenities

anhattan Loft Malacca is a freehold 35-storey mixed development project comprising hotel, Small Office Versatile Office (SOVO), retail lots and multi-level car park. It is located in the heart of Plaza Melaka town centre at the intersection of Jalan Gajah Berang and Jalan Hang Tuah. Inspired by its historic UNESCO World Heritage setting, Manhattan Loft Malacca is ideally positioned to take full advantage of the city’s classic old-world charm and combine it with stylish modern amenities. Manhattan Loft is a joint venture between Hong Leong Global Enterprises (HLGE) Limited and Heritage Hallmark Sdn Bhd. HLGE is a subsidiary of Hong Leong Group primarily engaged in the business of investment holding, property development and hospitality. Heritage Hallmark draws upon the wealth or experience and expertise of its major shareholders, Dato’ Chong Yoon On and Mr Lee Seng Khoon whose combined property development projects having a gross development value (GDV) exceeding RM9 billion. HOTEL Set amidst the city’s bustling district overlooking the Malacca River, Manhattan Loft is a haven of tranquillity to help you relax and rejuvenate the senses. The hotel features the option for a fully-furnished loft with thoughtful touches of luxury and a wide range of amenities such as 24hour concierge service, all-day dining restaurant, business centre, gymnasium and swimming pool. Its intelligent design maximises functionality and spaciousness with subtle cultural influences.

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RETAIL Manhattan Loft offers a unique retail experience with 3 floors of retail space that is convenient, accessible and packed with stores to satisfy your every shopping need be it for food, fashion or fun. SOVO Manhattan Loft features a unique SOVO space for businesses looking for the convenience of a central location within the town limits and easy access to hotspots around town. An open-plan concept starting from 450 sq ft and loft-style ceilings measuring 4.1 m floor-tofloor height create a space that is functional and comfortable. It is your own private retreat with a mix of elegance and style. The starting price of the loft SOVO unit starts from RM250, 000 for a 450 sq ft unit. A series of sales preview for Manhattan Loft was held in Kota Kinabalu (May 10 – 11), Kuching (May 18 – 19) and Sibu (May 24 – 25). The previews received encouraging response with investor commitments recorded for units of this exclusive property.

/// West Malaysia Property News

Danga Bay Boasts Wide Variety of Cuisine With Opening of 21 F&B Outlets

Another Chinese Developer Ventures Into Iskandar

WEST MALAYSIA PROPERTY NEWS

Grand opening: A group of performers playing music using rubbish bins during the launch of the Danga Avenue 1 commercial area in Country Garden Danga Bay in Johor Bahru

Sharing news and information about various issues related to the property industry from Peninsular Malaysia.

Danga Bay now has a wide variety of local and foreign cuisine on its menu after 21 F&B outlets set up base there. They offer a range of Japanese, Hong Kong, Taiwanese and Western dishes, and specialty brewed coffee.

Property Expert Faizul Ridzuan Meets Up With Datuk Rahman Dahlan Renowned property expert Faizul Ridzuan was involved in discussion with YB Datuk Abdul Rahman bin Haji Dahlan, the Minister of Urban Wellbeing, Housing and Local Government. Among key topics that were extensively discussed was how are more affordable homes created in Malaysia, as well as realistic and plausible ideas. Datuk Abdul Rahman bin Haji Dahlan who arrived to the meeting on his motorbike, spent half of his Sunday in discussion with Ridzuan. Ridzuan also commented that the minister was a very humble and down to earth person who is well dedicated to his government department.

Faizul Ridzuan and YB Datuk Abdul Rahman bin Haji Dahlan

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Visitors will be spoilt for choice with Chatime, Taang Shifu, Matterhon Western Food, Tea Garden, Station 1 Café, La Gourmet, “M” Espresso Sporting Club, I Love Yoo, KopiTan Classic, Kani Palace and Hong Kong Street Central. The outlets in Danga Avenue 1 are based within China-based property developer Country Garden Holdings Ltd’s commercial phase in its Danga Bay development. Country Garden regional vicemanaging director Jerry Chen said the opening of the commercial phase marked a huge milestone for the property developer.

He said Country Garden was also building a “Beer Street” modelled after Hong Kong’s famous Lan Kwai Fong Street dedicated to bars, restaurants and nightspots. Country Garden was also planning more up-scale development in Malaysia, after the Country Garden Diamond City in Kajang, which was in its final stage of planning, he said. Singapore’s MediaCorp artiste Thomas Ong, who came for the launch, gave the thumbs up to the integrated project. Besides man-made beaches, apartment units and clubhouse facilities, there are also sauna and gym facilities, tennis courts, playground and a yacht marina. The project includes 9,000 condominium units, shopping mall and a commercial boulevard with a gross development value of RM1.8 billion.

Guocoland Announce Profits of RM15 Million

Guocoland (M) Bhd announced a profit of RM15.70 million in the third quarter ended March 31 2014 from RM8.79 million a year ago, reported the Business Times. However, revenue fell to RM58.44 million from RM106.03 million previously.

The on-going project in PJ city and therefore the new launched development project in Damansara city attributed to the higher profit mainly to bigger profit of the company. It said the lower revenue was attributable to sale of land plots in Cheras amounting to RM68.6 million in the previous corresponding quarter.

Shanghai-based developer Greenland Group has agreed to buy 13.96 acres of land from Iskandar Waterfront Holdings (IWH) for RM600 million, which will be used for projects with a potential gross development value (GDV) of RM2.2 billion. This marks its first investment in Malaysia, whereby it will form a joint venture with IWH to transform the land into integrated project within five years. According to sources, the Chinese developer is also eyeing more land purchases in Iskandar at lower prices, despite a slowdown in the local property market due to the authorities’ cooling measures. “This is only the beginning for Greenland which is a stateowned enterprise” sources revealed. The developer is expected to conclude several additional land deals in the next few months, and these parcels will be utilised for

projects with GDV of more than RM10 billion. Based on previous report, the Chinese developer was interested in acquiring about 60 hectares in Iskandar. But very soon, it will finalise its acquisition of two additional land parcels close to the Permas Jaya township in Johor Bahru. IWH Managing Director Tan Sri Lim Kang Hoo said: “This massive influx of foreign direct investment is a boon for Malaysia and Johor because of the economic spillover and thousands of job opportunities that these projects will generate.” “We believe Greenland Group will pave the way for more China state-owned companies to invest in outstanding property projects in Iskandar Malaysia and IWH’s extensive waterfront landbank in Johor Bahru,” he added.

According to sources, the Chinese developer is also eyeing more land purchases in Iskandar at lower prices, despite a slowdown in the local property market due to the authorities’ cooling measures.

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/// West Malaysia Property News

Johor Identifies Nusajaya as the First Area to Have Free Connection

House Prices in KL, Johor and Penang Jump by More Than 30% in 2013

Explosive Growth Coming for Eco World shares to raise RM1.37 billion and a rights issue to raise RM788 million to fund the acquisitions and as working capital for its development activities.

Robert Kuok Buys Nusajaya Land for $74 Million With Confidence

It is also proposing a subscription of shares in Eco World by shareholders of Eco World Development.

Johor Mentri Besar Datuk Mohamed Khaled Nordin visiting booth after launching the Science, Infromation, Communication and Technology week Johor is going wireless this year starting with 100 hot spots within Iskandar Malaysia to offer free internet connections to users. Menteri Besar Datuk Mohamed Khaled Nordin said that the state government was currently talking with five local service providers to install wireless infrastructure in the hot spots. He said Nusajaya had been identified as the first area in Iskandar Malaysia to have the free WiFi installed at all state government and commercial buildings and public places. “We are going to make the announcement within the next one month on the successful service provider to undertake the project,” Mohamed Khaled said on Tuesday. He said this to reporters at the launch of the Johor Science, Information, Communication and Technology Week 2014 at Persada Johor International Convention Centre. Mohamed Khaled said focus would be given to the high density areas in the state in providing the WiFi services to users and gradually expand to least populated areas.

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He declined to give the names of five service providers which the state government was currently talking with except that one of them was Telekom Malaysia Bhd. “At the end of the day we want to make sure that there will be good and efficient internet penetration in the urban and rural areas in Johor,” said Mohamed Khaled. Separately, he said that Telekom Malaysia had allocated RM32 million to provide the high speed broad band (HSBB) infrastructure in Iskandar Malaysia and RM10 million for the Pengerang oil and gas hub. He said it was important to provide seamless and improve the HSSB connectivity in Iskandar Malaysia and Pengerang due to the high impact economic activities taking place in the two economic growth corridors. “Apart from good infrastructure layout such as electricity and water, investors will also look at the good internet connectivity before decided to invest in certain areas,” said Mohamed Khaled.

Kuala Lumpur, Johor and Penang saw average residential property prices increase by more than 30 percent last year, according to the Property Market Report 2013 by the Valuation and Property Services Department (JPPH). Specifically, average residential property prices in Johor rose 39.92 percent to RM275,854 in 2013 from RM197,147 in 2012. Kuala Lumpur posted an average increase of 37.66 percent while Penang recorded an increase of 31.45 percent. Overall, the Malaysian property market posted moderate growth which saw values increase marginally by 6.7 percent, on the back of a 10.9 percent contraction in volume. In 2013, 381,130 transactions worth RM152.37 billion were recorded compared to 2012’s 427,520 transactions worth RM142.84 billion.

Deputy Finance Minister Datuk Ahmad Maslan, said, “The residential sub-sector retained the lion’s share in the property market, contributing 64.6 percent share in volume and 47.3 percent in value. The year registered 246,225 residential property transactions worth RM72.06 billion which reflects a contraction of 9.7 percent in transactions and increase of 6.3 percent in value against 2012.” For this year, Ahmad Maslan expects house prices to continue to increase, albeit not drastically, “while the number of transactions may be stable.” He noted that the implementation of the Goods and Services Tax (GST) in April next year may result in a slight uptick in house prices. “When GST is implemented next year, we don’t see house prices increasing too much because the buying, selling and renting of residential properties are not taxed,” explained Ahmad Maslan.

Overall, the Malaysian property market posted moderate growth which saw values increase marginally by 6.7 percent, on the back of a 10.9 percent contraction in volume.

Chang said following the completion of this exercise, Eco World will become a property player for all sectors.

ECO World’s show gallery in Johor Bahru

“We will have affordable homes, semi-detached and terraced houses, bungalows, high-rise residences, townships, commercial centres, and business and industrial parks,” he said at a media briefing here, yesterday.

Robert Kuok, chairman of Kerry Group Ltd., holds a trophy during the 2012 CCTV China Economic Person of The Year award South East Asia’s richest man Robert Kuok, with Malaysian sovereign wealth fund Khazanah Nasional, has bought land in Johor’s Iskandar Malaysia for a mixed development project.

Development, to buy 5ha of land in Puteri Harbour, Nusajaya - the epicentre of Iskandar Malaysia - from UEM Land.

ECO World Development Group Bhd will emerge as among the country’s top 20 developers, with 1,793ha land generating RM43.53 billion in gross development value (GDV), following a corporate exercise.

Eco World is proposing to acquire the development rights to eight projects, with a combined GDV of RM30 billion, from the subsidiaries of Eco World Development Sdn Bhd.

The company, which is controlled by former executives of SP Setia Bhd, announced a corporate exercise yesterday that comprises two components - proposed acquisition and proposed funding.

It also plans to acquire two units from Eco World Development, namely Eco World Project Management Sdn Bhd and Eco Macalister Development Sdn Bhd, which owns an investment property in Penang.

Its president and chief executive officer Datuk Chang Khim Wah said the exercise would conclude in October and help to raise the company’s market capitalisation to about RM3 billion.

Chang said the net consideration for the eight projects was RM1.77 billion.

The timing of Mr Kuok’s investment could be telling in terms of whom he may be supporting.

The 90-year-old Mr Kuok, who lives in Hong Kong, controls the world’s largest palm oil firm Wilmar, which is listed on the Singapore Exchange. He also owns luxury hotel chain Shangri-La.

It is understood that the market value of the land for the eight projects, which totals more than 1,200ha, is RM3.78 billion.

Many Malaysian tycoons and businessmen prefer to wait and see, given election jitters. But not Johor Baru-born Mr Kuok.

The latest move is a shift from his previous manoeuvrings to cut his exposure in Malaysia and expand abroad.

Eco World currently has 536ha with a GDV of RM13.49 billion, and three projects in hand.

Eco World plans to issue 806.84 million new

Chang also said the corporate exercise would not affect the company’s performance in the financial year ending October 31. “This exercise will allow us to achieve explosive growth for the next eight to 10 years as we integrate all the development projects of the unlisted entity into the listed company,” he said.

Mr Kuok’s latest move to buy and develop two parcels of land in Nusajaya, Iskandar, for RM182 million (S$74 million) comes less than two weeks before the May 5 election. Nusajaya is a state seat under Gelang Patah, where the contest between outgoing Johor Menteri Besar Abdul Ghani Othman and opposition veteran Lim Kit Siang is being regarded as a battle for both the state and Malaysia.

“The project by Southern Marina will comprise highrise residential and retail/ commercial units at the waterfront location with views of the marina and Strait of Johor,” said UEM Land and Southern Marina in a joint statement. The development will have a gross floor area of over two million sq ft, and an estimated gross development value exceeding RM1 billion.

His flagship Kuok Brothers Group and Khazanah have set up a 70:30 joint venture company, Southern Marina

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/// West Malaysia Property News

Questioning the Sustainability of China Developers in Iskandar coming to this part of the world because of weak demand in their own country and to position themselves as being able to offer their customers properties overseas.

Property Transactions Dip, but House Prices Continue to Rise (-34.4%), Labuan (-33.9%), Penang (-23.9%) and Selangor (-14.3%). By market share, Selangor outpaced the other states, contributing to 26.1% of all residential transactions. Johor was next at 13.7%, followed by Perak, Penang and Kedah.

But Malaysia has imposed restrictions on foreigners buying properties that are only above RM1 million, meaning US$300,000 and above for buyers from China. Country Garden show gallery in Danga Bay Even before the physical presence of the property developers from China can be seen in Johor Baru, the psychological impact the builders have on the industry as a whole in Malaysia is already being felt. The fear of developers from China flooding the market with their largescale development is real among property developers, not only in Johor Baru but also the country at large. This is because all the big boys of the property sector have a presence in Johor Baru, or Bandar Iskandar. Without a project in the southern tip of the peninsula, a property developer is not considered to have “arrived”. That is the clout that Johor Baru commands, thanks to the initiative of the federal government to make Iskandar Malaysia the thrust of its development of the southern economic corridor. The might of the China developers was well displayed when Country Garden Holdings Ltd launched 9,000 apartment units in August, of which 6,000 were taken up within two months. The Malaysian market is not used to developments of such a scale, for sure. What now that the property market is already softening in Iskandar Malaysia? The latest launch in Puteri Harbour by a Singapore-based developer saw a booking rate of only 25%, according to a report by a business weekly. Puteri Harbour is about the most strategic of locations in Bandar Nusajaya, which is the hub of

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Iskandar Malaysia. It faces the Straits of Johor and is near the second link connecting Malaysia and Singapore. Some 18 months ago, sales were brisk in Puteri Harbour, with prices transacting at around RM700 per square foot (psf). The latest project launched by Pacific Star Development Pte Ltd is being marketed at between RM1,300 and RM1,600 psf. Property agents feel that the pricing is the reason for the poor take-up rate. The view of most developers is that as long as the developing company has the ability to hold on to the property, it will be sold eventually. The critical factor is that the developer has to have deep pockets to weather periods of slowdown. In this respect, there is a view that developers from China indeed have deep pockets and would be able to hold on to their projects and continue to develop them even if demand is poor. Lastly, the developers from China are not dependent on buyers from Malaysia but from their country itself, where there is supposedly still strong demand from a select group of investors. Put in a nutshell, the presence of developers from China is projected as not having any adverse impact on the local property market. Is this really going to be the case? Closer scrutiny, however, suggests that it may not really be the case after all for several reasons. Firstly, there is a property slowdown in China impacting all developers there.

