Property Hunter October Issue 2014 by Victor

/// COVER STORY

Newfields Property Maisson, Ara Damansara

/// HOT TOPIC Venturing into Commercial Properties

OCT 2014

ISSUE 59 RM8.90

• • • • •

/// HOT TOPIC Mixed Development: Getting the right mix

The Office by Donald Dunstan Wong Top 10 Reasons Why Banks Can Reject Your Loan Upcoming Mixed Development Projects A family legacy in property investment Venturing into Commercial Properties

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TBMC RICH SUCCESS

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HUA YANG

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06  07 | Cover Story /// Contents

What’s inside... Property Hunter is published by: Maxx Media (S) Sdn Bhd (1043783-T) Lot 4, 2nd Floor, Block A, Heritage Plaza, Jalan Lintas, 88300 Kota Kinabalu, Sabah, Malaysia Office Hours: 9:00am – 6:00pm (Monday – Friday) E: info@maxxmedia.com.my T: +6088 719 787

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Feature Property Event SHAREDA Propex 2014

Hot Topic The Office by Donald Dunstan Wong

Hot Topic Venturing into Commercial Properties

Hot Topic Getting the right mix

Sabah Property News

Hot Topic Build-Then-Sell in 2015?

Sarawak Property News

Feature Property Event SHEDA Expo Propex 2014

Contributor: Michael Yeoh Top 10 Reasons Why Banks Can Reject Your Loan

Contributor: Dr. Daniele Gambero “Walking The Green Talk” How Malaysian developers are moving towards the Green and Eco-friendly concept

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Property developers in Sarawak converge at the Borneo Convention Centre Kuching for the annual property expo

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Sneak Peek of November Issue Hot Topic Find out how BUDGET 2015 will affect the Malaysian property development industry and its consumers from our panel of experts in real estate taxation, property investment, mortgage and property law. Hot Topic How far would having a well-organised property management company affect your decision to buy or rent an apartment or condominium? What are you paying management fees for? We look into these issues and more in our survey of Property Management in Sabah.

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Contributor: Chris Tan Trending Up Legally in view of the Property Boom in Malaysia (Part 5)

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Cover Story NewFields Property

Feature Property Showcase Tanah Sutera Offers New Phase For Sale In Sabah

Sam Lee

Circulation & Subscription

The publisher and editors give no representations and make no warranties, express, or implied, with responsibility of any of the material (including statistics, maps, articles, loan product tables, advertisements and advertising features) contained in this publication. The publisher and editors expressedly disclaim all responsibility for any errors in or omissions from the information contained in this publication, including all liability for any loss or damage suffered or incurred by any person as a result of or arising out of that person placing any reliance, weather whole or partial, upon the whole or any part of the contains of this publication. No correspondents will be entered into a relation to this publication by the publishers, editors or authors.

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

PropertyHunter

Propertyhunt3r

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/// Cover Story

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/// Cover Story

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/// Featured Property Showcase

GIIB DEVELOPMENT

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/// Featured Property Showcase

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/// Featured Property Event

1 /// FEATURED PROPERTY EVENT

SHAREDA Propex 2014

he annual SHAREDA Propex held at the Sabah Trade Centre from 22 – 24 August continued to spur the Sabah property development industry with a strong show of support from its members. A total of 132 booths and 42 developers together with exhibitors for green products and MyHome scheme gave visitors a broader perspective of Sabah’s property market today and in the future.

The event was officiated by Minister of Special Tasks Datuk Teo Chee Kang, representing Chief Minister of Sabah Datuk Seri Musa Aman. Aeropod Sdn Bhd (SP Setia Bhd Group) made a clean sweep of all the awards presented during the expo. They were winners in The Best Decorative Booth, The Best Creative Model House (Setia Sky 88), The Best Creative & Unique Brochure (Setia Sky 88 – Life in the Clouds), and The Green Features (Eco Sanctuary Singapore) categories were joint winner with Remajaya Sdn Bhd (Bay 21) for The Best Interior Design Award.

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/// Featured Property Event

13 1.

The SHAREDA Propex 2014 Organising Committee headed by Organising Chairman Sr. Chua Soon Ping (front centre)

2. Minister of Special Tasks Datuk Teo Chee Kang was welcomed by SHAREDA President Francis Goh (left) and Orgnaising Chairman Sr. Chua Soon Ping (right)

The Property Hunter crew gets ready to welcome visitors at its booth

4. SP SetiaSdnBhdâ&#x20AC;&#x2122;s winning booth display featured the best of its project portfolio 5.

SHAREDA President Francis Goh delivering his welcome speech

Riverson showcasing its high-end Riverson Mall with an attractive shopping bag display

The luxurious high-rise Harrington Suites booth

Organising Chairman Sr. Chua Soon Ping

9. Visitors registering for one of the many attractive property offers during the expo

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10.

Grand Merdeka put up crisp display to showcase its suburban mall project

11.

Puncak Gloxinia in Kinarut is the first PPA1M scheme launched in Sabah

12.

Bigwheel Industrial Park featured its innovative industrial park development

13.

The theme for this yearâ&#x20AC;&#x2122;s SHAREDA Propex is MyHome which brings attention to affordable housing

14.

Smiles for yet another successful expo! From left, Chew Fei Sean (Project Manager, Grand Merdeka), Chew Sang Hai (Deputy President of SHAREDA) and Pouline Wong (Head of Sales & Marketing, Riverson Corporation)

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/// Hot Topic

Donald Dunstan Wong

Photo by All4One

The Office

/// HOT TOPIC

Work Stations

hen he started his real estate business some five years ago, Donald was faced with a dilemma. He had found a great location for his office but at 1,400 sqft, it was just too big. Instead of compromising on his office location, he decided to capitalize on all that access space. A service office is a set of individual offices sublet from a larger office. It has its roots in the 1980s when start-up entrepreneurs or businesses that don’t need, or can’t afford, a large office had the option to rent just enough floor space to conduct their business. The list of office amenities depends entirely on the rental market being targeting. Some serviced offices would include a basic package of workspace (office or workstation), meeting room, photocopier, wifi connection and receptionist service to handle calls and mail. Others might add a breakroom, video conference room or on-site fitness centre. As there are very few serviced offices in Kota Kinabalu, Donald decided to rent the space with the classic trio of manager office with a table, cabinet and visitor chairs; workstation and virtual office set-up targeting local entrepreneurs and home-based businesses. A meeting room that can accommodate up to for 15 persons was added to the mix.