It is already being reflected in the share prices of the likes of Country Garden and Greenland Hong Kong Holdings Ltd, which have lost more than 40% of their market capitalisation in the last six months. Property prices are stable in the tier-one cities and showing little weakness in tier-two cities. But in tier-three and tier-four cities, there is a massive oversupply of properties and prices are coming down. Funding for developers with projects in the least-preferred cities has practically stopped, and authorities are looking at ways to ensure that new supply slows down and existing projects are completed. The slowdown in the property sector in China has a spiralling effect on the economy as a whole. In the past decade, the property sector has grown 10-fold in China and played a big role in keeping its economic growth vibrant. According to Moody’s Analytics, the construction of apartments accounts for some 23% of China’s economic growth. Apart from keeping the industries growing, the proceeds from the sale of land is one of the major income earners for local authorities. Now, new land sales are being transacted at lower prices compared to previous years. This has allowed new developers to price their products cheaper, putting investors of older developments in a spot. House buyers are already complaining of new projects coming in at cheaper prices, causing an erosion in value of existing projects. The developers from China are

With prices in China falling and the yuan depreciating, would buyers from China be attracted to properties worth RM1 million and above in Johor Baru? Wouldn’t the buyers be able to find bargains in China itself, given that the prices there are already falling in the less-preferred cities? Finally, funding for developers from China for their overseas projects is also taking a beating. Because it is difficult to take money out of China, developers use offshore companies to raise debt that are backed by the financial resources of the onshore company. The arrangement is called the “keepwell” agreement, where the onshore company backs up the debt with a promise to inject liquidity or buy up the bad assets. The lenders to the offshore companies are foreign investors.

Allow DIBS for First-Time Home Buyers: REHDA

The various cooling measures on the property sector dampened transactions last year, with the volume of properties bought and sold dipping by 10.9% from 2012, even as total value rose 6.7%, a sign that prices did not come down. According to the Property Market Report 2013 released by the Valuation & Property Services Department, there were 381,130 transactions in the country in 2013 compared with 427,520 the year before, although their value climbed to RM152.37 billion from RM142.84 billion.

But increasingly, the foreigners are not lending to offshore companies or seeking higher rates for loans because of the fear of defaults.

The all house price index edged up to 192.9 against 172.8, and all house prices to an average of RM266,304 from RM241,591.

History has shown that foreign developers tend to flock back to their homeground when there is a slowdown.

The residential subsector retained the lion’s share of the market at 64.6% of volume and 47.3% of value.

The Middle East developers came in a big way when Iskandar Malaysia was being promoted prior to 2008. They prided on having an abundance of oil money and being able to splash it around in Iskandar Malaysia, come what may.

This was buoyed by the prevailing low interest rate environment on the back of a base lending rate of 6.53% and weighted average lending rate of 5.4%.

However, when the property bubble in the Middle East burst, they dropped everything in Iskandar Malaysia to consolidate their positions in their home country.

Last year saw 246,225 residential property transactions and worth RM72.06 billion, which declined 9.7% and rose 6.3%, respectively.

So, why wouldn’t the developers from China do the same?

There was a slight decrease in the sales of new launches

but the number of overhang properties also dipped. In the primary market, new launches shrunk after three consecutive years of growth, with 48,617 units of new launches rolled out from 57,162 in 2012. Some 45.1%, or 21,904, of these units were sold. Five states exceeded the national average take-up, of which three – Putrajaya, Selangor and Pahang – surpassed the 55% mark. In terms of units launched, Johor, Selangor and Perak topped the list with 20.9%, 13.5% and 11.85 of the national total. Terraced units made up the bulk of the new launches with 47.8% comprising 9,080 single-storey terraces and 13,273 two to three-storey units. Condominiums and apartments contributed 19.1% or 9,265 units. The sales of both these categories stood at 50.9% and 44.8%, respectively. In terms of value, the Valuation Department said most states saw a downturn in market activity save for Johor, which grew by 16.6%. Transaction volumes in Putrajaya fell the most by 41.7%, and Kelantan 34.6%, a reversal of its 93.6% growth in 2012. This was followed by Kuala Lumpur

In terms of value, only Kuala Lumpur saw a contraction in value of 9.7%. Johor posted the best growth of 63.2%, Selangor grew 2.8% and Penang saw no growth. Perlis, however, shot up 80.7% from the previous year. The report said the different market segments as measured by price indicated a divergent scenario. Transactions in the lowerprice range softened last year. Compared with 2012, the market activity of homes in the RM100,000 to RM150,000 and RM150,001 to RM200,000 bracket fell 26.6% and 17.9%, but the RM250,001 to RM300,000 range climbed by 23.2%. Houses priced between RM100,001 and RM300,000 were the most active, capturing the largest share of the market at 42.9%. Housing approvals fell sharply by 22.5% from an expansion of 47.4% in 2012, while total loans disbursed for the purchase of residential properties increased to RM74.4 billion from RM64.1 billion. Deputy Finance Minister Datuk Ahmad Maslan told reporters after the launch yesterday that the goods and services tax, which comes into effect next April, was not expected to raise house prices significantly as the tax was exempted on the home itself.

Datuk Jerry Chan The government should reinstate the Developers Interest Bearing Scheme (DIBS) for first-time buyers, according to The Real Estate and Housing Developers’ Association (REHDA) Penang Branch. Apart from making it easier for legitimate buyers to acquire a roof above their heads, the scheme is very helpful to first-time buyers, especially for those who are struggling to pay the mortgage of their uncompleted property as well as the rent of their temporary shelter at the same time, explained Branch Chairman Datuk Jerry Chan. Moreover, banning DIBS in order to stamp out speculation should not be done at the expense of genuine buyers, he said.

Meanwhile, Chan’s company Asas Dunia Bhd has teamed up with the state government of Penang to sell 104 affordable homes at Taman Sungai Duri Permai, South Seberang Perai. These units will be offered to those registered with the State Housing Department under a pilot shared ownership scheme (SOS), noted Chief Minister Lim Guan Eng. Under this scheme, buyers will only have to worry about getting a loan for 70 percent of the RM38,000 price, while the state government will provide the balance at zero interest.

Notably, the scheme was banned under Budget 2014 as it has led to spiralling property prices. This is because speculators only need to fork out a low downpayment thanks to it, and then they can sell the completed home for a quick profit.

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/// Contributor

The Rise of the High-Rise

Housing offer and current/estimate demand

W Dr. Daniele Gambero

CEO and co-founder of REI Group of Companies Dr. Daniele Gambero is the CEO of strategic marketing consultancy firm REI Group of Companies. He holds an MBA from L. Bocconi University in Milan-Italy, Master in Communication from the University of Michigan Ann Arbour MI – USA, Ph.D in Marketing Strategies and Communication from L. Bocconi University and University of Michigan. With his vast experience in strategic marketing consultancies, investment studies, researches, property market reports and business valuation globally, the REI Group of Companies helps Malaysian developers with business solutions relating to design, concept, strategic marketing and pricing, advertising and marketing and sale procedures for their residential, commercial and industrial projects since 2007.

hen I give presentations on the Malaysian Property Market I always talk first about the main driver that justifies the balancing between offer and demand, the economic current performance and outlook of the Country. This is a concept that has to be very clear for both developers and purchasers. Real Estate is not an economic driver or, we can also say, it is not the cause of the economic growth of a Country. It comes in as a logic and natural consequence of the economic development of the Nation. Economic drivers are manufacturing, services (such as financial services, high quality health services supply – i.e. properly developed third age healthcare system and so on), education, tourism and O&G. Malaysia has been kept on performing pretty well in the past decade and the outlook for the next several years remains positive as all the indexes are showing ample room for improvement. By looking at a steady growth of the economy and comparing some of the indexes with other fully developed economies in the world Malaysia should be proud of the achievements and look at the future in an optimistic way as there is still plenty of room for improvement (Chart 1). USA

JAPAN

AUSTRALIA

MALAYSIA

2.52%

0.12%

0.65%

4.70%

Gov. Depth as % of G DP

101.60%

90.60%

91.10%

226.1%

20.7%

53.10%

Gov. Deficit as % of GDP

-4.10%

-3.7%

-7.40%

-9.6%

-3.00%

-4.50%

Balance of Current Acc in USD Billion

-360.7

-34.5

-93.6

56.6

-44.9%

16.6

GDP GROWTH

Inflation

1.5%

2.7%

0.2%

2.4%

3.2%

Unemployement

7.3%

10.8%

7.7%

4.1%

5.7%

How this applies to Iskandar Malaysia is easy to say. In the last 8 years IRDA has been able to attract more than RM133 billions of committed investment within the 9 economic cluster defined by the 2005-2025 Comprehensive Development Plan. As we speak more than 55% of this has been already realized (Charts 2 and 3). Good to be underlined is that 65% of the amount above has been generated locally with a mere 35% coming from oversea. Looking at a possible 2020 outlook we can find very positive signals coming from our neighbor Singapore. The recent state visit of the Singaporean PM and his speech in Putrajaya are confirming the very high interest that Singapore has into Iskandar Malaysia not from a “property-speculation” point of view but more as an “industrial and manufacturing facilities supplier” with the big plus of attractively valued skilled labor cost. The results of a recently conducted “public opinion survey” are highlighting how little the Iskandarians are aware of the IRDA’s growth achievements.

9 ECONOMIC CLUSTERS

Food and Agro Processing

Petro & Oleo - chemicals

Electrical & Electronics

Education Services

Logistics

Tourism

Financial Services

Creative Industries

Health Services

Source: IRDA IMMF Forum

INVESTMENT UPDATE 2006 - OKTOBER 2013

ISKANDAR

REGIONAL DEVELOPMEN AUTHORIT

Committed and Realised Investment Year-On-Year

RM’Bil 140.00

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This trend will guarantee a prompt takeup of properties in the range as above which are representing the backbone of a healthy property market. For sure the last 24 months have seen the property market in Iskandar Malaysia gain a tempo that appears to be not sustainable.

Again, we need to look into real numbers. Even though it appears that too many high end un-affordable projects have been launched, by comparing the numbers in the chart below we can see that also houses more reasonably priced and low / medium-low cost flats will be abundantly supplied. If we consider that the biggest number of units in one single project is 9,600 dwellings in the Country Garden Danga Bay and we even multiply this number by 3 (other projects are normally launching less than 500/700 units each) we still have more than 70,000 houses that are not highly priced (Chart 4 sourced at Napic and further elaborated by REI Group Research division).

129.42

120.00

106.31

100.00 80.00

84.78 69.48

60.00

39%

40.00

41% 44% 37.75

44%

56.32 43.70

27.70

20.00 0.00

2010

2011

2012

The local authorities and in general all the stakeholders of Iskandar Malaysia should be looking with concerned eyes at this and provide better and more spread information. Let’s talk about Pinewood Studios and the collateral business and economic growth that it has been and will be generated. Making a movie is not only matter of superstars but an inducted army of hundreds of professionals and general workers are normally involved (i.e. carpenters, make-up specialists, tailors, F&B, accommodation, transportation just to mention few). Most of the committed investments above are having the same “collateral added value” with IT, logistic, specialized and skilled labor demand that is and will keep on being constantly on the rise.

How is the outlook can be looked at is easily understandable from the chart 5 below which shows estimates of actual needs of houses (estimates have been calculated using very conservative parameters

is consistently moving towards cities/urban areas with a stable 3.5% ratio (on the total Malaysian population) per year. This means that we will really see Klang Valley hitting an estimate 10 million inhabitants as far as Iskandar Malaysia reaching the expected 3 million residents by 2025 (Johor State almost 5.5 million).

Demographic growth and wealth distribution are also extremely important factors when the time comes to make decision on purchasing a house for either investment or own use.

Wealth distribution wise the statistics are showing how Malaysia has improved consistently towards the current 20-5/60-58/20-37.

We also need to consider that the Malaysian rural population

PER CAPITA INCOME STATISTICS 2012

EXISTING STOCK AND SUPPLY OF RESIDENTIAL UNITS BY TYPE IN JOHOR

Dr. Gambero’s lectures attract large crowds due to his lively presentation of serious topics with deep insight into the Malaysian Property market since 2011.

While the author makes reasonable efforts to present information which he believes to be reliable, the author makes no representation that the information or opinions contained in this article is accurate and complete. Readers are advised to seek specific professional advice before acting on the views.

Having said that we can now look into what has happened in Iskandar Malaysia from a property point of view but again, let me stress it, let’s not look at today but at three to four years from today! We cannot wait for the new residents to come in and only at that point look into a “provisory accommodation” solution while everybody will be running to supply houses whose prices, because of the basic rule of demand and offer, will skyrocket at even more unaffordable levels.

Demographic growth-migration and wealth distribution

GDP per Capita at current prices

State

2009 RM

2010 RM

2011 RM

2012 RM

State Population in 2012

GDP @ const prices

114,106

Single 2, 3 Storey Terrace

Single 2,3 Storey Semi- D

Bungalows and Cluster

Low Cost House and Flat

Condominium Service App and Soho

Total

Kuala Lumpur

57,040

62,075

68,072

73,931

1,768,680

337,129

42,816

89,784

191,695

31,482

692,906

Pulau Pinang

30,098

33,601

35,188

37,006

1,664,640

52,530

Completions by 2015

7,569

779

825

174

924

10,271

Selangor

30,098

31,457

33,727

36,135

5,826,240

176,239

Incoming supply by 2015

41,918

8,035

5,059

25,815

19,516

100,343

Malacca

25,397

28,328

31,093

33,550

832,320

21,953

Starts by 2020

9,767

2,334

1,540

362

6,918

20,921

25,595

28,586

31,295

32,511

1,040,400

27,717

Planned supply by 2020

73,689

9,119

8,644

42,012

19,099

152,563

Negeri Sembilan

New planned supply by 2020

9,643

2,026

2,151

558

10,029

24,407

Johor

18,878

21,329

23,593

24,574

3,537,360

68,791

Sabah

15,515

17,118

19,038

19,010

3,537,360

44,434

Johor State

Existing stock 2012

TOTAL PER TYPE BY 2020

652,827

260,616

87,968

1,001,411

How is the outlook can be looked at is easily understandable from the chart 5 below which shows estimates of actual needs of houses (estimates have been calculated using very conservative parameters) ESTIMATE NEED OF HOUSES BY 2015 AND 2020 TOTAL JOHOR POPULATION AS AT 2012

3,586,461

CURRENT DEMAND OF HOMES ( 3.5 members per household )

1,024,703

AVAILABLE STOCK AS AT 2012

692,906

CURRENT NEED OF HOUSES as at 2012

331,797

TOTAL JOHOR POPULATION AS AT 2015 ( Est +3.5% yr ) ESTIMATE DEMAND OF HOMES IN 3 YEARS TIME (3.5 members per household) INCOMING SUPPLY BY 2015 ( Inclusive of existing stock )

3,976,374

2012 RM Million

The real affordability Defined as we have the average per-capita income state by state with the next table we see how different at the end must be the perspective and mind set of lawmakers, buyers and developers when addressing the affordability issue and the results are opening the door to a new and interesting scenario for state rulers, developers and eventually investors (Chart 8). PERSTATE AFFORDABILITY VALUES 2012

State

1,136,107

GDP 2012 per Capita at current prices

State by state (est) Population in 2012

Yearly RM

Monthly RM

35% monthly incomeLoan repayment RM

Affortable house value ( 30 yrs loan @ BLR -2.3 4.4 % ) Per capita RM

Per household RM

ESTIMATE NEED OF HOUSES BY 2015

803,520

Kuala Lumpur

1,718,680

73,931

6,161

2,156.32

480,000

720,000

TOTAL JOHOR POPULATION AS AT 2020 ( Est +3% yr )

332,587

1,654,640

37,006

3,084

1,079.34

240,000

360,000

ESTIMATE DEMAND OF HOMES BY 2020 ( 3.5 members per household )

Pulau Pinang

4,722,685

Selangor

5,626,240

36,135

3,011

1,053.94

240,000

360,000

INCOMING SUPPLY BY 2020 ( Inclusive of existing stock and supply by 2015 )

Malacca

832,320

33,550

2,796

978.51

220,000

330,000

1,349,338

Negeri Sembilan

1,040,400

32,511

2,709

948.24

220,000

330,000

Johor

3,337,360

74,574

7,048

716.74

160,000

740,000

Sabah

3,437,360

19,010

1,584

554.48

125,000

187,500

INCOMING SUPPLY BY 2020 ( Inclusive of existing stock and supply by 2015 )

1,001,411

ESTIMATE NEED OF HOUSES BY 2020

347,927

2013 (OCT)

Committed Investment Realised Investment

Note: Percentage is a committed against realised investment (RI/CI)

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Two explanations on how these values have been calculated: The monthly loan repayment takes into consideration the newly revised, by Bank Negara, rules on DSR (Debt Servicing Ratio) and some average commitment that every household normally has while the step from “per capita” to “per household” uses a 1.5 ratio only considering both couple’s commitments and normal differences in payout between husband and wife. I hope these numbers will help all readers to better understand the meaning of affordability and how it differs on a nationwide basis. These values are median and if we look at Johor state and try to extrapolate real values for Iskandar Malaysia, looking into the major economic developments

that the “special region” has been going through my personal take is that affordable values should be look at as included between RM200,000 and maximum RM450,000 or, if you prefer RM250 to RM450 psf looking at livable spaces of 850 to 1,100 sq.ft. Maybe I’m wrong but, that I’m aware of, there are several development projects which are offering livable houses within these values. For sure purchasers shouldn’t be looking for their dreamhome nearby Danga Bay or in JBCC but widen up north and east their range of search in what I define as the Iskandar Malaysia Affordable Corridor of growth (Chart 9).

Maybe I’m wrong but, that I’m aware of, there are several development projects which are offering livable houses within these values.

Property Developers Planning Further Price Hikes

‘40% Gap Between Affordable Housing Supply and Demand’ According to Napic data since 2011, house prices has risen between 9.96% and 12.3% annually on average. Kuala Lumpur has the most expensive houses with house prices averaging at RM534,216 per unit in 2012. Sabah and Selangor follow with average per unit prices of RM382,160 and RM374,815 respectively.

Potential home buyers hoping that the cooling measures introduced by the government which have put the brakes on the residential property sector, will result in lower prices of new property will be sorely disappointed. Far from lowering prices, a Malaysian Institute of Economic Research (MIER) survey shows that 53% of the builders surveyed plan to hike property prices in the second quarter (Q2) while the rest say they will not raise or slash their prices anytime soon. With higher cost of construction translating into higher home prices, MIER says the survey shows the respondents who raised prices of their residential property in Q1FY14 have risen sharply to 47% from 23% in the previous quarter. For the third consecutive quarter, no respondents lowered prices of their residential property in Q1. Despite a slowdown in sales of residential property, construction of homes is likely to gather momentum with 47% of the respondents indicating they plan to build more houses soon.

‘Loose purse strings contributed to house price surge’

The mismatch between affordable housing supply and demand in the country stands at 40% difference, says Housing Minister Abdul Rahman Dahlan. Quoting data from the Department of Statistics Household Income Survey 2012, Abdul Rahman said that approximately 80% of Malaysians earn below RM6,954 per month, and that this group can only afford houses priced at RM300,000 and below based on the credit line of 30% of net income at the current base lending rate (BLR) of 6.6%. In comparison, National Property Information Centre (Napic)’s 2012 report stated that only 31.7% of all new housing units launched were priced below RM250,000, said Abdul Rahman. “This shows that there is imbalance between the demand and supply of houses towards the right target group in Malaysia.” “There still exists a serious gap of about 40% between the provision of affordable housing below RM300,000 compared with the demand,” said Abdul Rahman. “Of concern is the fact that income growth has not been keeping in tandem with (rising house prices).”

Credits and sources: Napic Property Market Report 2011 and 2012, Government Department of Statistics (Household income and basic amenities Survey Report 2012), IRDA, REI group Archives, Ho Chin Soon Research maps Dr. Daniele Gambero, CEO and co-founder of REI Group of Companies, gives presentations on the property market and welcomes feedback at: Daniele.g@reigroup.com.my

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Abdul Rahman added that affordable housing accessibility has become a more critical problem among the middle income group, which is why the government has introduced the 1Malaysia People’s Housing Program (PR1MA).

The minister also touched on the current regime of low interest rates which has made housing loans particularly attractive, in turn leading to growing numbers of property investors. “The introduction of easy home financing has brought home ownership entry costs to an all-time low,” said Abdul Rahman. “Some developers have introduced schemes such as developers interest-bearing scheme (DIBS).” Abdul Rahman noted that through the DIBS scheme, buyers do not need to fork out significant capital to purchase property, and instead only need to pay their deposits before waiting for their house to be completed before selling them for a hefty profit. “Besides, financial institutions also have been willing to finance residential mortgages because such loans are typically viewed as low-risk, but this loosening of the purse strings has undoubtedly contributed to the rapid increase in house prices,” said the housing minister. More curbs to come?

need for better government intervention and policies,” said Abdul Rahman. Is rising debt a concern?“Moving forward, the government would not hesitate to further tighten the fiscal policies in order to curb property speculation and ensure reasonable and affordable property prices in the country,” said Abdul Rahman, adding that state governments and developers should also play their part. “There is a need for both the government and developers to collaborate in creating a healthy and sustainable housing and property sector,” he said, adding that “the winners should include property owners, property developers and the local economy.” “Currently, most state governments only impose a certain quota for low-cost housing, and even this in many instances is not strictly enforced,” commented Abdul Rahman, adding that more can be done. The housing ministers also suggested that state governments impose affordable housing quotas according to their needs while reducing the low-cost quota. “For example, there can be a 20% quota for low-cost housing and a 20% quota for affordable housing,” he said. “These quotas should be imposed based on the current demand in specific areas.” Abdul Rahman was speaking at the 16th National Housing and Property Summit 2013.

In addition to previous fiscal policy tightening by the government by way of stricter lending guidelines and 70% financing margin cap on third house purchases onwards, the housing minister hinted that more measures may be needed. “To overcome this problem and ensure the sustainability of the housing sector, there is a strong

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/// Hot Topic

INVESTMENT UPDATE 2006 - OCTOBER 2013

/// HOT TOPIC

How Sustainable is Iskandar Malaysia?

ohor is predicted to be the richest state in the country supported by investments brought upon via Iskandar Malaysia by 2025. Due to high potential in the area, an immense amount of promotion activities by the Malaysian government has been conducted to promote this project to Malaysians. The Johor gross domestic product (GDP) in 2005 was recorded at USD20 billion is expected to increase up to USD93 billion in 2025 thanks to the Iskandar Malaysia project with a GDP per capita growth from USD14,790 in 2005 to USD31,000 in 2025. It is also set to push employment rate from 0.610 million in 2005 to 1.428 million by 2025. Even areas such as Nusajaya are slated to be a key driver of the Iskandar Malaysia project and the largest fully integrated urban development in Southeast Asia. Iskandar consists of commercial and residential developments with a multitude of niche business endeavors. Three times the size of Singapore, Iskandar is set to be a modern metropolis buzzing with economic activity, a conglomeration of various exciting growth sectors, including nine key economic clusters: financial advisory and consulting, creative industries, logistics, leisure and tourism, education, health care, electrical and electronics,

petrochemical and oleo-chemical, food and agro-processing. Among the key areas that are being developed at Iskandar includes government sector (Kota Iskandar), high-end living (Puteri Harbor), industrial parks (SiLC Nusajaya), health (Afiat Healthpark), education (EduCity Iskandar Malaysia), mixed used development (Medini Iskandar Malaysia), recreation (Legoland) as well as film production (Pinewood Studios). Leveraging on Proximity to Singapore To further add value to Iskandar, the KL–Singapore high speed railway is set to have a station located at the new township to increase the human traffic flow which will ultimately boost the spending in Iskandar. Iskandar is overflowing with potential that is already benefiting the early movers there. The cost advantage as compared to Singapore has lured a multitude of investors from the small island nation and the added tax incentive is set to make Johor grow faster than Penang. It is currently the only township that is implementing the modern metropolis concept the moment you step in the area. Singapore Prime Minister Lee Hsien Loong said Iskandar Malaysia is a strategic place to boost Malaysia’s competitiveness in the global market

Cumulative Committed Investment by Sector

INVESTMENT UPDATES

Finance 0.60 Education 1.56

Creative 0.40 Cummulative Committed Investment Year-On-Year

140.00

Utilities 12.64

129.42

130.00

8.31

120.00

106.31

110.00

7.31

100.00 90.00 80.00

55.56

60.00

41.76

50.00 40.00

0.00

6.83

25.80

30.00

10.00

6.28

69.48

70.00

20.00

33.66

11.30

8.17 5.05

5.80 7.10 1.00

5.80 5.50

11.90

2006

2007

Manufacturing

6.28

41.78

19.98 14.45

9.11

23.65

2008

2009

2010

PropertiesG

31.22

2011 overnmentC

Committed Investments : (2006 - Oct 2013) Realised Investments :

RM129.42 bil

Main Contributor

Manufacturing (35%)

Retail Property 9.45

35.07

2012

2013 (OCT)

RM156.32 bil (44%)

Utilities 12.64 Government 8.31 Industrial 6.20

Promoted

ommitted Investment

In RM’ Bil

Emerging Technologies 1.03

Industrial Property 6.20

45.68

21.70

Emerging Technology 1.03

Manufacturing 45.68

28.79

16.52

26.92

Others

35.14

27.30

21.83

6.28

Residential Property 33.66

Government 8.31

84.78

Healthcare 2.59 Creative 0.40 Tourism 2.50 Education 1.56 Finance 0.60

Manufacturing

35%

Services - Services subsectors

65% 10%

Government

Real Estate (residential)

26%

Utilities

10%

Others

11%

Non-Promoted Sector

Manufacturing

35%

Residential Properties

26%

Logistic

Utilities

10%

Healthcare

Retail

Tourism

Government

Education

Industrial

Creative/Finance

Emerging Tech

and help Singapore maintain its economic competitiveness by integrating two economies and complementing each other.

Manufacturing 45.68

Logistic4 .81

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Healthcare 2.59

RM’ Bil

Residential Properties 33.66

Logistic 4.81

Tourism 2.50

Committed Investments (2006 - Oct 2013)

Retail 9.45

The tallest residences towering at 70 storey high, Astaka will have a private tunnel to Woodlands CIQ for residence use

In RM’ Bil

He said Malaysia and Singapore agreed to develop Iskandar Malaysia comprehensively to create jobs, attract investments and to have an organic, comprehensive, dynamic, centre of economic vitality in Johor, which would benefit Malaysia and Singapore. “Singapore’s Economic Development Board and Malaysian Investment Development Authority Malaysia (MIDA) can work together to find projects which can fit these models of win-win relationships,” he said at a joint press conference after bilateral discussion in conjunction with the fifth Malaysia-Singapore Leader’s Retreat.

Lee said, Iskandar Malaysia’s great advantage was that it was located across the straits of Johor where investors could tap what Singapore offered in terms of infrastructure, financial service and industrial base. “We have land constraint in Singapore. We are upgrading manufacturing and economic sectors. Many projects want to expand but we are not able to accommodate them in Singapore following limited space. “When we have a good project, we can talk to Iskandar Malaysia and MIDA to look at it and see whether it fits into Malaysia’s plan and your industrial scheme. If it does, you can make an offer and set up in Iskandar Malaysia. “Therefore, the projects can benefit from the synergy and proximity with

what they have in Singapore. I think that is a great help to industries, companies and Iskandar Malaysia. It will benefit the residents and workers as there are more jobs and better pay. This will upgrade and develop Malaysia’s economy,” he said. Both Malaysia and Singapore recognised the strategic importance of Iskandar Malaysia and its contributions to greater cooperation between the two countries and the integration of their economies. The Industrial Cooperation Work Group (ICWG) under the Malaysia-Singapore Joint Ministerial Committee (JMC) for Iskandar Malaysia will continue to promote and explore more mutually beneficial economic activities, particularly in advanced materials engineering, electronics, creative services and food industries.

Hub for Foreign Investors Countries that are on the list of investors in Iskandar include Australia, Singapore, Switzerland, Spain, United Arab Emirates, the Netherlands, Lebanon, France, the United Kingdom, the United States and many more. But recently, investors from China have been showing a lot of interest in the area. Last November, Iskandar secured a RM2.5 billion real estate investment from China-based company, Qingdao Zhouyuan Investment Holdings. This was the first real estate investment by a foreign company in Medini Iskandar Malaysia and the biggest project investment in the area which see the development of a residential project on a 7.256-hectrate plot in Medini North. The total sales value of the project is RM157.6 million. And the second framework agreement

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/// Hot Topic

is the establishment of a mixed-use development which has a total sales value of RM70.8 million and total investment estimated at an initial RM520 million. The Greenland Group is the latest developer from China to buy land for a sizeable property project in Johor’s coastal Danga Bay area. It struck a deal to acquire 13.96 acres from Iskandar Waterfront Holdings Sdn Bhd (IWH) at a cost of RM600 million, where it plans to develop properties worth RM2.2 billion in gross development value (GDV). Inclusive of the Greenland transaction, IWH has to-date inked 17 deals with local and foreign partners to develop properties worth RM127bil in GDV, providing a fillip to its ambitious plan of transforming the coastline of Johor bordering Singapore into a waterfront metropolis. At least four other major China developers were in talks with IWH for mixed-use developments featuring waterfront properties, the company said in a statement. The Greenland Group is believed to pave the way for more China state-owned companies

to invest in outstanding property projects in Iskandar Malaysia. What the Future Holds The success of Iskandar will ultimately revolve around whether it can successfully integrate the four fundamental aspects of a thriving metropolis: invest, work, live and play. Companies are attracted to start up businesses in Iskandar by the promise of cheaper land and labour, and generous tax breaks. But where sufficient cheap labour will come from is a big question mark. Haunting images of ghost cities in China appear, like Chenggong, Yunnan, an impressive but vacant city first conceptualized in 2003 as a spillover catchment for neighbouring Kunming. Plus, Singapore still has its own labour shortage in sectors such a hospitality and manufacturing. Will Malaysians be willing to work in Iskandar unless the salaries offered can compete with what they would earn in Singapore? Given that Iskandar is thrice as vast as Singapore, the possibility of a native Johorian having less distance to travel to work in Singapore than any other

TOP 10 Foreign Investors in Iskandar Malaysia by Country (Manufacturing, Services, Properties) 2006 - October 2013

Country

RM’ Billion

Singapore Spain Japan USA Netherlands United Arab Emirates Australia

9.183 4.181 3.743 3.295 2.838 1.894 1.801

Lebanon France China

1.702 1.627 1.582

Manufacturing Investments from Singapore in Iskandar Malaysia from 2006 to 2012 Total Inv Foreign Inv Singapore Inv

Source: MIDA Statistics as at June ‘13, IRDA

given location in Iskandar is highly probable. Although Iskandar is an exciting and worthy pursuit for the government of Malaysia, and bigger players like Liberty Bridge, a consortium of Singapore-Malaysia tycoons, Singapore’s Ascendas, and Malaysia’s own Sunway, Dijaya Corporation, Eastern & Oriental, SP Setia and the like, property investments are

advised to exercise caution. Iskandar does indeed present many attractive propositions, but as with all things that generate a lot of heat, the propensity for the ill-advised to get burnt is also high.

Year

2006

2007

2008

2009

2010

2011

2012

2013 = RM831 million (Jan - June)

Total Total Foreign Investments Investments RM’ mil RM’ mil

Investments from Singapore RM’ mil

2006

517 mil (62 projects)

2007

5,080

4,372

763 mil (55 projects)

2008

9,869

8,226

750 mil (50 projects)

2009

2,705

1,654

921 mil (38 projects)

2010

4,026

2,368

201 mil (33projects)

2011

5,679

2,800

801 mil (51 projects)

2012

4,237

3,326

1,017 mil (46 projects)

Some key investments statistics Manufacturing

= RM5,800 mil

Property (Azea, Vantage Bay, Ascendas etc)

= RM1,000 mil = RM2,030

Country Garden’s Sales Gallery in Danga Bay

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/// West Malaysia Property News

Liew Has 35% in Eco World

Tan Sri Liew Kee Sin has emerged as a substantial shareholder of Eco World Development Group Bhd with a 35.05% indirect stake or 88.78 million shares in the company.

He was appointed non-independent and non-executive director of the company on May 5.

Liew Appointed Eco World Director

Former SP Setia’s chief executive officer Tan Sri Liew Kee Sin Property developer extraordinaire Tan Sri Liew Kee Sin has been appointed non-independent and non-executive director in Eco World Development Group Bhd, according to a Bursa Malaysia announcement. The 55-year-old, who built S P Setia Bhd into one of the largest Malaysian property companies by market capitalisation, resigned from his position as president and chief executive officer of S P Setia on April 30, 2014. However, he remains chairman of Battersea Project Holding Co Ltd and managing director of Qinzhou Development (M) Consortium Sdn Bhd. Liew is the father of Liew Tian Xiong, director and substantial shareholder of the company. Eco World is controlled by former executives of S P Setia.