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Meeting Room

“Many people are already familiar with the service office concept in Sabah but there is still room for improvement to make virtual office more acceptable and to develop into a viable option for new entrepreneurs,” says Donald.

Manager Office

The offices are opened from Monday to Friday, and half day on Saturday, but special arrangements can be made for the office to be opened on a Sunday if necessary. The entire setup provides clients the flexibility to use as much, or as little space as they need without having to pay high overheads to occupy the entire office space. Rental is on a yearly basis except for the meeting room which is rented out on an hourly rate.

Aptly naming his business The Office, Donald splashed bright colours on the walls to up the energy level and add vibrancy to the atmosphere. Preference for private space made the manager office the mostpopular choice with workstations not too far behind in the popularity stakes. However, the concept of a virtual office is still quite novel.

A virtual office provides home-based businesses with a commercial address and professional reception service to manage business calls and mail handling. There is no daily commuting to the office and you can manage your time to suit your other priorities.” Having only been in business since April this year, Donald sees the demand for service offices as very encouraging and plans to expand into more places.

I saw examples of service offices in Kuala Lumpur and although they have a more international clientele, I think that the concept, if applied correctly, can work well in Sabah, he says.

Mailbox

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/// Hot Topic

Venturing into Commercial Properties

roperty development remains one of the main drivers of Malaysia’s economy and Malaysians will continue to invest in residential and commercial properties as a way to enhance their investment portfolios. With the rising demand for housing stemming from population increase and urban migration, property developers have been more inclined to produce residential properties which fulfills the intrinsic need to have a roof over our heads. The commercial property market is mainly incomedriven and although it is outnumbered by residential properties, it is a significant and growing sector. The term commercial property refers to buildings or land intended to generate a profit, either from capital gain or rental income. These includes office buildings, industrial property, medical centers, hotels, malls, retail stores, warehouses, and garages. There are several factors that make investing in commercial property a sound investment. Tenant management is one of the biggest distinguishing factors between a residential and commercial property. For residential property, furnishings and renovations are pretty much standard if you want to rent out your unit in a competitive market. Commercial property tenants on the other hand prefer their units bare as they usually want to renovate them to their specifications. This in itself makes the entire letting process much easier and hassle free as no personal preference has to be considered. Residential property owners often complain about runaway tenants leaving in their wake outstanding rent, unpaid utility bills and in more extreme cases, damaged property. Commercial property tenants generally pose less problems in this area and they are more likely to adhere to the terms of their tenancy agreement. And if your commercial unit is located in a competitive area, you can be assured of continued interest in the unit and spare you the hassle of finding a replacement

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/// HOT TOPIC

Property Hunter Expo Commercial Edition

October 3 – 6, 2014 Ground Floor, Suria Sabah Shopping Mall.

tenant should your existing one decide to terminate the tenancy agreement.

The risk factor As is any equation, there are the pros and cons and property investors have to weigh in the risk factors of choosing a commercial property over a residential property. Factors such as location, property type or design, and economic conditions are primary considerations. Commercial properties fluctuate in tandem with the country’s economy - an economic downturn means less purchasing power, leading to lower demand for retail spaces and ultimately lower property value and rental rates. Undeniably, the risk is higher but so are the returns. For local property developers, the risk factor can be mitigated by being business savvy and able to read the market well enough to capture the interest of new and seasoned property buyers. Innovative design concepts, a variety of built-in amenities and very competitive prices would be crucial to stand out in the crowd of new and upcoming commercial property developers.

Golden Hill Industrial Park PacifiCity

In trying to find that first step on the commercial development ladder, the trick is timing. So, is the timing right for more commercial property development in Sabah? From the many new projects that are taking shape not only in Kota Kinabalu city but also in thriving towns such as Beaufort and Kota Marudu, that seems to be very much the case.

Beaufort square

Commercial Mall and SOVO by Bina Puri Properties Sdn Bhd located along the same route. Closer to the city are Pacificity Mall by Pacific Sanctuary Holdings Sdn Bhd and Golden Hill Industrial Park by Bumiwang Properties.

Commercial property expo Property investors in Sabah will have a chance to view quality commercial properties in the up-coming Property Hunter Expo Commercial Edition scheduled from October 3 – 6, 2014 at Ground Floor, Suria Sabah Shopping Mall. This is the first time Property Hunter magazine is organising an expo showcasing exclusively commercial properties to focus on this fast developing sector of the local property market. Developers from Sabah and Peninsula Malaysia will

M-Square Township

8 Avenue

MITC Ayer Keroh Melaka

be introducing a diverse range of Commercial & Industrial properties to suit both new and established businesses.

from Kota Marudu and Kimanis which points to fresh optimism in the development of new business markets outside of Kota Kinabalu.

Developments from Sabah

Grand Merdeka Development Sdn Bhd will be showcasing its first suburban mall, Grand Merdeka Mall, and Grand Merdeka Home Warehouse located along the Tuaran Bypass. Another featured mall is the 13-storey 8 Avenue

Properties to be featured at the expo include 10 from Sabah and four from Peninsular Malaysia. Out of the 10 properties in Sabah, three are from Beaufort, and one each

The three Beaufort commercial properties making their debut at the expo are Bandar Mingo by VC Bumijaya Sdn Bhd, Lumat Centre 2 by Pemborong Hasil Emas Sdn Bhd and Beaufort Square by Kimis Development Sdn Bhd. M-Square Township by GPS Development Sdn Bhd and Kimanis Commercial by New Kimanis Town Sdn Bhd rounds up the Sabah exhibitor list.