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Malaysia Airports to Open Southeast Asia’s Largest Outlet Shopping Mall

An artist’s impression of what is being hailed by Malaysia Airports and Mitsui Fudosan as the largest outlet shopping mall in Southeast Asia, Mitsui Outlet Park KLIA Malaysia Airports is partnering Mitsui Fudasan to develop what it hails as the largest outlet shopping mall in Southeast Asia, located 6km from Kuala Lumpur International Airport (KLIA). Scheduled to open by early 2015, Mitsui Outlet Park KLIA will feature 140 factory outlet stores spanning over 25,000sq m of commercial space under Phase 1. Phases 2 and 3, which are slated for completion by 2018 and 2021 respectively, will increase commercial space to 46,300sq m, housing approximately 260 shops. MFMA Development Sdn Bhd, a joint venture company started in August 2013 between Mitsui Fudasan (with 70% ownership) and Malaysia Airports (30%), will undertake the construction, leasing to tenants, promotions as well as the management and operations of the outlet mall. The company will be led by Mitsui Fudosan’s Takehito Fukui as Managing Director. With a concept themed ‘Paradise Village’, Mitsui Outlet Park KLIA will feature four distinctive zones: Sunshine Square, Pier Walk, Tropical Plaza and Beach Walk. A wide variety of luxury and sports brands from Europe, the USA and Asia (including Japan and Malaysia) will be offered at discounted prices, and

international cuisine will be offered under a ‘World Food Expo’ concept. Other highlights include a Japanese specialty store showcasing delicacies, traditional arts and crafts and technology; an entertainment, sports and leisure centre; an amusement park; and a creativity development facility for children. “The Mitsui Outlet Park KLIA will certainly further enhance the spectrum of attractions in Malaysia,” said Malaysia’s Secretary General of the Ministry of Tourism and Culture Y.Bhg. Datuk Dr. Ong Hong Peng, who officiated the groundbreaking ceremony last month. He added that the project represents “a massive leap forward” in providing quality and competitive shopping in Malaysia. Malaysia Airports believes that the easy accessibility, high visibility and strategic location of Mitsui Outlet Park KLIA, which is about 60km from the Kuala Lumpur city centre, make it an ideal location for both tenants and customers. There are also plans to provide shuttle bus services from KLIA to the facility and to establish check-in counters and flight information display boards to further facilitate travellers. Additionally, there will be over 2,500 parking lots. The encouraging growth

Tourism Has Been the Big Driver of Kota Kinabalu & Penang’s Property Market Sustainability

in passenger movements also augurs well for the project, the national airport operator added. In 2013, KLIA registered over 47 million passengers with a +19% increase on-year; the same year saw KLIA being ranked by ACI as the world’s 20th busiest airport based on overall passenger movements and the world’s 11th busiest for international passenger movements. A major component of KLIA Aeropolis Mitsui Outlet Park KLIA is an integral part of KLIA Aeropolis, Malaysia Airports’ master plan to develop the 6,750 acres of land surrounding KLIA into a self-sustaining and multifunctional airport city. The development mix will include offices, commercial establishments, a convention centre, logistical facilities, a theme park and golf courses. Mitsui Outlet Park KLIA will be developed across approximately 180,000sq m of land.

fully understand the high potential of a flourishing tourism industry. The growing pace of tourist arrivals with a YoY (Year on Year) average up-trend of 10.55% has generated tourism spending which shows a YoY rise of almost 14%.

Kota Kinabalu has been ranked as one of the best destinations for diving and water sports, attracting millions of tourists every year. In addition to this, Penang has been ranked eighth in the world as the preferred place to retire. These two tourist paradises have also been gaining a top ranking position as hot property investment locations. In fact, the last six to eight years have seen property values in these two cities multiply two or even three times over.

“The Mitsui Outlet Park KLIA is poised to be a destination of choice regionally and a stimulus for the development under the KLIA Aeropolis Master Plan,” said Malaysia Airports Chairman Y.Bhg. Tan Sri Dato’ Sri Dr. Wan Abdul Aziz bin Wan Abdullah. “The project dovetails perfectly with our new vision of becoming ‘The Global Leader in Creating Airport Cities’. This project not only demonstrates our commitment but it also serves as a catalyst towards achieving this vision.”

The Federal Government has established 2014 as “Visit Malaysia Year” and this will further contribute to spreading the fame of these two tourist and property hot spots worldwide.

Mitsui Fudosan Executive Managing Officer Takeshi Suzuki commented: “As the economy of Malaysia continues to grow and with KLIA gaining importance as a regional hub, the Mitsui Outlet Park KLIA is positioned to be the most sought after commercial facility in Southeast Asia.”

In other words, it is very clear how the tourism industry, when properly developed, becomes a strategic and multi-layered economic driver.

The promotion will also attract an estimated arrival of 30 million tourists by the year’s end. The significance of this is huge as it will help Malaysian tourism be the third earner of foreign exchange and the tourism industry to continue to contribute towards an estimated 12.5% to the national Gross Domestic Product (GDP) earnings.

It is surely interesting to compare the trend of tourist arrivals between 1998 and 2012 with their “quantitative spending” habits to

The flourishing tourism industry is surely a strong driver for further development of state and national economies as it allows further expansion of many correlating sectors alongside the real estate industry, which follows as a logical consequence and not as the main cause. Tourism, when properly promoted, gets the attention of the world, and consequently that of multinational corporations (MNCs). Tourism also draws focus on the country which could result in foreign direct investment (FDI) inflow. In fact, it is one of the most effective “word of mouth” forms of advertisement and till now, Penang in Malaysia has been smart enough to profit from it. Changes in “holiday habits” worldwide and a different way of looking at retirement in the western countries have boosted our local property market as witnessed in its growth in the last few years.

Guaranteed attractive Return on Investments (ROI) on properties can even be more than double as compared to long-term rental rates for smart investors who have listed their house(s) in one of the existing circuits for short-term rentals.

Sustainable Future

Last minute bookings and smart travelling websites and apps where one can register as a house owner and offer his property(ies) for shortterm rental are easily available to everybody.

My personal take, looking at the current and estimated tourism targets set for the next few years, is that we are still in relatively safe waters as there is still a lot that can be done to increase the inflow of foreigners to Penang.

Once listed, the only thing one will need to do is to check the balance of his bank account at the end of each month. If we take a look at how much the skyline of Penang (Batu Ferringhi and the old George Town in particular) has changed in the last 10 years, thanks to eye-catching, high-rise buildings, we can fully understand the positive impact of tourism on property developments as well as investments. Outlook-wise, the Penang branch of the Malaysian Tourism Promotion Board estimates that Penang will receive 5.5 million foreign visitors in conjunction with Visit Malaysia Year 2014.

Investors keep asking me if there might be a forthcoming property bubble in Penang as it looks like the sky is not the limit for property values there.

This can be further achieved by becoming a more internationally recognised tourism destination instead of being a mostly regional travel destination. As a matter of fact, less than 10% of the total tourist arrivals in 2012 and 2013 have been from countries outside the South-East Asia region. Looking at the number of tourist arrivals expected during “Visit Malaysia Year 2014” and the “2015 Year of Festivals” that the Ministry of Tourism has been promoting worldwide, we can surely foresee how the long-term sustainability of the tourism-focused economic cluster will be the strong driver for a robust and long-lasting property market.

Having said that, nowadays, tourists are looking more for short-term rental of private houses where they can really experience the local lifestyle rather than opting for the “all inclusive hotel packages”. The Correlation Between Property And Tourism Compared to Europe, the United States and Australia, Malaysia is a country where a foreigner can afford a high standard of living at very affordable prices. In addition to this, there is the added value of all the appealing places and attractions available to satisfy the most demanding expectations.

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Chris Tan

You can get in touch with him at Facebook: Chur Associates Email: consult@churassociates.com

Lining Up for Real Estate 2014 Legally

ooking into my crystal ball on the legal challenges in real estates in Malaysia for year 2014, an image of football appears naturally (since 2014 is also the FIFA World Cup Finals in Brazil). I see a game of two-half with an interesting starting eleven lining up by “FC2014” with a mix of the usual suspects outnumbered by some unknown qualities making its debut this year. Strategically given the unknown dark horses, the first half is a game of “wait and see” to access at how formidable is this new mix taking on the seasoned real estate investors in the home ground. Scrolling down the visitors’ team sheet, this is how the game shall unfold with the emergence of each player from the dugout:

GK 1: Real Property Gains Tax (RPGT) The undisputed No.1 that we keep an eye for comes every Budget announcement in every October since 2007. RPGT has been reviewed and adjusted on yearly basis from no RPGT in 2007 to 5% flat rate in year 2010 up to the current highest rate of 30% for early disposal. Investment planning has become challenging as this yearly lottery draw works on the year of disposal and not the applicable rate on the year of acquisition.

FB 2: Goods and Services Tax (GST)

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CF 9: Public Infrastructure

Sitting at the core of any real estate investment is the financing policies introduced by the central bank. In these key positions, we have two debutants. Yet, apart from the brief statement of “increase transparency in property sales price, where property developers will have to display detailed sales price including all benefits and incentives offered to buyers such as exemption of legal fees, stamp duty, sales agreements, cash rebates and free gifts” in the Budget 2014; there is no clear direction being issued net purchase price by the Ministry nor the Bank Negara.

Following the launch of Greater Kuala Lumpur, a lot of mega infrastructure projects have been announced with new highways, MRT as well as the much anticipated High Speed Rail to Singapore. Investors are buying in to such development projects banking on the great prospect upon the completion of these infrastructures. Lessons should be learned from the delay in progress of various mega infrastructure projects recently such as KLIA 2 and Penang Second Bridge, investors need to be prepared for any possible delay.

CB 6: Developer Interest Bearing Scheme (DIBS)

Lawyer Specialising in Real Estate Chris Tan is the founder and now Managing Partner of Chur Associates, a boutique legal practice that thrives in delivering business friendly solutions for its clients and having a niche positioning of ‘Everything Real Estate’ serving the entire value chain from the upstream to the downstream. Chur Associates is a boutique legal firm founded in 2004, specialising in designing legal solutions catered to our clients’ needs. Chur Associates’s brand promise is “We Deliver!” To that end, they offer clientsthe necessary means and methods to ensure their requirements are met.

CB 5: Net Purchase Price

Given a run out prior to its planned debut on 1 April 2015, GST will certainly impact the market prices given many tiers of supplies in real estate development that is subject to the same. Immediately, there is an incentive for investors to look at commercial property now as there is directly an extra 6% cost to be paid next year onward.

FB 3: Foreign Purchase While it is the federal policy to adjust the threshold for foreigner’s acquisition of property from RM500,000.00 to RM1,000,000.00 for 2014,

it is still subject to the adoption by the respective State Governments given that it is within their realm of power under the Federal Constitution. Other than the Federal Territories with immediate implementation, Johor will only implement on 1 May 2014 while Penang has long been implementing such control. It is interesting to note that the States are getting more autonomous in this regards with special levy introduced on foreign purchasers. Naturally, this limits the market size and decrease the number of potential takers of Malaysian property saves for those usual hot spots where price tags in million are the norm.

CM 4: Minimum Wages Playing the holding role, this new policy has a preventive effect on any price correction in real estate. As the construction sector relied heavily on foreign labours, the full implementation of minimum wages covering both local and foreign workforce would have a direct impact on the construction costs. Increment on construction costs would naturally uplift the pricing of properties.

Similarly, this was briefly mentioned in the Budget 2014 announcement that financial institutions are prohibited from providing final funding for projects involving DIBS. To date, the only clear direction on the banning of DIBS appears to be a statement issued by the Ministry of Urban Wellbeing, Housing and Local Government stating that a new condition in approving housing development license and advertisement and sale permit does not allow the use of Interest Capitalisation Scheme or any other permutation thereof, including the DIBS by any housing developer starting 15 November 2013. Along with the Net Purchase Price issue, it is interesting to watch out on how the financial institutions react to the existing housing development as well as pre-approved phased development with DIBS scheme prior to 15 November 2013.

RM 7: Affordable Housing Donning the No.7 jersey is always a star that dictate the play and in encouraging building of affordable housing for masses, the federal and state governments would have given incentives and/or alienate states land for affordable housing projects. The perks and privileges offered by the governments, allows more affordable housing in the market; thus making the property market even more competitive for the investors as well as the private developers.

CF 10: Build Then Sell (BTS) BTS is where housing developers have to complete a housing project completely before selling it to homebuyers. The Minister has stated that BTS shall be fully implemented as a mandatory system in 2015. However, no bill has been presented to date on this subject. Given the speed of the lawmaker, it is not unlikely to see an act to be rushed through however the crux here is really the buy-in by the financial institutions. While the good intention is to safeguard purchasers’ interest by eliminating the risk of abandoned projects, it is also naturally for the costs of the extra funding for this BTS model will still be transferred to the buyers eventually. It certainly did not go well with the climate now that focus on affordability more than anything else.

LW 11: Housing Development (Control and Lisencing) Act 1966 – Amendment 2012 Instead of addressing the BTS, the new amendment act of Housing Development (Control and Lisencing) Act- Amendment 2012 was actually passed to revise the developer’s refundable deposit to Controller of Housing from RM200,000.00 to three per centum (3%) of the gross construction costs of the development (minus the land). Once it is in force, the impact is again on affordability given that the costs of the extra funding need to show up somewhere nonetheless.

CM 8: Strata Updates Strata living today are driven by needs rather by choice. Maximum return on land development and low entry points for buyers made strata even more appealing. The new laws on strata title and strata management that both been passed but yet to be in force provides for strata title to be issued upon completion of the property. Purchasers are required to pay for stamp duty upon completion of the property. In such case, the purchaser shall no longer be able to shun from stamp duty payment, by selling off the property after completion of the property and before issuance of title.

Public Infrastructure

7 Build The Sell

HDA 2012

Time to drop the “ing” from the developing nation mindset in your investment strategy.

Strata Updates

Minimum Wages

GST

Affordable Housing

No DIBS

Nett Purchase Price

Foreign Purchase

1 RPGT

It is interesting to note that the formation of this new line up is not your conventional 4-4-2, opting for a more aggressive and fluid front 4 diamonds is a strong statement that this game of real estate has just got more sophisticated in Malaysia. If you still play the game in the same way you did for the past 5 years, you are in for a very long and bumpy ride. Malaysia is in the last lap to push towards the First World that we so commonly craved in our vision, time to drop the “ing” from the developing nation mindset in your investment strategy. Like anything else, only the fittest shall survive with the second half can only get more exciting!

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/// West Malaysia Property News

Greenland Eyes Major Role in RM4.4 Billion River of Life Project However, company officials told StarBiz that MRCB has no intention of selling down its interest in RoL currently, and neither was it on the lookout for buyers. Unlike the Duke highway, in which MRCB used to own a 30% stake, RoL is a “division we want to keep”, an executive said. “We will honour our commitment to the Government as PDP.”

Fresh from selling land worth RM600 million to China’s Greenland Group, Iskandar Waterfront Holdings Sdn Bhd’s (IWH) Tan Sri Lim Kang Hoo is believed to be eyeing another tie-up with Greenland – this time for the RM4.4 billion River of Life (RoL) project in Kuala Lumpur.

land from IWH in the coastal Danga Bay area south of Johor for properties with an estimated gross development value (GDV) of RM2.2 billion, marking its maiden foray into Malaysia.

People familiar with the matter told StarBiz that Greenland, one of China’s top five property developers by sales, was in talks with Lim for it to play a major role in RoL.

It is understood that the stateowned enterprise may seal another purchase from Iskandar Waterfront Holdings (IWH) soon for two parcels measuring some 20 acres on the eastern side of Johor near the Permas Jaya township.

The Shanghai-based firm could be planning a “city within a city” à la Shanghai’s iconic The Bund along the bank of the Klang and Gombak rivers that flow through Kuala Lumpur, sources said.

The deal is yet to be finalised as the land is held under IWH’s 47.16% associate Tebrau Teguh Bhd, another listed entity in Lim’s stable, and will have to undergo the usual due diligence processes.

Lim’s construction outfit Ekovest Bhd has a 60% stake in the joint-venture company that was appointed the project delivery partner (PDP) for RoL in 2011 by the Government. Malaysian Resources Corp Bhd (MRCB) holds the remaining 40%.

“Greenland ultimately plans to acquire up to 150 acres in Johor with a GDV exceeding RM10 billion. The land alone is expected to cost RM3.8 billion,” a property executive said.

A spokesperson for Ekovest declined to comment when contacted. RoL – an anchor project of the Economic Transformation Programme for Greater Kuala Lumpur that aims to breathe new life into the long-polluted Klang and Gombak rivers – is spearheaded by a multiagency task force under the purview of the Federal Territories Ministry. The project calls for a massive cleanup and redevelopment of an 110km stretch of river by 2017. In return, the contractors given the mandate get plots of land along the river for development. Greenland had two weeks ago agreed to buy 13.96 acres of

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That would make Greenland the biggest China-based landowner in Iskandar Malaysia. Guangzhou R&F Properties, which last year bought 116 acres in Tanjung Puteri from the Sultan of Johor for RM4.5 billion, is a close second. Lim owns 60% of IWH via Credence Resources Sdn Bhd, and Kumpulan Prasarana Rakyat Johor, a statebacked vehicle, 40%. Shares of Tebrau Teguh were up some 14% since early-April to RM1.37 on Friday. Ekovest, meanwhile, has drifted downwards after peaking in December. The counter closed Friday at RM2.62. A deal between Greenland and Lim on RoL, should it materialise, could have implications for MRCB.

Even so, the executive conceded that RoL could be a target of various parties given its large construction orderbook. MRCB had in January hived off its interest in highway concessionaire Duta-Ulu Kelang Expressway to Ekovest for RM230 million in cash in a bid to pare down its debt and dispose of non-core assets. Although RoL is still sorting our land valuation issues, its first phase kicked off in March involving a 10.7km stretch of the river dubbed Precinct 7. Ekovest-MRCB JV Sdn Bhd is the contractor appointed to carry out the project. Work on the other four phases, comprising 10 precincts, is expected to begin in September. A slew of developers from China have expanded abroad aggressively in recent years, but Greenland could well be the most ambitious of the lot. Greenland, a Fortune 500 company, has interests in real estate, coal mining, finance and automobiles. Known as a builder of skyscrapers, three of its towers rank among the 10 tallest in the world. It is targeting a spot in the Fortune 200 and revenue of 500 billion yuan by 2015. In January, it had launched a US$480 million project in Sydney, its first in Australia, as part of a US$1 billion push Down Under. The Greenland Centre in Sydney’s central business district will comprise a high-end boutique hotel and residential tower. The group had acquired land in downtown Los Angeles, its first in the United States, last July for US$1 billion from a teacher’s pension

fund, with plans for a hotel, offices, serviced residences and luxury homes.

Housing Prices May Rise by at Least 5% on GST, Experts Say work. So how to improve supply and demand? We bring in untrained people, train them over a few years then they go home or to other countries, and that cost is then passed down to you [end-buyers],” he said.

Across the pond, Greenland is investing £1.2 billion in two London developments, one in the southwest and the other in the Canary Wharf financial district. Foreign news reports suggest that Greenland also has its eye on France, Canada, Singapore and Thailand. Four other major Chinese property firms are in talks with IWH for mixed-use developments featuring waterfront properties. IWH is the master developer of 1,620ha of waterfront land in the eastern and western side of the Johor Causeway, with Danga Bay, located in Zone A of Iskandar Malaysia, as its centrepiece. It has inked 17 deals to-date with local and foreign partners to develop properties worth RM127 billion in GDV, bolstering its plan to transform the coastline of Johor bordering Singapore into a waterfront metropolis.

PNB to Merge E&O, SP Setia and Sime Darby?

Housing prices are expected to rise by at least 5% next year when the goods and services tax (GST) takes effect in April next year, said property experts. “I think at best, prices will be maintained, but it is hard to get statistics because of deferred launches. Smaller units are flying off the shelves. Next year, depending on people’s grasp of the GST, prices may rise by around 5%,” said Real Estate and Housing Developers Association (REHDA) president Datuk Seri Michael Yam. “I think some property players in hotspots will try to push the envelope further. For instance, if it’s Mont’ Kiara and they have the last parcels there, if they want to push for higher prices and can hold on to the land, they will,” he added. Meanwhile, Sunway Bhd property development division joint managing director Ong Pang Yen said that while residential properties are exempted from the 6% GST rate, the input

cost is still payable but it cannot be collected directly from buyers. “Because of that, we must transfer the cost to purchasers, but it will still be at around 4%. However, it’s still better than commercial properties which will be taxed the full 6%,” he said. Master Builders Association Malaysia (MBAM) immediate past president Kwan Foh Kwai said from the construction sector’s point of view, the price will increase by slightly over 5%. “It depends on how you look at component cost... there is GST and also other factors. There must be a balance... because in construction, we don’t have import cost, only inflationary pressure and foreign labour cost,” said Kwan, who is also managing director of Sunway’s construction division. “If the government truly listens, we need foreign labour. Malaysians are not going to do such

He also explained that the cost of materials such as cement and sand have been rising, citing the Building Works Composite Tender Price Index international construction consultancy Langdon & Seah Sdn Bhd growing at a compounded annual growth rate of 4% to 170.3 in 2013 from 100 in 2000. Cement prices have seen major increases in since the market was liberalised, while sand is a scarce commodity especially with states like Selangor controlling supply. Yam, Ong and Kwan were panelists at a discussion titled ‘Homes to cost less – is it possible?’ at The Edge Investment Forum on Real Estate 2014. The forum was themed ‘Buy, Sell or Hold?’ and featured three speakers who covered various topics, including where and how to invest, the prospects of investing in London and a panel discussion on whether home prices will become more affordable. The Edge managing director Au Foong Yee moderated the panel discussion.

SP Setia Sales Gallery in Johor Permodalan Nasional Bhd (PNB), Malaysia’s largest fund manager, plans to unite four of its portfolio companies to form the ASEAN region’s second largest property player by assets.

to wrest control of SP Setia, Sime Darby as well as Eastern & Oriental Bhd (E&O). And then combine it with I&P Group, said the source. The merged entity could take the form of a property trust, listed firm or could even stay private. However, the plan is still subject to changes as it is still in the early stages, he added.

According to a source, the slowdown in the local housing market has led to falling property stocks, giving PNB a chance to take control of its units involved in real estate.

Requests for comments at PNB, E&O, Sime Darby and I&P Group went unanswered, while SP Setia refused to say anything.

With at least RM41 billion in assets, the resulting entity is expected to become the biggest property developer in Southeast Asia after Singapore’s CapitaLand. It could also end up with 11,315 hectares of landbank spread across Malaysia and in London’s Battersea Power Station. Under the proposed deal, PNB would fork out RM4.25 billion

PNB began restructuring its property portfolio in 2009, when it merged three developers into I&P Group after buying Petaling Tin Bhd, Pelangi Bhd, as well as Island & Peninsular Bhd for RM1.43 billion. It currently oversees around RM238 billion worth of assets.

According to a source, the slowdown in the local housing market has led to falling property stocks, giving PNB a chance to take control of its units involved in real estate.

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/// West Malaysia Property News

IJM Land Wins Asia Pacific Property Awards 2014

When One Compares Penang and Iskandar

MAHB to Build Airport Cities

PNB Mulls Global Property Giants

Prevention Through Environmental Design (CPTED) approach which entails a natural form of surveillance on top of other security measures to give the community an increased sense of security.

IJM Land Berhad triumphed at the recent Asia Pacific Property Awards 2014 held on May 9 in Kuala Lumpur, taking home four coveted awards for its highly anticipated Pantai Sentral Park and Seremban 2 developments. Pantai Sentral Park received the Five-Star Award for the Best Development Marketing Malaysia and Best Developer Website Asia Pacific. Pantai Sentral Park also bagged the Highly Commended Award for the Residential Landscape Architecture Malaysia category. Seremban 2, IJM Land’s flagship development in Negri Sembilan received the Highly Commended Award for the Public Services Development Malaysia category. The event was attended by property developers, architects, interior designers and and real estate agents from around the Asia Pacific region including from Thailand, Singapore, Malaysia, Vietnam, Philippines, Cambodia and Indonesia. This is the first year IJM Land participated in this international property awards ceremony. “This is an honour of the highest degree for

us to be recognised by the Asia Pacific Property Awards’ esteemed panel of judges. These awards are a tribute to the hard work and dedication of our team with attention given to the minutest details,” said IJM Land chief executive officer and managing director, Datuk Soam Heng Choon. Pantai Sentral Park, a collaboration between Amona Development Sdn Bhd and IJM Land Berhad, is a 58-acre integrated city development strategically located at the Kerinchi-Pantai Dalam corridor and is easily accessible via Jalan Kerinchi from the Federal Highway. Scheduled to be launched in June 2014, Pantai Sentral Park is a mixed commercial and residential development, with a gross development value (GDV) of RM5.6bil. The entire concept is designed to blend in seamlessly with the lush green surroundings of a 200-acre forest known as Bukit Kerinchi with provisions for a linear forest walk and green connector located between the residential and commercial parcels with ample space for the community to engage in healthy activities.

The upcoming launch is the first parcel of 211 residences with home sizes ranging from 1,140 to 1,975 sq ft which is now open for registration. Spanning 3,800 acres, Seremban 2 is a selfcontained township in Negri Sembilan offering modern amenities and convenience of a city while maintaining the grace and serenity of a country atmosphere. To date, Seremban 2 has emerged as one of the most progressive and successful developments in Negri Sembilan and is now home to more than 60,000 residents

When deciding on where to make your next property investment, the first question that comes into mind is location. If you already have one or two investments in the city or state that you live in, the next step would be to purchase property somewhere else where you feel the appreciate is faster. A lot of property investors are showing interest in investing in either Penang or Johor. Penang is a small island, (smaller than Singapore) and Iskandar is twice the size of Singapore. Technically, this shows that price appreciation in Penang seem much higher, especially now that there are 10 flights or more daily between Penang and Singapore, connecting both places as close as Singaporean taking a MRT ride from one end to the other in terms of time. Property prices in Penang will continue to increase due to scarcity of land and both prime areas and not so popular areas

are appreciating in price. There is less land to build on in Penang as compared to Singapore because Penang is not a flat piece of land and it has a Forest Reserve National Park within the island. Iskandar on the other hand is located less than one hour away from Singapore. With the potential of RTS and Singapore Prime Minister Lee Hsien long wanting to have even more of the world’s talents working in Singapore, Iskandar is a very good choice. The MNCs can base their staff in Iskandar at half the usual cost. And a lot of Singaporeans who want to retire more comfortably also relocate to Johor Bahru. The prices of HDB resale units, is currently higher than the prices of new condominiums in Iskandar and it comes with sea view. Thus, both Penang and Johor are good places to invest in properties.

Property prices in Penang will continue to increase due to scarcity of land and both prime areas and not so popular areas are appreciating in price.

Malaysia Airports Holdings Bhd (MAHB) plans to boost its non-aeronautical revenue from 50 percent to 55 percent in 2020 by building cities around the Kuala Lumpur International Airport (KLIA) in Sepang, according to its General Manager for Corporate Planning Randhill Singh. “Airport cities is the way forward for many airport operators around the world. It is the latest concept. A long time ago, cities used to be built near harbours, then railway stations and today, it is the airports,” he said during the 2014 World Airport Cities Conference and Exhibition. Other airports actively pursuing this plan are South Korea’s Incheon International Airport and Amsterdam’s Schiphol Airport. Dubbed as Runway to Success 2020, the six-year business plan aims to create a more sustainable income flow, considering that MAHB’s traditional income sources like passenger services fees, aircraft parking charges as well as aircraft landing and take-off fees are either regulated and/ or contracted. “Aeronautical charges are heavily regulated and you can see how airlines are fighting to reduce the charges. Though we are already among the lowest in the world (in terms of aeronautical charges), we have

provided incentives of around RM70 to RM80 million a year to airlines,” Randhill explained. As such, the airport operator has been embarking on a building spree. It has around 10,050 hectares in Sepang, a portion of which has been used for the construction of KLIA, Sama-Sama Hotel, cargo area, the Low-Cost Carrier Terminal (LCCT) and the newlybuilt KLIA2. “Our focus back then (1990s) was to build airport-related infrastructure. We also had to wait for the surrounding areas in Sepang to mature first before we could move on to the next phase, which was commercial development,” noted Randhill. MAHB’s maiden venture into commercial development is the Gateway@KLIA2, a 30:70 joint venture between WCT Holdings and MAHB. Another ongoing commercial project is the Mitsui Outlet Park. Boasting 25,000 sq m of space, this collaboration between MAHB and Japan’s Mitsui Fudosan is touted as the biggest factory outlet shopping mall in the ASEAN region. In total, the airport operator plans to utilise up to 1,206 hectares in Sepang for commercial projects by 2020, he added.

In order to create a property giant that can compete globally, Malaysia’s largest asset manager Permodalan Nasional Bhd (PNB) is considering the merger of three real estate players -- SP Setia, Sime Darby Properties and Island & Peninsular (I&P). “By consolidating the three companies, there will be more streamlining of businesses and operations,” said a source interviewed by the Business Times. “As a single giant, it would be easier to buy more assets overseas, undertake major developments and expand earnings,” he said, adding that both developers have already ventured into other countries, except for I&P. With RM2.6 billion in cold cash, SP Setia has 1,913 hectares of land and 40 projects across five countries with a

gross development value of over RM70 billion. At present, Sime Darby has a landbank of 7,600 hectares, but is eyeing another 7,520ha for future projects. Aside from Malaysia, it also has a presence in Singapore, Vietnam, Australia and the UK. As for I&P, its 2,066ha is mostly located in Selangor. Meanwhile, PNB is all set for its overseas venture after completing the necessary preparations and research, President & Group Chief Executive Tan Sri Hamad Kama Piah Che Othman said in a recent report.

80 percent of the unit trust industry’s overall net asset value of RM300.19 billion. But come 2020, it plans to oversee RM500 billion worth of assets by offering innovative and value-added products.

At present, Sime Darby has a landbank of 7,600 hectares, but is eyeing another 7,520ha for future projects.

Apart from owning one property in Australia and three in London, PNB has invested in over 200 Malaysian firms since its inception. Based on latest regulatory figures, the company’s funds under management are nearly

Pantai Sentral Park’s master plan also includes the adoption of the Crime

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/// Contributor

Let’s look at an example. Mr Tan went to 2 banks. Bank A and Bank B. He bought a new property and would like to take a RM500,000 loan as off 1st December 2013.

...Remember, before you decide to take on a loan package do your research first

Michael Yeoh The Mortgage Expert

With over 15 years of experience in the mortgage and investment industry and working with prominent companies such as Standard Chartered Bank, Hong Leong Bank, HSBC and Hwang DBS Unit Trust, Michael has helped thousands of loan borrowers by providing comprehensive mortgage advisory and solutions. Michael regularly conducts mortgage courses and has produced many graduates. He is also a regular columnist and also has being featured in New Straits Times Press, The Star, Property Guru and also Property Hunter magazine. He speaks regularly in Property Exhibitions, Seminars and also for developers. You can get in touch with him at Website: www.michaelyeoh.com.my

Klibor Pegged Home Loan

Is This The Right Loan Package For You?

f you walk into a bank today with the intention of getting a property loan, don’t be surprised that the banker will offer you many different types of loan packages. Yes, you will be spoilt for choice. The next question that will be in your mind is which package I should take. All looks quite the same.

My personal advise to you, the lowest interest rate package does not necessarily is the best. Choose the package based on what you need. For example, if you know you are buying the property for a short term period you should be avoiding loan packages with lock in period and penalty. Although the interest rate might be a little bit high, you still save more as compare with packages with lock in period. Recently, during after my public seminars quite a number of participants asked me about Mortgage Klibor. They can’t decide whether to take up the loan package or the normal loan package tag to Base Lending Rate. I should have written this article much earlier but my busy schedule does not permit me. My apologies to my readers and followers. Firstly let’s look at the definition of KLIBOR. The definition according to Bank Negara:

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The rates that the KLIBOR contributors submit for KLIBOR setting indicate the rates that that they are willing to lend ringgit funds for the relevant tenors to interbank players and are mainly used as reference for other products such as the floating leg of interest rate swaps, options, futures and structured products.