Developers from Peninsular Malaysia Well-known property developer Glomac Berhad will be featuring its shop-office properties in Peninsular Malaysia namely Glomac Centro Shop Offices in Petaling Jaya and Glomac Cyberjaya 2 Shop Offices in Cyberjaya. And from property hotspot Johor is Phase 13 Shop Lot by Tanah Sutera Development Sdn Bhd recently held an which exclusive showcase in Kota Kinabalu.

Lumat Centre 2

Resorts are also categorised under commercial property and the sole representative of this category is the very plush Sang Sarang by RK Group.

Kimanis Town

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/// Hot Topic

Glomac Centro Shop Offices

Phase 13 Shop Lot

Glomac Cyberjaya 2 Shop Offices

Bandar Mingo

REMAJAYA

Grand Merdeka Home Warehouse

Grand Merdeka Mall

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Sang Sarang

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/// Hot Topic

Mixed Development

/// HOT TOPIC

Getting the right mix

ver the last decade, mixeduse developments have increased its stake in the local property market and the reasons for this are many, namely traffic congestion, increased fuel prices, changing consumer demographics and a longing for a sense of space and community cohesion. Urban planning and real estate development are moving in tandem with this shift in development pattern and are increasingly responsive to the wants and needs of the public. The concept is certainly not new and is in fact being embraced with the end user who is demanding the space, the developers who are supplying the space and the planning and policy makers who are regulating the space. In his research paper (MixedUse Development in Theory and Practice: Learning from Atlanta’s Mixed Experiences; 2011), Joshua D. Herndon said that sorting the fact from the ﬁction and developing an in-depth understanding of both the possibilities and the limits of mixeduse development are essential if the positive aspects of the concept are to be maximized. Doing so requires some questions to be considered. For example,

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how has the arrangement of land use changed over time? What are the necessary characteristics of a mixed-use development? What are the different ways of conceptualizing mixed-use projects? And what are the goals of mixed-use development?

Incentives for land use change Accessibility and connectivity are the two main incentives for property development and this can be clearly illustrated with the development of new townships on the east coast of Sabah. Hap Seng Properties Development is one of the most established developers of housing in Sabah with developments in Lahad Datu and Tawau bringing about a significant change in land use in the area. John Tan, COO of Hap Seng Properties Development, opines that land use in these two east coast towns had to evolve out of necessity. “Mixed-use development means decentralization of old towns that can no longer sustain its population growth,” he says. We have been in this business for more than 40 years and we understand the market demographics well enough to

Hap Seng Properties Development has made considerable contributions to mixed-use development in Sabah in the form of its Bandar Indah township project in Lahad Datu. From left: Caroline Yong (Senior Sales & Marketing Manager), COO John Tan and Willie Pang (Senior Manager – Marketing & Leasing) looking over the Bandar Indah project model.

Aeropod Retail Shops

know what the public needs. And for Tawau and Lahad Datu, it is affordable housing and space.” As a diversified company with interests in construction and building materials, Hap Seng was able to leverage on its construction cost to offer housing as low as RMRM210,000 per unit for a terrace house some two years ago. Today, it plans to still provide housing within this range as it sees it as part of its corporate social responsibility as much as a good investment. Its Bandar Sri Indah project in Tawau is the largest commercialresidential township development in Sabah, with a land area that is three times larger than the current Tawau town centre. It is located midway between the town and airport, about 15 minutes’ drive either way, and comes equipped with modern infrastructure and landscaping for homeowners to experience a modern lifestyle. Tan adds, “We do not see ourselves as just house builders but as township developers.” “We started planning the project some 8 – 9 years ago on a 1,368 acre piece of land that used to be oil palm estates. Tawau town was getting too congested and high

land prices were making housing unaffordable for the lower income group. Public facilities and amenities were also in bad shape due to age and lack of maintenance.” When completed Bandar Sri Indah will have 7,493 residential units (992 acres), 788 commercial units (96 acres), 527 industrial units (103 acres) and 28 acres of open space. “People generally prefer landed property and this is the characteristic we maintained in our development project which comprises mainly of terrace houses. We also focused on providing all the basic amenities for the convenience of the residents like shops, offices, markets, schools, bus/taxi terminal, community hall, sports and recreational centres, all within easy reach.” Tan concedes that mixed-use development requires heavy financing but if there is a demand for it, it is a matter for finding the right mix for the right market. Creating an entire township requires long-term commitment and a solid foundation built on trust that you will deliver on your promises. The Bandar Sri Indah example will hold Hap Seng in good stead as one of the pioneers in mixed-use development to make its mark in

Sabah.

Connecting to the future

six bus lanes and even air space provision for future LRT or MRT expansion,” he adds.

As the lines between city and country being to blur with the development of new hubs for business, living and leisure, future proofing would be of paramount importance.

The Aeropod project is currently looking at constructing four flyovers with internal and external connectivity to Jalan Kepayan to ensure a constant flow of traffic to the area.

Timothy Lim, senior manager for project planning and development at SP Setia, developer of the massive Aeropod project in Tanjung Aru, pointed out that location and accessibility are key factors in mixed-use development as they will determine the project’s long-term success.

A mixed - use development project is very challenging as it is not only about location and accessibility but also about finding the right tenant mix to attract the right crowd. Aeropod spans approximately 60 acres and featuries a mix of retail, offices, F&B, serviced apartment, SOHO, Corporate Office, boutique hotel, and 5-star hotel.