Bank A (Conventional Loan) 6.6% (BLR) – 2.2% (spread) Interest Rate = 4.4%

Bank B (Mortgage Klibor) 3.22% (klibor rate) + 1.1% (spread) Interest Rate = 4.33% Conventional Loan Mortgage Klibor

In short it refers to cost of lending between banks. As compared to Base Lending Rate, Klibor rates fluctuate more. Klibor rates is fixed at the last business day in a 3 month period. Today, as the mortgage market gets more competitive banks will introduce more and more innovative products. As such, Loan package tagged Klibor rates was first introduced by Standard Chartered Bank followed by Hong Leong Bank recently. Many people asked me is it true that the rates will be lower comparing to conventional loan package Let’s look at the below table DATE

3 MONTHS KLIBOR RATES

BASE LENDING RATE

1st Mar - 2010

2.25

5.55

1st Jun - 2010

2.72

6.05

1st Sep - 2010

2.92

6.30

1st Dec - 2011

2.97

6.30

1st Mar - 2011

3.03

6.30

1st Jun - 2011

3.23

6.60

1st Sep - 2011

3.27

6.60

1st Dec - 2011

3.23

6.60

1st Mar - 2012

3.19

6.60

1st Jun - 2012

3.19

6.60

1st Sep - 2012

3.20

6.60

1st Dec - 2012

3.21

6.60

1st Mar - 2013

3.21

6.60

1st Jun - 2013

3.21

6.60

1st Sep - 2013

3.20

6.60

1st Dec - 2013

3.22

6.60

If you notice from the table, Kilbor rates is always lower than Base Lending Rate. Your next question will be which is better. Then my answer will be it depends on the rates offered by the banks to you.

If you compare both banks Bank B (Mortgage Klibor) interest rate will be cheaper. Most banks will take the higher spread when comparing with the klibor rates. Thus, it will show the klibor rates are more competitive. Well, what you actually need to do is to do your own research on the highest spread you can get from a few banks on conventional loan and you use this to compare with the klibor rates. An average, you will be able to get BLR-2.4% from most banks. Some banks might give BLR-2% or BLR – 2.2%. Do your own comparison and see which one on average is cheaper and then you decide which package to take. At the end of the day, which package gives to a better rates depends on what the spread been given to you . To attract more borrowers, bank such as Hong Leong Bank offers rebates to borrowers who sign up within 24 hours upon approval for their klibor loan package. Remember, before you decide to take on a loan package do your research first. Again I stress that the lowest interest does not necessary be the best package. It depends on your needs. I hope that this article will assist you to make the right decision when choosing your loan packages.

I hope the above will answer most of your queries. If you would like to know in more detail you can also call Ms Elane at +016 442 2903 as she is an expert on insurance. If you would like to read my previous article please log on to www.michaelyeoh.com.my. NOTES

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/// International Property News

Robust Sales at Puteri Cove Residences New Launch in Singapore

INTERNATIONAL PROPERTY NEWS

Catch up on the latest property and real estate news, views and analysis from across the globe featured

Big crowds at Puteri Cove Residences main launch Puteri Cove Residences was launched for sale to the public on 5th April and was met with overwhelming response. Big crowds of buyers flocked to the two sales galleries located in Singapore and Puteri Harbour when Pacific Star and DB2 announced the launch of the project.

Battersea’s Phase 2 Double in Price Recent preview of phase two in Singapore showed that prices for studio apartments will start from £800,000 (RM4.39 million), £1 million (RM5.49 million) for one-bedroom unit, £1.5 million (RM8.24 million) for two-bedroom unit, while three- and four-bedroom units will cost from £2.7 million (RM14.82 million) and £4 million (RM21.96 million) respectively. Penthouse prices will be upon application.

Phase two of the Battersea Power Station redevelopment project is being priced at a record level in London’s Nine Elms area, said media reports.

Last year, phase one sold all 861 units within three weeks from launch. Meanwhile, the phase two apartments are considered “hotter property” since they are located at the heart of the power station.

At an average psf price of £2,300 (RM12,627), the price is more than double than the first phase price of £1,100 (RM6,039) psf. Property consultancy Kinleigh Folkard & Hayward noted that it is also 176 percent higher compared to the average price of £832 (RM4,567) psf for newbuilds within the Nine Elms area.

Given the successful preview for said apartments, there is a strong likelihood that they will be fully snapped up “on the day of the launch itself”, noted a Battersea insider.

With a gross development value of £1.6 billion (RM8.78 billion), the project’s second phase comprises 254 units and is set to be launched in London next Thursday.

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“The benchmark pricing set by Battersea showcases the success of a Malaysian developer. It puts Malaysia’s name among the list of premium developers such as Ballymore, Barratt Homes and the Berkeley Group in the UK,” commented one observer.

Apart from the 254 new homes, the second phase will also include 1.3 million sq ft of commercial space, including three levels of retail. It will also feature a leisure and entertainment zone, which will include cinemas, a 2,000-capacity auditorium, conference spaces, restaurants, a boutique hotel as well as offices for around 10,000 people. Set for completion in 2022, the redevelopment of the Battersea Power Station is being undertaken by Battersea Project Holdings Co Ltd (BPHC), which is controlled by Malaysian firms Sime Darby Bhd and SP Setia Bhd, with a 40 percent stake each, as well as the Employees Provident Fund with 20 percent.

Last year, phase one sold all 861 units within three weeks from launch.

Highly anticipated by property buyers and keenly watched by industry players, large crowds formed at the marketing agent ERA Headquarters at Toa Payoh as early as eight thirty in the morning to queue for the sale via ballot process, which took place in the late morning Saturday. A total of 400 apartments in Tower One and selected floors in Tower Two were released for sale. However due to stronger than expected demand from buyers, another 50 apartments in Tower Two were released, bolstering the total number of apartments released for sale to 450. Most buyers came with firm decisions to purchase that resulted in the majority of the buyers signing sale and purchase agreements on the launch day itself and making payment for the first ten per cent of the purchase price. Popular marina view facing two- and threebedroom apartments were snapped up immediately whilst sea view apartments enjoyed equally strong take-up. Following the Saturday’s main launch, there were a high number

of walk-ins at the Sales Gallery and Show Suites at Puteri Harbour on Sunday. Receiving a higher number of visitor turnouts than precedent weekends, and that translated into many apartments snapped up on the spot. To-date, 370 units (83 per cent) of the 450 units offered for sale have been sold at prices ranging from RM1,180 psf to RM1,580 psf. The outstanding results were above the developer’s expectations and the developer credits the winning mix of unique characteristics of the project for its popularity amongst buyers:- Freehold Waterfront with Private Marina - Stunning Views of Sea or Marina and Singapore - Mixed-use Project ie. Live, Work, Leisure, Shopping, Entertainment, Dining - Luxury Finishes and Fixtures - Prime Location and Within Close Proximity to Puteri Harbour International Ferry Terminal, Kota Iskandar, Theme Parks and EduCity - No Restrictions on Sales to Foreigners Commenting on the exceptional sales results, Glen Chan, Chief Operating Officer, Pacific Star Group and President, Pacific Star Development, “With a winning combination of prime waterfront location and reasonable prices, the strong sales attests to the attraction and sale-ability of our project. We have over 20 nationalities of buyers in Puteri Cove Residences, which validates our original intent of designing and conceptualizing a

luxury mixed-use development that appeals to a cast of sophisticated and experienced international property buyers. I am confident that Puteri Cove Residences is eminently positioned for capital appreciation because of its international appeal, much like prime properties in global cities like London, Hong Kong and Singapore. We are also encouraged by this strong showing of confidence by our buyers and thus believe our buyers are looking at the long term growth potential in the Iskandar Region, particularly when co-operation and collaboration between the Page 3 of 5 Press Release Governments of Singapore and Malaysia in the Iskandar Region are expected to increase in the near future”. To-date, buyers of Puteri Cove Residences include citizens from the United States of America, Australia, Britain, Germany, France, Canada, China, Hong Kong, Taiwan, Japan, Korea, India, Indonesia, Malaysia and Singapore. Recent changes to the Real Property Gains Tax in Malaysia were not a factor for buyers because they are optimistic in the long term growth and development of Puteri Harbour and Nusajaya, Iskandar. Recent affirmation of excellent ties between Singapore and Malaysia by Prime Ministers of both countries in Putrajaya on 7 April provided public confidence on the bright prospects of Iskandar Malaysia. Furthermore new transportation links to be built such as the KL-Singapore High Speed Rail and JB-Singapore Rapid Transit System, will enhance the prospects of Iskandar as a global manufacturing hub. For property buyers looking to purchase apartments in Puteri Cove Residences, choice units on mid to high floors are available for sale and the developer may release more units on selected floors in Tower Two if demand from buyers surge in the coming days. Tower Three is not for sale as the developer has entered into negotiations with an international five-star class hotel management company for management of

Property Prices in Shanghai, Hangzhou Drop

Prices of several residential properties on sale in China’s eastern cities of Shanghai and Hangzhou dropped sharply over the weekend, feeding industry speculation of a fresh round of price cuts by developers to boost sales, the Shanghai Morning Post reported. The developer of a high-end residential property project on the outskirts of Shanghai on Saturday slashed average prices of a batch of homes on sale by 28% to 36,000 yuan (US$5,800) per sq m amid sluggish sales, the newspaper reported. Separately, 12 property projects in Hangzhou went on sale on Saturday, with developers wooing buyers with prices much lower than their counterparts in the city, according to the newspaper. Homes prices in Hangzhou fell 11.3% in the first quarter, with trading volume dropping 38%, the newspaper said, citing government data. Shanghai and Hangzhou are both closely watched property markets. China’s property market has lost steam since late 2013 as authorities have tightened controls on speculative buying, and as banks have made it harder for home buyers and small developers to get loans. Official data showed home price gains slowed to an eight-month low in March.

Tower Three as high-end serviced residences for lease to expatriates working in Iskandar.

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Hong Kong Property Tycoons Stand Trial in City’s Biggest Graft Case

Chinese Investors Lead the Manhattan Property Race

The Richest Man in Asia Is Selling Everything in China on its back just by dumping a portion of its Treasuries in order to defend the yuan.

Khazanah Invest RM215 Million in Philippine Developer

Now, you’d think that a major credit crunch with far-reaching consequences in the world’s second largest economy, its largest manufacturer, and its largest holder of US dollar reserves, would be constant front-page news. But it’s not.

Thomas and Raymond Kwok, the billionaire co-chairmen of Sun Hung Kai Properties Ltd, Asia’s largest developer, went on trial on Thursday in Hong Kong’s biggest corruption case since the city’s anti-graft agency was formed nearly 40 years ago. The case involves a series of payments and loans totaling more than HK$35 million ($4.5 million) allegedly paid to Rafael Hui, who had headed Hong Kong’s civil service from 2005 to 2007. The three men have pleaded not guilty to all charges, including conspiracy to offer an advantage to a public servant. The case has thrown a spotlight on the close relationship between the city’s powerful developers and government in the former British colony, which returned to Chinese rule in 1997 and has a separate legal system from the mainland. The Kwok brothers, who run the world’s second-largest property company with a market capitalization of $34 billion, have been charged with a total of seven offences, including claims related to alleged payments offered to Hui. Thomas Chan, a board member in charge of land purchases at Sun Hung Kai Properties, and Francis Kwan, a former Hong Kong Stock

Exchange official, have also been charged in the case. They have also pleaded not guilty. All five defendants appeared in court, where about 50 photographers and cameramen jostled to get shots of the men at the entrance. Thomas Kwok, wearing a black suit and red tie, thanked reporters as he entered the court looking relaxed. HIGH-FLYING LEGAL TEAM The prosecution and defendants have hired highprofile lawyers for the trial, with local media reporting the Kwok brothers could spend more than HK$100 million in legal fees, which would mark the most ever paid in the city. Clare Montgomery, a specialist in criminal and fraud law, is representing Thomas Kwok. She led the prosecution team in the extradition case to Sweden of Julian Assange, founder of whistleblower website WikiLeaks. John Kelsey-Fry, a lawyer who represented former News Corp. executive Rebekah Brooks in a phone-hacking scandal, is defending Raymond Kwok. Hong Kong’s Court of First Instance will summon more than 80 witnesses during the

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trial, which is scheduled to run for 70 days, according to local media reports. The Independent Commission Against Corruption (ICAC) arrested the tycoons in March 2012 in the agency’s biggest investigation since it was set up in 1974 to root out widespread corruption in the then-British colonial government and police. Sun Hung Kai Properties, which has a market value of $34 billion, has said the legal battle will not affect its business and operations. Shares in the company were down 0.6 percent on Thursday morning, lagging a 0.6 percent gain for the broader market. The stock has fallen 3.5 percent so far this year. Analysts have said the company has already taken steps to reassure investors, including the appointment of additional non-executive directors and naming Adam Kwok and Edward Kwok, the sons of Thomas and Raymond Kwok, as alternative directors. Sun Hung Kai is the city’s largest real estate developer, followed by Cheung Kong (Holdings) Ltd, which is controlled by Asia’s richest man Li Ka-shing. ($1 = 7.7520 Hong Kong Dollars)

According to a recent Forbes Asia report, Chinese buyers have overtaken overseas investors from Russia in terms of volume and sales, as the recently imposed economic sanctions continue to stymie demand from the eastern European market. Ultra-wealthy Chinese investors—who have spent as much as USD90 million on US residential property—are also reportedly vying with Hollywood celebrities when buying homes in New York City. Recently, Brad Pitt and Leonardo DiCaprio both lost their bids to purchase a USD26 million mansion in Manhattan to Beijingbased Zhang Xin, CEO of real estate developer SOHO China. Major Chinese developers have also increased their investments in high-profile projects in the United States. Earlier this year, Vanke, one of China’s largest property firms, announced the construction of a 61-storey luxury condominium tower in Midtown Manhattan. It is the company’s second North Americanbased project through partnerships with US firms. About 440 residential projects available to foreign investors are underway in response to the rising Chinese demand in the US, including one inspired by the London

Eye that is being built on Staten Island. Forbes estimates that Chinese foreign investment could hit CNY1.1 trillion (USD178 billion) this year. China’s rising middleclass is also joining the race—and many are even choosing to leave their country behind. By comparison, the most expensive New York properties only cost half as much as their counterparts in Hong Kong, per Knight Frank’s latest Prime International Residential index. An increasing number of middle-income Chinese investors are leaving China in search of better living conditions and a higher quality of life abroad, according to a new report by The Economist.

Here’s a guy you want to bet on– Li Ka-Shing. Li is reportedly the richest person in Asia with a net worth well in excess of $30 billion, much of which he made being a shrewd property investor. Li Ka-Shing was investing in mainland China back in the early 90s, way back before it became the trendy thing to do. Now, Li wants out of China. All of it. Since August of last year, he’s dumped billions of dollars worth of his Chinese holdings. The latest is the $928 million sale of the Pacific Place shopping center in Beijing– this deal was inked just days ago. Once the deal concludes, Li will no longer have any major property investments in mainland China.

More than 6,000 Chinese emigrants participated in the US investment visa programme in 2012—an estimated 80 percent of the total foreign investment. Based on the National Statistics data, about 230 emigrants were granted permanent residency status, compared with the 150 permits approved 10 years ago.

This isn’t a person who became wealthy by being flippant and scared. So what does he see that nobody else seems to be paying much attention to?

Under the EB-5 visa scheme, foreign investors can receive a green card after making at least a USD500,000 real estate investment in the US.

The shadow banking system alone is now worth 84% of GDP according to an estimate by JP Morgan. The IMF pegs total

Simple. China’s credit crunch. After years of unprecedented monetary expansion that has put the economy in a precarious state, the Chinese government has been desperately trying to reign in credit growth.

private credit at 230% of GDP, jumping by 100% in the last few years. Historically, growth rates of these proportions have nearly always been followed by severe financial crises. And Chinese leaders are doing their best to engineer a ‘soft landing’.

Most traditional investors are unaware that what’s happening in China will likely have far greater implications to their investment portfolios than the policies of Janet Yellen and Barack Obama combined. At least for now. And folks who don’t see this coming and keep buying at the all-time high may see their portfolios turned upside down. Quickly.

If they’re successful, the world will only see major drops in global growth, stocks, property, and commodity prices.

At the same time, some investors who are conservative and cashed up may realize a real ‘blood in the streets’ moment.

If they fail, the spillover could become pandemic.

Again, using Chile as an example, I’m starting to see over-leveraged property owners coming to the market in droves ready to make a deal. This is great news because my shareholders and I are able to buy far more property with US dollars than we could even just six months ago.