“Future proofing is to ensure that we plan our connectivity well before we develop so that we won’t have to waste time and money on land acquisition or building tunnels around built-up structures,” he explains. “When we submitted our project plan, the local authorities requested for future expansion plans so we did a study of the various connectivity corridors around Kota Kinabalu and its suburbs. Aeropod itself is a transportation hub which integrates the existing railway station plus

The tenant mix has to be able to generate the perfect balance of live/work/play dynamics to attract a new generation of workers and residents who want to spend less time commuting in their cars and more time indulging in leisure and recreational activities. As a transit oriented development, Aeropod also has the advantage of attracting a wider mix of workers from the city and suburbs who would find the convenience of a well-organised transport hub a huge

Aeropod Transportion Hub

plus point. Lim, who prefers the term integrated development as it represents the more cohesive nature of a multipurpose development that includes sustaining the well-being of its residents and visitors, feels that developers have to value-add their projects to remain relevant. He highlights SP Setia’s Bukit Indah project in Johor where after it was already completed, they had returned a few years later to redevelop the streets for the benefit of the residents there. “This has been our practice for the last 5 to 6 years as we consider facility management a very

important issue. More so for an integrated development project as there are so many more parameters to consider from the commercial and residential perspectives.” While many mixed-use developments are enormous, there are smaller developments with a mix of everything. The only difference is the economies of scale. Sabah has made great strides down this path but it would be indeed prudent to future-proof its trajectory with the necessary infrastructure and connectivity blueprint to ensure we get the mix just right for now and into the future

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/// Hot Topic

Upcoming Mixed Development Projects

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360 Boulevard

Sky City

Jesselton Quay

Bundusan Homesign Network Sdn Bhd

W GROUP

Karamunsing Homesign Network Sdn Bhd

Kota Kinabalu SBC Corporation Berhad

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/// East Malaysia Property News

Sabah’s Estate Agents Move Up Against Illegal Brokers

SHAREDA Confident Commercial Property Demand in Sabah Still Strong own perception as to what they can find at any respective mall. “For example, Low Yat Plaza has been branded as a place to buy computers and IT (information related) products,” he said. On the company’s joint venture Wisma Tiong Hua project with land owners, Sabah United Chinese Chambers of Commerce (SUCCC) and United Sabah Chinese Communities Association of Kota Kinabalu (USCCA), Goh described it as a ‘boutique mall”.

SABAH

Property Hunter, Sabah’s leading property magazine recently hosted a talk for local property agents and negotiators, focusing on the topic of establishing a leading edge against illegal brokers. The 2 hour talk attracted over 80 property professionals.

PROPERTY NEWS

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

The talk was held in Celyn Hotel, and industry leaders such as Mr Siva Shanker, President of Malaysia Institute of Estate Agents (MIEA), and Mr Enoch Khoo, Vice President of Property Hub, an award winning real estate agency.

Government to Re-Allow DIBS? “In the event of an economic downturn, banks saddled with too much DIBS end-financing could collapse as the losses from such DIBS end-financing will erode the banks’ capital,” he added. On the other hand, MKH Bhd’s Group Managing Director Tan Sri Eddy Chen is hopeful that DIBS will be reintroduced but with limitations to prevent abuses.

A residential project in Kota Kinabalu which previously offered DIBS scheme

The government is open to lifting the ban on the Developer Interest Bearing Scheme (DIBS) in the housing market if there are compelling reasons, according to the Urban Wellbeing, Housing and Local Government Ministry. “There are some suggestions made by the industry, we will look into it. There are pros and cons, there’s no hard and fast rule on this. If it is

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not abused, it’s a tool for everybody to sell their houses and to make it more affordable for the people,” said its Minister Datuk Abdul Rahman Dahlan.

“If there are some indicators that DIBS can be reintroduced we have no problem with it but the most important thing is we must be flexible and nimble,” he added.

The housing ministry will look into this on a case-by-case basis, he told the media at the 17th National Housing & Property Summit held recently

But Chang Kim Loong, Secretarygeneral of the National House Buyers Association, stands firm on his belief that DIBS should be permanently banned as it promotes speculation.

Notably, Prime Minister Najib outlawed DIBS during his Budget 2014 announcement. However, some property players suggested that first-time home buyers should be allowed to participate in this scheme. This story was first published by www.propertyguru.com.my and is reproduced as part of an editorial partnership between Property Hunter and PropertyGuru Group.

According to the organizer, the purpose of hosting the talk is to reaffirm the publisher’s commitment to stand in line with the industry to combat against illegal brokers, who are damaging the age-long trade in an unprecedented way. Siva Shanker, President of MIEA pointed out during his presentation that whilst it is important to eradicate illegal real estate brokers, it is more important for the licensed practitioners to upgrade their services and professionalism, which will eventually be the most effective means of differentiation between the two. Enoch Khoo, a Sandakan born Sabahan who runs an award winning agency in KL, shared enthusiastically about his journey in the property industry. Khoo emphasized that modern day property agents have to embrace the change of technology to their benefit. According to him, the internet and social media are effective and free platforms to assist them to market properties. “I have successfully closed property deals via contacts in Facebook, without

even meeting the person. All these were done at literally zero cost!” said Khoo. According to the organiser, Michael Hiew who is also the publisher of Property Hunter, the purpose of organizing the talk is a gesture of appreciation towards the agents. “We would like to appreciate them by giving them something valuable in return, which is ‘knowledge’. We see the importance of growing and improving together with the industry.” During the event, Property Hunter’s director Elson Kho introduced the latest marketing platform offered by the media company – the mobile version of PropertyHunter.com.my. This addition is an extension to the portal’s existing website, making it more convenient for agents to post listings, and be more accessible to the public. PropertyHunter.com.my is now accessible via both laptop as well as any mobile devices. “We are not launching an app because there are too many mobile operating platforms out there. Instead, we decided to launch a mobile version of the portal, so the same portal is easily accessible via the web browser of any mobile devices.” Said Kho. The talk, aptly named as “Establishing a leading edge against illegal brokers” is the first of a series of talks targeted at property agents and negotiators. Property Hunter plans to organize informative talks and enriching events as such on a quarterly basis to facilitate the advancement of the real estate industry.

Francis Goh, President of SHAREDA

The RM300 million project will be constructed on 2.7 acres of land in Karamunsing.

The Sabah Housing and Real Estate Developers Association (SHAREDA) is confident that there is still strong demand for commercial buildings in Sabah.

The 16-storey building shall consist of 318 units of hotel suites as well as four levels of retail mall, a banquet hall that can cater for 200 tables and a five-storey carpark.

Its president, Francis Goh, said the notion that Sabah was experiencing an oversupply of commercial buildings was a subjective one.

The development plan for Wisma Tiong Hua has been approved by Chief Minister Datuk Seri Musa Haji Aman and construction work is expected to begin this December.

Goh said he was asked the same question a few years ago whether there was a glut of commercial buildings in Sabah.

“We have applied for the building plan. That will take two months to be approved and we cannot proceed before that,” he said.