This isn’t important just for Asian property tycoons like Li Ka-Shing. Even if you don’t know Guangzhou from Hangzhou from Quanzhou, there are implications for the entire world. Here in Chile is a great example. Chile is among the top copper producers worldwide, China among its top consumers. With a major slowdown in China, however, copper prices have dropped considerably. Consequently, the Chilean economy has slowed. The peso is down nearly 10% against the US dollar in recent months, and the central bank is slashing rates trying to prop up growth. There are similar situations playing out across the globe. Not to mention, China could put the entire global financial system

I expect this trend to hold given that China is just at the beginning of its process. It’s said that the Chinese word for “crisis” is a combination of “danger” and “opportunity”. This isn’t entirely accurate. ‘Weiji’ can have several meanings, but is probably best translated as ‘dangerous’ and ‘crucial point’. We may certainly be at that crucial point, and now might be a good time to take another look at your finances and consider selling before a major crash. The richest man in Asia certainly thinks so.

Khazanah Nasional Bhd is investing around RM215 million to acquire an eight percent stake in a property developer in the Philippines. The sovereign wealth fund revealed that it has inked a cornerstone investment agreement, via its special purpose vehicle Pasir Salak Investments Ltd, for the upcoming share offering of 8990 Holdings. “The investment represents Khazanah’s first foray into the Philippines, which will allow Khazanah to gain exposure to the country’s unique growth story,” noted Khazanah in a statement. Currently, 8990 Holdings is a leading developer in the under-served mass housing segment in the Philippines and has sold more than 26,000 homes from completed as well as on-going projects. “Specialising in socialised housing and economic housing, 8990 Holdings caters for housing demand from the lower income population. The company has development projects throughout the Philippines, including projects in Cebu, Davao, Iloilo, Cavite and Pampanga,” added Khazanah. Khazanah believes that 8990 Holdings is well-positioned to address the country’s affordable-housing problems through innovative solutions that meet the needs of the lower-income market. Notably, the Philippines has been one of the region’s fastest-growing economies, with real domestic product growing by 6.8 percent in 2012 and 7.2 percent in 2013. “Growth and trade prospects are expected to further strengthen with the anticipated increase in political stability and security in the southern Philippines,” it said.

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The Asking Price of a Rarefied Manhattan Condo Jumped $10 Million in 24 Hours be worth $10 million more overnight? We won’t know until the aspiring investor-escapee completes the flip of No. 62A. If the entity known as Escape From New York gets its asking price, there will be at least one other satisfied party in the tower: the owner of a three-bedroom unit on two floors below. That unit sold for $30 million last month, too, in a transaction that inspired a bit of real-estate porn in the New York Times:

Are you looking to make a quick $10 million in the ultrahigh-end Manhattan real-estate market? You needn’t look further than One57, Extell Development’s slim, 90-story rising over Central Park South.

new buyer put the property back on the market for $41 million, a miraculous 32 percent increase in value. This is a sign of what real estate writers often describe as “a frothy” market. The Real Deal, which uncovered the fastappreciating home, describes it as a “4,483-square-foot, 62nd-floor apartment [featuring] four bathrooms and floor-to-ceiling windows.” It must be adorable. But could such comforts

A three-bedroom condo in the building sold for a record $31 million in April to a mysterious buyer known as Escape From New York LLC. The sale was officially memorialized in public real estate records on Tuesday. Then, on Wednesday, the

“The apartment, No. 60A, has fourand-a-half marble baths and the ultimate view magnet, 60 feet of park frontage in the living/dining/ entertaining area. The master suite has his-and-hers baths and bird’seye views of the city and the Hudson River. The custom eat-in kitchen by Smallbone of Devizes has handpainted white cabinetry (although buyers at One57 do have the option of choosing a Macassar ebony color scheme). ” Throw in the optional room service—wouldn’t you expect it at this price?—and such opulence suddenly seems like a bargain at only $30 million.

Big Drop in March New Home Sales Number of units

Riversuites which moved 44 units at $1,109 psf and RiverTrees Residences where 35 homes were taken up at $1,129 psf.

Sales of Private Home (inc. ECs)

3,500 3,000 2,500 2,000 1,500 1,000

Source PropertyGuru / URA

Sales of new private homes in Singapore fell by about 34 percent monthon-month during March to reach 480 units, according to public data published today by the Urban Redevelopment Authority (URA).

In February, the total number of private homes sold by developers, including ECs was 769 units. Looking at March 2013 when 3,072 units were sold, the year-onyear decline is a massive 83 percent.

Including executive condominiums (ECs), the number of units sold increased marginally to 535.

The top-selling project last month was The Santorini which sold 76 apartments at a median price of $1,108 psf. This was followed by Eight

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The most expensive property sold in March based on median psf pricing came from Cluny Park Residence with one unit at $2,825 psf. Skysuites @ Anson was second with one unit sold at $2,817 psf, followed by Marina Bay Suites which moved one unit at $2,787 psf. Sales of new private homes as well as the number of projects being launched has generally declined. Sales in December 2013 were at 333 units, which was a fiveyear low for the city-state.

According to URA, prices as well as the number of units sold during the month are based on the Option to Purchase (OTP) issued by developers to buyers. An OTP is a right or option given by the vendor to an intending purchaser to buy the property at a specified price within a specified period of time - the validity period of the option. The intending purchaser must pay a booking fee of between 5 – 10 percent of the agreed price for this right or option. The purchaser has to exercise the OTP within its validity period if he decides to buy the property.

A Chinese Company 3D Printed 10 Houses in a Day

There’s a lot you can do with a 3D printer. Now add “building a house in a day” to the list. Make that 10 houses. The WinSun Decoration Design Engineering Co. has printed 10 homes in 24 hours out of recycled materials. This isn’t the first attempt at 3D printing large structures in a short amount of time. Researchers in California are making a printer that can build a house in 24 hours. In Amsterdam earlier this month, construction of a 3D-printed house began. The house made out of plastic bricks that fit together like Lego. It’s also being printed onsite. The Chinese houses, on the other hand, weren’t built onsite. They were printed in pieces and then put together in Shanghai’s Qingpu district. The pieces are made using recycled construction materials and industrial waste to form a concrete aggregate, Gizmodo reports. The 3D printer used to build the houses is 500 feet long, 33 feet wide and 20 feet high. Each home costs around $4,800. “We purchased parts for the printer overseas, and assembled the machine in a factory in Suzhou,” the company’s CEO, Ma Yihe, told 3ders. “Such a new type of 3D-printed structure is environment-friendly and costeffective.”

This Chinese City’s Property Market Is Even Chillier Than Its Weather gates opening to the International Olympic City project in Yingkou.

Here One of thegates opening to the International Olympic City project in Yingkou“We’re in the frigid, wind-battered northeast currently finding a lot of difficulties in Chinese port city of Yingkou, realgrowth,” admits Gao Hongtao, a local estate developer Zhang Wang is official, who remains optimistic that hoping that weather might be a eventually Yingkou’s apartments will selling point for potential apartment fill with residents. buyers. “Then the question won’t be whether Temperatures in the region plunge there is an oversupply but whether to -30 degrees Celsius in the winter. we have sufficient housing,” he said. But in Yingkou, they bottom out at a mere -20 degrees, he says. Maybe According to data from local officials, he can get some buyers looking for a Yingkou’s average area of housing better climate. space per person has nearly doubled in the past 10 years to 28 square Cities like Yingkou in China’s meters. Brokerage firm Nomura northeast rust belt were among considers a rapid increase in perthe earliest cities in the country to person space a signal of oversupply, be overbuilt. In 2005, now-Premier and similar increases occurred in Li Keqiang was party secretary of Japan before its property bubble Liaoning province, where Yingkou burst in the early ’90s. is located. He pushed a massive restructuring project to wean the But building apartments before there region from its reliance on steel, is demand has worked in the past coal and mining. As Mr. Li moved up in China, most notably in Pudong, a the government ranks, developers one-time wasteland across the river counted on his endorsement as from Shanghai where developers an implicit government backing of built office buildings and apartment the region’s future development, complexes as a development project. developers and analysts say. Yingkou, The area eventually boomed. along with other cities, sold vast tracts of lands to developers to build Pudong became a model for the rest apartments for the workers who – of China: build it and they will come. they hoped – would populate the But with so many cities competing to new factories, malls and industrial build cookie-cutter housing projects parks to come. and industrial parks, the model may have run its course. Since the The Bayuquan cityscape in Yingkou early 1990s, China’s overall return is filled with housing projects, most on investment has fallen by about of them empty or unfinished. But a third, the International Monetary investments have been slow to Fund says. The country over invests materialize, and newcomers are by 10% of GDP, the IMF estimates. scarce in Yingkou, a city of 2.4 million And each yuan of lending now with a population that hasn’t grown produces just one-third the payoff in much in the past few years. Mr. economic growth that it did before Zhang, chairman of Xinhuixin Real 2009, Fitch Ratings says. Estate Group in Hangzhou that is building apartment towers near an “The problem is that Yingkou lacks a unused mega-stadium here, says strong and diverse enough industrial 70% of his sales are to people who base to draw people into the city,” received compensation from the said a builder at a state-owned local government after they were construction firm here. evicted from their homes to pave the way for projects such as the one he’s Nearby cities are also competing currently building. to attract rural workers. One of the

In parts of Yingkou and its nearby suburbs, empty apartment towers more than a dozen stories high fill the horizon. The city now has five years’ worth of unsold apartments, Citigroup estimates. Local developers say at least three large projects together totaling more than two dozen 20-story apartment buildings have been abandoned due to low sales and won’t be completed unless the city figures out a way to revive them. Two of the projects are devoid of the billboards advertising apartment space that are commonplace in China. During a March visit, there were no signs of workers or construction material, although a few watchmen kept an eye on the developments while a German Shepherd in a second-story balcony barked at passersby. The city says the projects aren’t abandoned; developers say the city is in talks with the troubled properties’ builders but they don’t know the details. To help developers find customers, Yingkou officials say they have waived fees and eased criteria for out-of-towners who buy homes to get a local residence permit, or hukou. (Chinese citizens need these to legally live in a city and get social services, including schooling for their children.) Officials also say they are trying to help struggling builders, who say they haven’t been able to get bank loans in years, line up funding.

regrets the purchases and wishes he would have bought real estate overseas instead, citing flat housing prices and concern about a housing bubble. As for Mr. Zhang, despite his attempts to promote Yingkou’s comparatively mild climate—mild for China’s northeast, that is—he’s gloomy in his outlook on the city’s housing market. “There will be more defaults to come,” he says.

Singapore Resale Private Home Prices Down Again

Prices of non-landed private resale homes continued to fall across all regions of Singapore in the month of March, according to latest flash estimates of the NUS Singapore Residential Price Index (SRPI). Overall prices decreased by 1.1 percent month-on-month, more than the 0.9 percent decline in the January to February period. Excluding small units, the central region posted the biggest drop of 1.3 percent from the previous fall of 0.2 percent.

Meanwhile prices have stagnated and Yingkou residents say they have learned lessons from those who bought properties early only to see developers walk away.

Non-central region prices (properties outside districts 1 through 4 and 9 to 11) dipped by 1.0 percent after sliding 1.5 percent in the month before.

Rather than buy apartments upfront and wait for several years until they are completed—as is customary in China— Yingkou’s would-be buyers won’t put down money until the units are finished. The wait-beforepurchase attitude could further crimp financing for developers.

As for small units, prices fell by 0.4 percent from the 0.7 percent decline seen previously.

“I waited until the house was finished,” says Jesse Huang, a 32-year-old translator at a Yingkou pipe-fitting company, who recently bought two apartments. He said he

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The Rich Buys Real Estate, the Poor Wants Gold

Malaysian Property Market Falls 10.9% in Volume, Rises 6.7% in Value

NEWS

The banking and investment industry has a crucial role to play when it comes to property. Read about the most recent news and trends in this trade

Malaysian Invest Overseas to Gain Wealth HSBC conducted an online survey to find out about the view of the Malaysian public regarding property developments overseas. According to the survey, 45.5% of Malaysians invest in properties abroad for growing wealth, 23.6% for migration purposes, 18.2% for family and children, and 12.7% for retirement. 87.3% of Malaysians also admitted to being ill informed about properties overseas.

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When making a decision about purchasing properties in foreign countries, 21.8% of Malaysians source information from websites and blogs, another 21.8% get advice from banks and financial institutions, 21.8% gather knowledge from property development companies, 16.4% find out about developments overseas from family members, 12.7% read about it in newspapers and magazines, plus 5.5% learn about it from friends.

If you want to know what someone’s views of society are, ask what they believe is the best long-term investment.

Consider the differences between what the wealthy and poor believe is the best longterm investment:

legal system; that you will be secure in that property, and no one can illegally take it from you.

I am fascinated each year when Gallup Poll asks Americans to choose the best option among real estate, stocks and mutual funds, gold, savings accounts and CDs, or bonds. The results are a pop psychologist’s dream of cognitive issues, belief systems and ideologies. See the following chart:

Upper-income Americans are much more likely to say real estate and stocks are the best investment, possibly because of their experience with these types of investments. Upper-income Americans are most likely to say they own their home, at 87%, followed by middle (66%) and lowerincome Americans (36%). Gallup found that homeowners (33%) are slightly more likely than renters (24%) to say real estate is the best choice for long-term investments.

Stocks are similar: Investing in them reflects a long-term faith that the nation will continue expanding its production of goods and services. Stocks are an optimistic asset class almost by definition.

Now, before we get into the details, some caveats: First, people often don’t really know what they want or think. Instead, when questioning people about their hopes and desires, we end up with a distorted mass-media version of a bad Robin Leach television series. Sad but true, often we don’t know what we want out of life. Second, survey responses are not all they appear to be. There is value in the collective data, but we need to dive into the details to tease out some fascinating cultural differences. Note what happens when we divide the survey responses along income lines. We discover some very telling things about the American psyche.

Now compare that with this: Lower-income Americans, those living in households with less than $30,000 in annual income, are the most likely of all income groups to say gold is the best long-term investment choice, at 31%. Upper-income Americans are the least likely to name gold, at 18%. The wealthy like real estate and equities; the poor prefer gold. It isn’t too hard to figure out why. Buying and investing in real estate requires several things: Steady income, saved money for a down payment and decent credit. But it also reflects a faith in the legitimacy of the local property laws and

It also is worth noting that starting a business requires more than capital; it requires a specific type of optimism beyond mere economic hope of success -- a belief that the existing economic, legal and governmental system, if not perfectly fair, at least isn’t wildly arbitrary or capricious. In other words, your business will rise or fall on its merits. The Rise and Fall of Gold More pop psychology:Gold is more or less portable; it often can be traded extra-legally. It is a disaster currency that will have value even in a Mad Max era when society breaks down. Gold reflects a hedge against the potential collapse of the existing order; it is a pessimistic investment. What do you believe you think? How would you answer those questions? Have you given much thought to what you actually believe?

The Malaysian property market saw a decline of 10.9% in volume for the year 2013, with 381,130 transactions done compared to 427,520 in 2012. However, it saw a 6.7% increase in value, with RM152.37 billion done for 2013 compared to RM142.84 billion a year ago, according to the Property Market Report. It said the residential sub-sector continued to spearhead the property market activities, taking up 64.6% share. “Prevailing low interest rate environment, with the base lending rate of commercial banks sustaining at 6.53%, and weighted average lending rate to 5.4% continued to support the domestic property market,” it said. It added the Bank Negara Malaysia’s pre-emptive strategies to preserve household sector resilience through application of 70% loan-to-value ratio on third housing loans onwards as well as guidelines on responsible funding, had gradually impacted the housing market. It noted the overhand performance continued to improve as the number of residential overhang dropped further to 13,547 units in 2013. On the contrary, the overhand value increased from RM4.74 billion to RM4.8 billion in 2014. On the supply side, completion of residential, shop and industrial sub-sectors improved with 8.3%, 18.2% and 15.8% each. Construction activities for residential, shop and industrial sub-sectors continued to grow with more starts and new planned supply.

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Malaysia Top Retirement Destinations

BNM to Raise Overnight Policy Rate by 25 Bps?

Malaysia Investor Clubs Blamed for Sky-Rocketing Property Prices cent for the subsequent two years. Foreigners have also been barred from buying properties worth less than RM1 million, under the Guidelines on the Acquisition of Properties with effect from March 1 this year.