“At that time there were 13 malls under construction,” said Goh who is the managing director of Arah Permai Sdn Bhd.

Also present at the event was SUCCC president Datuk Seri Panglima Gan Sau Wah who said that the name for Wisma Tiong Hua was meaningful and represented the Chinese people.

Now Sabah is ahead of its neighbour Sarawak in terms of growth in retail malls. “We have big retail malls, but in Kuching there aren’t many,” he said at the introduction ceremony of Wisma Tiong Hua project. Goh also said that developers in Sabah have helped in the transformation of Kota Kinabalu as it was today. “Without developers you wouldn’t see Kota Kinabalu as it is now,” he said.

The Sabah Housing and Real Estate Developers Association (SHAREDA) is confident that there is still strong demand for commercial buildings in Sabah.

Goh also mentioned on the importance of branding for a mall as it will allow people to have their

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/// East Malaysia Property News

‘Limit’ Ruling Ineffective on Bulk Property Buys According to him, the market has slowed down considerably with developers’ sales falling 50% so far this year. In Sabah, the Sabah Housing and Real Estate Developers Association (SHAREDA) announced a 65% drop in sales. “The romance has left the group buying clubs because it only works in a rising market…the lure of group purchase is not so much there anymore,” he said. However, he said this is not the result of the ruling on bulk buying as none of the developers have registered or submitted names of purchasers to the Controller of Housing for bulk buying. “I don’t blame them because there has been no official document from the ministry since the announcement,” he said. Shanker said the drop in property sales in the first half of the year was due to the general perception of a slow down in the economy.

Siva Shanker, the president of the Malaysian Institute of Estate Agents (MIEA)

The four-unit limit ruling on bulk property purchases has not made any impact on the residential property market and could be detrimental to the investment market, said the Malaysian Institute of Estate Agents (MIEA) president Siva Shanker. “The ruling does not work with group sales because in group sales, each person buys one unit. The ministry has got it all wrong. Group buying and bulk buying are different. Bulk purchasers are actual investors who have capital and buy several units for investment whereas group purchasers are a group of say, 200 individuals who buy one unit each for the purpose of flipping the units,” he told SunBiz in an interview. He said the ruling was the wrong policy in the first place and was not thought through properly prior to implementation. It also punishes genuine investors instead of ad-

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dressing the issue of runaway prices caused by speculative buying. The limit on bulk purchase was first mentioned in February when Urban Wellbeing, Housing and Local Government Minister Datuk Abdul Rahman Dahlan said that the government is considering ways to restrict bulk buying of properties by investor clubs. As part of an effort to curb speculative buying of properties by investor clubs, which is one of the causes of runaway prices of properties in the Klang Valley, Abdul Rahman said developers who intend to sell more than four units to a purchaser must obtain prior approval from the Controller of Housing. “In my opinion, there should be an outright ban on investor clubs, or the clubs should be regulated. But an outright ban is better,” said Shanker.

“The outlook on the property market is still gloomy. In the first half, transactions fell but values are staying or going up…between 2011 and 2013, the market rose too high, too fast and too quickly. Now the market is screeching to a halt,” he said. He said talk of a property bubble, property prices rising and responsible lending guidelines have created a negative market perception, which has slowed down the market but values are still “grossly inflated”. “The market is in a tailspin and it has yet to recover. The slow down will reduce in the second half of this year and remain flattish next year before picking up again in 2016.” National House Buyers Association (HBA) secretary-general Chang Kim Loong concurs, adding that the ruling, which was implemented in May, has not resulted in any improvements in the residential property market.

industry players and stakeholders despite various reports on the new ruling published in the media. “The ruling also states that each buyer is allowed to buy up to four properties per development. This means that speculative buyers can still use their relatives’ names to buy more than four residential properties. There are too many loopholes with this ruling,” he said. He reiterated his opinion that investor clubs should be outlawed and there should be regulation on the formation of such clubs. He also urged the government to investigate developers “who are speculators themselves”. “Some developers set up their own companies and buy the properties themselves, after which they claim that the project has been sold out,” he said, adding that prices rise considerably in the secondary market after that. “Is it in the public interest to commodify a common need?” he questioned.

In my opinion, there should be an outright ban on investor clubs, or the clubs should be regulated. But an outright ban is better

“Our members have not reported any improvement in the situation at all,” he told SunBiz. According to Chang, the ministry has not issued any official circular to

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/// East Malaysia Property News

Hua Yang Berhad Eyes on Kota Kinabalu and Penang Property Markets 31 March 2014, the company registered sales of RM750 million. “So far our launches have received reasonable response. The demand (for affordable housing) is still there and the market is still resilient.” “But the tricky part would be stricter loan approvals and I think a lot of people are holding back a bit to observe the market and expect for better deals in the second half. Our focus will be on the affordable housing segments,” said Ho, noting that the company expects to witness a double digit growth in revenue for the current financial year.

Kota Kinabalu, Sabah

Notably, the company’s revenue stood at RM509.9 million in FY2014, up 24.8 percent from FY2013’s RM408.7 million.

Hua Yang Bhd – which eyes to launch new property projects with a total gross development value (GDV) of RM1.1 billion for the present financial year ending 31 March 2015 (FY2015) – is still on the lookout for opportunities to enter the property markets of Penang and Kota Kinabalu in Sabah, revealed its CEO Ho Wen Yen and reported in the media.

“We are still in talks with landowners. We have been looking into this since the last two years but land cost keeps rising in Penang. We are working very hard to enter this market. Our focus areas will be in Bukit Mertajam, Juru and Batu Kawan,” said Ho after the company’s AGM.

He noted that while land price in Kota Kinabalu is still manageable, “there are a few factors that need to be considered such as approvals from authority. That would be a longer process.” Ho said the company aims to achieve a sales growth of between RM500 million and RM600 million for FY2015. For FY2014 ended

Currently, the company has nine ongoing projects spread across Johor, Klang Valley and Perak, with total unbilled sales of RM808 million as of 31 March 2014. This story was first published by www.propertyguru.com.my and is reproduced as part of an editorial partnership between Property Hunter and PropertyGuru Group.

Sabah Construction Cost Among Highest in Malaysia material in Sabah is among the highest in Malaysia. He says, “building material and construction cost in Sabah is estimated to be 30 per cent higher than in Peninsular Malaysia and this is reflected in the housing price.” The price difference has been largely attributed to the cabotage policy implemented in Sabah and the higher cost of building materials such as sand, tiles and bricks. Tiles and bricks can be manufactured locally but high electricity, transport and handling costs can make these materials more expensive than in Peninsular Malaysia.

Kota Kinabalu, Sabah

Rural migration into urban centres, particularly Kota Kinabalu, is creating a higher demand for low- to medium-cost housing but escalating construction costs is making it a

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challenge for developers to provide enough housing units to meet this demand. According to SHAREDA president Francis Goh, the cost of construction

Inadequate supply of cement is also another contributing factor. Cement prices in Sabah is about RM18 per bag compared to around RM15 in Peninsular Malaysia. Adding to

the price disparity, cement costs less in Peninsular Malaysia and also Sarawak because they have ample cement processing plants to better cope with the demand. In Sabah, there is only one cement concessionaire supplying the whole state. With landowners demanding higher rates to develop their land, and coupled with the high cost of construction materials, prices for landed properties are getting further out of reach for the majority of Sabah’s population. Strata-titled properties are now more in demand with prices hovering between RM380 – RM400 per sq ft for a medium-cost condominium and up to RM680 – RM1,200 per sq ft for a high-end condominium, depending on location.

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/// East Malaysia Property News

SHAREDA Supports Study on Soaring Property Prices

Musa - Sabah’s Economy on Strong Footing Despite Tragic Events

off and in various stages of implementation. These projects are starting to transform Sabah’s economy in a positive manner, and I am hopeful that the state will achieve its development aspirations and goals as set out in the SDC blueprint,”he said. MICC Sabah Branch chairman, Brig. Gen (R) Datuk A Arulpragasam, said the issue of the Cabotage Policy cannot be left hanging forever and it was the desire of the association to see the government granting a fullliberalization of the policy.

Sabah Housing and Real Estate Developers Association (SHAREDA) president Francis Goh

Sabah Housing and Real Estate Developers Association (SHAREDA) president Francis Goh supports the call by Local Government and Housing Minister Datuk Haji Hajiji Haji Noor to the Royal Institution of Surveyors Malaysia (RISM) Sabah Branch to conduct a study on the soaring prices of properties in Sabah over the past 10 years. The call was made during the 32nd annual dinner cum installation night of RISM (September 6). “We, SHAREDA opined that it is virtuous for a professional body like RISM to act as a neutral party to conduct such study. SHAREDA welcomes the call and ensure that we will extend our full cooperation to RISM by providing information and reasons for the price hike for their justification,” said Goh in a statement. To kick start this study, Goh proposed that a dialogue to be held also to brainstorm all relevant issues and concerns by involving other professional bodies such as Pertubuhan Arkitek Malaysia (PAM) Sabah Chapter, Association of Consulting Engineers Malaysia (ACEM) Sabah Branch, Institute of

Engineers Malaysia (IEM) Sabah Branch, together with RISM attributing to a more effective and thorough study. “SHAREDA and its 189 members will not wish to see property prices escalate beyond reach and pledge full support to Hajiji to find the best solution in order to provide more affordable homes for the people of Sabah,” he said. During the recent fourday SHAREDA PropEX 2014, Goh also called on all members to absorb any price increase that may occur due to the forthcoming imposition of the Goods and Service Tax (GST) on April 1, 2015. He also urged SHAREDA members to strike a balance to continue to keep the housing prices reasonable and affordable as their obligation to full commitment to corporate social responsibility (CSR) programmes and rebranding of SHAREDA’s image and priorities to nation building and halatuju.

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Sabah has remained economically strong despite having a year marred with tragedies, said Chief Minister Datuk Seri Musa Aman. He said the string of kidnappings for ransom in the State’s east coast and the mysterious disappearance of Malaysia Airlines flight MH370 and the downing of MH17 had undeniably brought Sabah and Malaysia bad publicity. However, despite an eventful 2014, Musa said Sabah still registered favourable trade and investment figures with major sectors showing healthy growth. “Trade figures from January to June this year show an increase in both exports (5.0 %) and imports (11.4%) compared with the same period last year, resulting in a trade surplus of RM4.9 billion,” he said in his speech at the Malaysian International Chamber of Commerce (MICC) luncheon held here.

13 manufacturing projects valued at over RM1.0 billion have also been approved by MIDA between January and May, most of them in chemical and chemical products, followed by food, non-metallic, wood and plastic products.

Arulpragasam, in his welcoming remarks, reiterated that the Cabotage Policy, which contributes to the high cost of doing business in Sabah, has remained one of the key issues affecting the industries in the State.

Even in tourism, the sector expected to be affected the most, an increase of 8.7 per cent was recorded in the first five months of this year compared to the corresponding period last year.

He said giving large subsidies to shipowners to keep the shipping and logistic costs down was wishful thinking and will not solve the major part of the problem.

A moderate growth was however anticipated for the second half of the year due to the events that happened in the first half. He said the Chinese market was expected to be specially affected in the short term but things are expected to bounce back to normal in the medium to long term.

The text of his speech was read by Deputy Chief Minister cum Industrial Development Minister Datuk Raymond Tan Shu Kiah.

“City and corridor projects falling under the Sabah Development Corridor (SDC) are also progressing well in 2014. As at March, 30% or RM38.4 billion of all pledged investments totalling over RM128 billion have been realised, with close to 25,000 jobs created.

Musa, who is also Minister of Finance, informed that

“Close to 60% of 337 projects planned have taken

KIMANIS DEV

Alternatively, he suggested for the government to designate Sepanggar as the second transhipment hubport after Port Klang as a long-term solution. He said Sepanggar is ideally situated to serve the potential market of more than 70 million population in BIMP-EAGA. MICC also appealed to the government to implement the “one country one price” policy before introducing the Goods and Services Tax (GST) in April next year.