There is a current trend where more Malaysians are migrating overseas and retiring abroad while an influx of foreigners are flocking to here to spend the rest of their golden years. According to InternationalLiving.com’s Global Retirement Index 2014, Malaysia ranks as the third best country to retire, after Panama and Ecuador. What makes Malaysia a good place to retire? There are any advantages including the yearround warm sunny climate, affordable cost of living, accessible health care and good infrastructure. One of the main concerns of retirees is living in a place that has good health care facilities. According to InternationalLiving.com’s Global Retirement Index, Penang and Kuala Lumpur have the best medical centers in the country. Affordable insurance protection is also key especially medical and hospitalization benefits. Another attractive factor for retiree sis the good and comfortable quality of living in Malaysia. The country has a mix of facilities and environment that can cater to both a lavish lifestyle and a simply moderate one. The natural landscape also allows you to have the best of bots worlds which is calm and relaxing yet adventurous at the same time. Connectivity to other countries

and regions is also important especially when needing to keep in touch with family abroad. Besides that, the availability of high-speed Internet broadband enables retirees to also stay connected with family and friends around the globe. While finding the right environment may shape your dream retirement, being financially prepared for retirement may help you turn that into a reality. Sound financial planning is the basis to fund your standard of living during your golden years, wherever you may want to spend them. You may want to consider retirement plans that provide annual guaranteed cash payouts such as HSBC’s UniversalTreasure to boost your retirement income and take you closer towards your dream retirement. Have a chat with your Relationship Manager if you need more assistance in planning your retirement or visit any of our branches for more ideas and insight. Top Three Cities to Retire In Malaysia: Penang The ‘Pearl of the Orient’ remains is a favourite with retirees and Yahoo! Travel listed it as one of the top 10 must-visit islands. Besides its beautiful beaches, iconic Georgetown is protected as a UNESCO World Heritage site and is ranked as

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one of the world’s 21 best cities for retirement by LiveandInvestOverseas.com in their First Annual Retire Overseas Index. Penang is famous for its multicultural society, wide variety cuisine, golden sandy beaches and some of the best health care facilities in the country. Kuching Located in East Malaysia, this city was named by LiveandInvestOverseas. com as the most interesting retirement spot as Kuching offers retirees a laid back lifestyle that can be adventurous and high standard as well. Kuching is also one of the cleanest city in Malaysia recognised by United Nation, the Alliance for Healthy Cities, and the World Health Organization. Ipoh This gem of a city is famous for its natural limestone hills and delicious food. And it is conveniently located just over two hours by road from Kuala Lumpur and Penang. It offers a quiet hideaway from the hustle and bustle of the city, but it’s still close enough for you to experience the best of both worlds. Furthermore, property prices are still affordable, compared to Kuala Lumpur. It also has relatively good public amenities and infrastructure, and shopping and entertainment outlets.

While Bank Negara Malaysia (BNM) maintained it overnight policy rate (OPR) at three percent, it latest monetary policy statement hinted at a possible hike in the coming months. “Going forward, the degree of monetary accommodation may need to be adjusted to ensure that the risks arising from the accumulation of these imbalances would not undermine the growth prospects of the Malaysian economy,” said the central bank yesterday. According to Alliance Investment Bank Chief Economist Manokaran Mottain, the last paragraph in the statement meant the OPR could be raised in the next few months. “After reading the statement carefully, we noticed that the central bank’s tone towards the OPR has changed. We believe the adjustment may happen as early as July,” with interest rate rising by 25 basis points (bps), he said. Notably, a hike in this benchmark rate would mean higher interest rates for property loans. “Following the issuance of the statement, we are more confident that there will be an increase in interest rate but it will not be at a quantum that could disrupt the country’s economic growth,” noted Mottain. Nevertheless, the OPR hike is viewed as a stabilising adjustment, he added. Meanwhile, the government’s macro and micro prudential measures have curbed the dizzying growth of the country’s household debt, said BNM. However, the prevailing monetary and financial conditions could result to a larger build-up of economic and financial imbalances. Global economic growth softened in Q1 2014 as several important countries were impacted by weather-related and policy-induced factors. “Looking ahead, the global economy is expected to remain on a path of gradual recovery,” it added.

His reward? He managed to buy two condominiums in 2011 and 2012 on nearly 15 per cent discounts which promised to bring good resale value. But he has found that the rents for his properties are barely enough to cover his mortgages while their values have been stagnant. “It’s a big risk even with big discounts in the clubs,” says the 47-yearold. But many are willing to take these risks, he says. At least seven property investor clubs have sprung up in Malaysia over the past five years, with the clubs being accused of keeping property prices on the boil as the government faces an endless uphill battle to cool runaway property speculation. These clubs, with members hungry for inside scoops on property deals, are keeping prices hot. And experts believe that if they are left unchecked, it could lead to more runaway speculation. “Typically, these investor clubs approach property developers and offer to buy 50 to 100 units or even an entire block of apartments and in return, receive an en bloc discount of between 15 per cent and 25 per cent,” says

property analyst Tang Chee Meng of Henry Butcher Marketing. He says investor clubs have mushroomed over the past few years because of the boom in the property market and the double-digit rise in home prices which have led to the heightened interest in investing in the property market. The problem comes when the developers mark up prices to cover the en bloc discounts given to the investor clubs. The organisers of the clubs ask for 20 per cent discounts on new launches and pocket 5 per cent as commission, Mr Tan, the used car business owner, says. The International Real Estate Federation (FIABCI) says these clubs contribute to rising property prices and prompted the government move to cool rising prices. “We are concerned,” says Mr Michael Geh, a spokesman for the Malaysian chapter of FIABCI. Among the cooling measures in the 2013 Budget were raising real property gains tax from 15 per cent to 30 per cent if a piece of property is resold within three years and 20 per

In 2009, the minimum threshold imposed was RM250,000 which was raised to RM500,000 in 2010. Despite the government’s moves against speculation, Malaysia’s national home prices still rose 10.1 per cent for the quarter ended last September, year on year. Kuala Lumpur has the most expensive homes in Malaysia, at an average of RM620,758, even though prices rose only 4.3 per cent for the year before last September. Home prices surged in Johor by 20.4 per cent, 14.3 per cent in Penang and 6.3 per cent in Negeri Sembilan in the same period, according to government data. Mr Geh says the phenomenon in Malaysia started some five years ago with selfproclaimed property “gurus” who were successful themselves and had garnered several properties. “Then, they started a club to share their knowledge and charged members for tips,” he says. “They are either subscription based or charge a fee per talk.”

membership sizes, ranging from several dozen members to hundreds.

Najib: GST Will Benefit Everyone

“Their fees can be from RM200 to RM2,000, sometimes RM5,000,” Mr Tan says. Members are often told to have their cheque books with them and “expect a very good deal” on a new property. “It’s all by word of mouth to keep them exclusive. They will offer deals like 25 per cent discount for the first 10 buyers,” says Mr Tan. The Malaysian Institute of Estate Agents says speculators’ practice to “flip” their properties for short-term gain has led to properties being sold at 30 per cent to 40 per cent higher than developers’ selling prices, distorting the market. To control the activities of the investor clubs, the government has proposed to restrict pre-launch sales of developers, says Mr Tang, the property analyst.

There were just over a million taxpayers in a country with a population of 28 million, noted Prime Minister Datuk Seri Najib Razak. During his department’s monthly gathering, PM Najib have questioned on how often have we heard about supposedly poor people who can afford to send their children abroad for a foreign education. “This is an obvious case of underdeclaring income or paying less than what you are actually supposed to pay,” he said. According to the Malaysian Insider, despite the widespread May Day protest, Putrajaya has maintained that the controversial Goods and Services Tax (GST) will level the playing field for taxpayers as there are many who evade paying income tax. Najib added the GST is a progressive tax which will benefit Malaysians as it depends on consumption since many Malaysians do not pay income tax.

“However, this has, of course, met with stiff resistance from the developers and may not be easy to control.”

GST is scheduled to be implemented in April next year and many Malaysians, already reeling from the rising cost of living, are concerned about making ends meet.

Attempted calls to reach central bank officials for comment on property investor clubs were unanswered.

On May Day 1st May, thousands of Malaysians had gathered near Dataran Merdeka to voice their dissatisfaction with Putrajaya’s intention to introduce GST.

Property experts believe there are at least seven property clubs in Malaysia with varying

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/// Banking and Investment News

Property Lending Remains Strong

How GST Will Impact Home Prices & the Property Market BEFORE & AFTER GST - A COMPARISON

Despite the government’s real estate curbs, lending to the property sector is expected to remain robust this year, according to Malaysian Rating Corp Bhd (MARC) Chief Economist, Nor Zahidi Alias. “Lending to the sector will still remain resilient this year. Part of the reason as documented by Bank Negara in its latest annual report is that property prices remain elevated. This will induce investors to keep focusing on property investment, as it is often the safest investment with lucrative returns in Malaysia,” he said in an interview with StarBiz. In fact, loan growth in the residential property market recovered to 13.4 in January 2014 from a cyclical low of 12.4 percent in March 2013. Excluding loans granted for construction purposes, property loans accounted for 40.8 percent of all lending in January. The growth of housing loans also rose to 13.5 percent in February 2014 compared to the same period last year, surpassing the annual growth of 13.4 percent in January 2014. Hence, there is a high possibility that the government could impose tougher measures to control the rising growth in property lending. Possible curbs may include lower loan-to-value (LTV) ratios for second property purchases. Cheah King Yoong, a Banking Analyst at Alliance Research, noted that while there is a good chance that the authorities may introduce more stringent measures, they still need to thoroughly study its possible. “We believe the authorities will review the impact of these measures on the underlying economy first before taking the next step. After all, it is a delicate task juggling between curbing excessive speculation and hurting real demand.” “Besides that, we believe there is a 50:50 chance of the overnight policy rate being raised by 25 basis points in the latter part of the year, which could also serve as a precautionary measure to curb speculative activities in the market,” Cheah added.

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MH370: Banks Start Contacting Families to Settle LOANS

GST Starts Next April With or Without Protest, Says Deputy Minister

The tables below show a comparison between the cost of a new property before and after GST. Certain taxes and costs leading up to the sale to the final consumer have been simplified for this purpose. Also, an assumption is made that developers are able to transfer 100% of all incurred tax costs over to the consumer via the sale price.

With the coming implementation of Goods & Service Tax (GST) in April 2015, many Malaysians are concerned with what this bodes for prices in general. It is inevitable that home prices will also be affected. In this article, we explain how home and property prices will be affected moving forward. To properly appreciate how GST will affect home prices, it is necessary to first understand how GST works. Aside from GST, one must also have an understanding of the Sales Tax, which is the existing tax scheme affecting the property sector. GST will supplant the Sales Tax come April 2015. TAX SCHEME ON RESIDENTIAL PROPERTY - THE SIMILARITIES In comparing both tax schemes, we have to first identify their similarities. One similarity between GST and the existing Sales Tax scheme is that no taxes are charged or will be charged to the consumer on the purchase of a home / residential property. For GST, residential properties fall under the “Exempt Rated” basket of goods. (But do take note that GST will be charged to the consumer for commercial property purchases as commercial properties are “Standard Rated”). However, during the creation of the final product (also known as the input stage in tax parlance), under both tax schemes, developers would incur taxes during procurement of their inputs and materials. And this is where the differences start to become apparent between both tax schemes. The tax rate for inputs and materials vary between GST and Sales Tax.

SALES TAX VS GST FOR RESIDENTIAL PROPERTIES - THE DIFFERENCES Based on the Sales Tax Act of 1972, basic building materials such as bricks, cement and floor tiles fall inside First Schedule Goods, in which all the goods in this category will not be subjected to sales tax. Meanwhile, other building materials fall inside Second Schedule Goods, in which all the goods in this category will only be charged sales tax of 5%. Under the new GST implementation, all building materials and services (E.g. Contractors, engineers) will be subject to GST with a standard rate of 6%. This will invariably raise the production cost for developers. If you understand how GST works, you will notice that in most cases, the additional tax cost is simply passed on to the final consumer (StandardRated goods), or is claimed back from the government (Zero-Rated goods). But in this case (Exempt-Rated), the additional tax cost is borne by the party before the final consumer – The developer. The developer does not have a next “victim” in the supply chain. This seems like good news for home buyers as they do not have to pay GST when purchasing a home. However, one should not be too happy about this. It is no stretch of the imagination to think that developers would try to build in the additional tax costs into the final sale price implicitly.

Despite the anti-GST protests, which took place in Kuala Lumpur and Penang recently, the government will go ahead with its implementation from next April, Deputy Finance Minister Datuk Ahmad Maslan said.

The example above shows a price increase of 3.41% for new residential properties post-GST implementation. But there is a plus point to this. Overall, new residential properties may register a lower overall increase in tax burden compared to Commercial Properties that are Standard-Rated. This is because there still is the chance that developers may only transfer some and not all of their tax cost increases into the final retail price. The downside to this is that where pricing for new commercial properties will be cleaner (Sales Price + GST), pricing for new residential homes would look inflated. This, in turn, will undoubtedly have a knock on effect on prices in the secondary house market. CONCLUSION As a home buyer, it pays to know what the implementation of GST might bode for home prices moving forward. If you skipped the entire article, here are all the key insights in a nutshell: 1. 2.

With GST, there should be a once-off increase in property prices across the board While developers may not bill home buyers for GST, they could transfer the costs implicitly via the sale price The overall price increase for new residential properties could be marginally lower than that for new commercial properties The secondary home market should see a knock on effect in prices

Armed with this knowledge, you can make a better decision on when to purchase your home.

Banks have started contacting families of passengers on board missing Malaysia Airlines flight MH370 to settle their loans. Zamani Zakaria, 56, the father of Mohd Razahan Zamani, 33, said a bank officer contacted him regarding his son’s housing loan. The bank, he said, requested a confirmation letter from Malaysia Airlines that his son and daughter-in-law, Norli Akmar Hamid, 33, were among the missing passengers. “I now need to contact MAS for the official letter and discuss the next course of action,” he said, adding that his son’s employer also visited his family on Wednesday and gave them his salary for last month. “The employer praised my son for his hard work, dedication and gave us his March salary. I am not sure whether they will continue paying him.” Zamani said they were not affected financially as he was still working. “He (Razahan) used to give his mother some money for monthly expenses. She is feeling it now. She is also still finding it hard to accept our son’s and daughter-in-law’s fate.”

Passenger S. Puspanathan’s father, G. Subramaniam, 60, said the banks and insurance companies had not contacted him regarding his son’s loans or policies. He said his wife and son jointly bought the house that they were living in, but the banks had not contacted them regarding the repayment. “I am assuming that my daughter-in-law is servicing the loan. That is why they have not contacted us.” He said if the Mortgage Reducing Term Assurance (MRTA) coverage for their house offsets only the son’s portion of the loan, he would have to look for ways to service the balance. “My son used to take care of our expenses. But now, I am planning to work as a security guard again to manage our expenses.” In Ipoh, Choi Loong Chow, the husband of MH370 air stewardess Goh Sock Lay, said he was contacted by two insurance companies on Thursday and they offered to pay him compensation.

Choi, 48, said the companies offered to pay him compensation with no questions asked. “I accept the money with a heavy heart as I believe my wife is still alive. Without the plane wreckage or bodies, I will never accept she is gone.” The family of civil engineer Tan Ah Meng, however, refused to speak to reporters at their home at Kampung Baru Kanthan in Chemor. Tan, 46, his Taiwanese wife, Chuang Hsiu Leng, 48, and their eldest son, Tan Wei Chen, 19, were among those on board the flight.

I accept the money with a heavy heart as I believe my wife is still alive. Without the plane wreckage or bodies, I will never accept she is gone.

Describing the protest rallies against the Goods and Services Tax (GST) as inappropriate, he said the rally organisers should use a better approach to voice their opinions. “They should have submitted a memorandum on the matter, this (the protests) only serves to politicise all the good things that the government wants to implement”, he said, adding that the money collected ultimately benefits the people. The GST will be implemented at a fixed rate of 6%, replacing the existing sales and services tax. It will not be imposed on basic food items such as rice, sugar, salt, flour and cooking oil. Some of the other services exempted include government services such as issuance of passports and licences and healthcare services. Ahmad said the GST was not something new; in fact, 90% of the world’s population lived in countries which had been practising the GST. The GST rates to be charged next year were also among the lowest in the world, he noted. “The principle that everyone must understand is that tax processed from the people is returned to the people for their social and economic development. “The government does not keep the money because we will return the money to the people through the annual budget,” he said.

“One was from the insurance company appointed by MAS while the other was from my wife’s personal insurance.”

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/// Property Listing

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