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/// East Malaysia Property News

Build-Then-Sell Proposal Will Be Handed to Cabinet Eight years ago, the policy was announced in parliament and approved for implementation by the government in August 2006 and the current choice given to developers to either BTS or Sell-Then-Build (STB) saw most opting for the latter. “The decision is not easy because the developers, especially smaller developers will require extra financing for their housing projects and even the banks will also have to change their financing models (to accommodate such a rule). The Urban Wellbeing, Housing and Local Government Minister Datuk Abdul Rahman Dahlan

The Urban Wellbeing, Housing and Local Government Minister Datuk Abdul Rahman Dahlan said his ministry will be submitting papers to the cabinet on the pros and cons of the Build-Then-Sell model within a month or two, drawing flak from National House Buyers Association (HBA) secretary general Chang Kim Loong.

As reported by local media, Chang argued that talk of submitting papers on the pros and cons of the policy was a step back from the commitment made by the previous housing and local government minister Datuk Seri Chor Chee Heung, that it be made mandatory by the year 2015.

“The ministry has to look at the overall economic impact of such a move and not only house buyers’ interest,” Abdul Rahman said. He added that only a few developers have implemented the BTS model since it was introduced on a voluntary basis in 2007, despite various incentives being given to encourage more to move to the BTS model.

Incentives for developers include exemption from paying the RM200,000 deposit for a housing development licence, exemption from obligation of building low-cost units and given options to build medium low-cost houses in lieu, and fast-lane priority for applications such as land conversion and subdivision, planning permission and building plan approval. Moreover, under the BTS model, buyers need to pay a 10% deposit and only pay the remaining 90% purchase price upon completion of the unit. The STB model however see buyers pay or draw loans until the construction is completed. This story was first published by www.propertyguru.com.my and is reproduced as part of an editorial partnership between Property Hunter and PropertyGuru Group.

UUC Phase 1 Ready to Be Moved in Soon during the launching ceremony. Indeed, a number of walls around the compound of the 40,000 sqft UUC Clubhouse have been designated as the drawing boards for the contest participant.

GRAND MERDEKA

Mei Wong, the operation manager of The W Group claimed that the group is the first developer in town to launch such initiative. The winner will not only be able to have his or her masterpiece featured in prominent spots at the 5000 unit establishment, he or she will also walk away with attractive cash prizes. During the launch event, Property Hunter was given a private tour around the development. Phase 1 which consists of 1,360 units is expected to be handed over in a couple months time upon obtaining the occupancy certificate (OC).

University Utama Condominium (UUC), a signature community development by The W Group is doing its final touch up to prepare itself for the tenancy handover, which is expected to happen in a couple of months time.

of the “Feature Wall Design Competition”. The competition initiated by the group’s concept designer Alan Wong is an event aimed at encouraging the creative minds of the local people.

UUC officially welcomed its first troop of guests through its door during a recent byinvitation event, which also signified the launch

“We want to be able to provide a platform for the talented local artists or art enthusiasts to be able to express their creative work” said Alan Wong

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The units at UUC are almost fully furnished and are renovated to high quality standard. UUC boasts a high measure of security with a full fledge team of trained security guards safeguarding the compound, and each unit is also fitted with high tech smart home intelligent system which can capture images of the house remotely. Phase 1 and 2 are completely sold out with approximately 70% sold at phase 3. The developer announced that phase 5 will soon be opened for sale so interested parties are encouraged to contact them at +6088 260 727 or sales@thewgroup.com.my.

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/// Hot Topic

/// HOT TOPIC

Build-Then-Sell in 2015? Credit must be given to the wellregulated regime of housing development that include the tight control on the disbursement of the progressive claims under the specially opened Housing Development Account as well as the responsible lending guided by the one of the world best central bankers proudly Malaysian.

Chris Tan, managing partner of Chur Associates Chris Tan, managing partner of Chur Associates

e are close enough to 2015 that the market is already speculating on Budget 2015. April 1, 2015 will see the introduction of the consumptionbased goods and services tax (GST). While we are hopeful of a reduction of the corporate and personal income tax rate and even more hopefully for the adjustment to the real property gain tax in light of the imposition of the 6% GST, there are something else looming in the backdrop of all real estate investors and home buyers alike. Guided by the then minister’s speech in the parliament, 2015 is suppose to be the year where the build-then-sell (BTS) model shall be made mandatory for all housing developers to replace the everpopular sell-then-build (STB) model that has certainly played a significant role in the rapid nation building in the last two decades.

population. The newsworthiness of PR1MA and the various efforts by the State Governments in constructing affordable housing seems to suggest that Malaysians can no longer own the roof over their heads without governmental interventions. It seems like a natural progression in joining the rank of developed nations where public housing is common. Many would argue that there is still merits in implementing BTS as it will stamp out completely the risk of incompletion and abandonment by incapable housing developers to offer the ultimate protection for genuine homebuyers. The question remains whether such risk that BTS aim to address is one that is manageable.

In fact, the STB model of housing development is so significant to the extent that real estate investment has captured the imagination of the nation and abroad as the preferred tool in gaining wealth, hedging against inflation and shielding against any potential economic downturns.

Granted that the frequencies of such news were high in the late 1980s, late 1990s as well as some isolated cases of mismanagements, it seems no surprise that the frequencies coincide with the global recession in the 1980s and the Asian financial crisis in the 1990s. On top of that, house purchase and development can never be separated from the financing regime at the material time.

Even with the allegedly less secured STB, a lot of liquidity has flown into real estate that drives up the house prices and effectively drive out the BTS to the back burner with affordability becomes a more pressing issue of our young

Learning from these painful but valuable experiences, Malaysia seems to “survive” the global financial crisis in 2008 where real estate remains the most resilient sector in comparison with its pale relatives worldwide.

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BTS as a model is nothing new and has always been there, driven by the market forces. Under the Housing Development Act, there are two instances where you do not require a developer licence to build and an advertising permit to sell. It is either the negligible development of four units of houses and below or when no payment is to be collected during construction of which sales will only take place when the houses are completed and ready for occupation. The latter has been practiced by a handful of cash-rich developers that are committed in delivering brand new products to gain clear advantage and compete with the secondary market. Most often, there is a beeline for these new houses for its obvious scarcity in the market. The buyer can buy the real house that they have inspected on an “as is where is” basis instead of making decision based on scaled model and pimped-up show unit that requires lots more imagination to fill up the gaps. In 2007, the statutory regulated BTS has been introduced under the new prescribed sale and purchase agreements in the form of Schedule I and Schedule J under the Housing Development Regulations 1989. The essence is simply for the buyer to pay 10% deposit and sign the agreement, and only pay the balance purchase price when the unit is ready to be delivered. The basis of regulation is still the fact that money is collected during construction and the rationale is to limit the exposure to just 10%. In the admission of the same minister, such statutory BTS has been unpopular for the housing developers and it is not hard to comprehend the reasons behind.

If liquidity is not a concern to the developers during construction, it is immaterial to collect the 10% deposit and then subject themselves to a stringent regulatory regime under the Act. Such regulated BTS model requires strong buy in from the financial institutions in their commitment and willing adjustments for the bridging financing during construction as well as the end financing for the purchase. Without the security of the constant cashflow driven by the construction progress under the STB model, developers will not fancy paying higher interest for the bridging loan due to a longer repayment period until the completion of construction. Given also that the end financing is drawing closer to the completion date, a noble valuation of the property by the banks is required and the same will be benchmarking closely to the transacted market price at the material time.

MELIGAN

This will lead to a potential difference in the price and market values not mentioning its potential effect on the margin of financing offered to the buyers. A mandatory BTS is a step backward and against the basis of the free market. To embrace it would be a vote of no confidence to current regulatory regime from the Housing Ministry, local authorities, building professionals to even Bank Negara. It drives out smaller developers with weak cashflows thus limiting choices in the market. The capital costs during construction will show up in the pricing that certainly goes against affordability being the flavour of the day. This could also indirectly encourages speculation with the 10% deposit be taken as a “bet” against an unexpected market crash. Complying with the capitalist fundamentals, we should embrace choices. Just as the water will find its level, our free market is certainly big enough to accommodate the current STB, the statutory BTS and the traditionally non-regulated BTS to the benefits of its respective admirers.

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/// East Malaysia Property News

SARAWAK

PROPERTY NEWS

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

Naim 2014 Q2 Net Profit Soars 217 Per Cent The company in a filing to Bursa Malaysia said it’s earnings for the first half of 2014 (1H14) also jumped 148 per cent y-o-y to RM124.58 million against RM50.24 million in 2Q13. However, Naim said its 2Q14 revenue decreased 14 per cent y-o-y to RM158.11 million while turnover for 1H14 dipped 0.5 per cent to RM312.16 million.

Naim’s construction segment recorded higher revenue of RM164.3 million in 2Q14 compared with RM143.1 million in 2Q13.

In its notes accompanying the results, the property developer said sales for its property division continued to be sustained by its township development in Miri which registered strong takeup rates.

Going forward, Naim remains cautious on the outlook of the property market in Sarawak given the mixed outlook for the year ahead.

Nonetheless, Naim expects slower take-up rates for its newly launched products comprising high rise condominium and high end commercial units in Kuching and Bintulu. Additionally, the group has put in place strategies such as aggressive marketing, competitive pricing and attractive product packages to improve the take-up rates. Naim booth display at SHEDA Property Expo 2014

Naim Holdings Bhd’s (Naim) net profit for the second quarter of 2014 (2Q14) soared 217 per cent year-on-year (y-o-y) to RM28.76 million compared with RM9.08 million in 2Q13.

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The higher revenue was due to higher progress of construction works from existing projects, especially contracts secured in 2013.

“Product planning and pricing as well as tightening of cost control strategies are amongst key measures to be implemented to sustain performance for its property segment,” it said. Looking ahead, Naim said a number of sizeable construction tenders has been submitted. The company is cautiously optimistic to secure some of the contracts to replenish its order book which stood at more than RM1 billion currently.

With the demand from the Sarawak Corridor of Renewable Energy (SCORE) projects, Naim believes continued growth in the current property market in Sarawak will help to sustain demand for its properties.

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/// Feature Property Event

Overview of Samalaju Industrial Park with its impressive water features

Building a new township

SHEDA Property Expo 2014

Midway along the coast of Sarawak is Bintulu, a town with a historical past that dates back to the rule of the White Rajahs. Its modern day history is however firmly tied to its enormous oil and gas resources. The many businesses that hinge on this have created a bustling town with a huge expatriate workforce that has brought significant changes to housing demand in Bintulu.

/// FEATURE PROPERTY EVENT

The timber and oil palm industries have also played a big role in the economic development of Bintulu but it will be the energy intensive industries that will sustain it far into the future.

t was an activity packed three days at the Borneo Convention Centre Kuching where the annual SHEDA Property Expo was held from 22 – 24 August, 2014. SHEDA (Sarawak Housing and Real Estate Developers’ Association) was formed in 1993 to provide a forum for the advancement of interest of companies engaged in property development with a view to raise the standard of the industry, establish a code of conduct and ethics, and promote goodwill among members. The first Sarawak Builders’ Expo (SARBEX) was held in 1998 as a proactive approach to stimulate the recovery of the industry through the economic downturn at that time. Through the years, it has matured to become one of the most important and anticipated property events in Sarawak and continue to draw huge crowds to view the many new developments and opportunities for home buyers and investors.

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SARBEX was renamed SHEDA Property Expo this year but continues its long tradition of offering an exciting and rewarding property hunting experience for all. Sarawak’s top drawer list of housing and property developers were at the SHEDA Property Expo 2014 to impress potential buyers with a range of properties including condominiums, villas, residential houses, retails lots, shop houses, resort property and inner-city apartments. Exhibitors also included manufacturers and suppliers of building materials, home and lifestyle

furnishings, bankers and other related services to complement the needs of home buyers and property investors. Visitors thronged the venue throughout the event with a multitude of side activities to keep the young and young at heart entertained in between browsing excursions of the various exhibitor booths. Property Hunter was there to take in all the excitement and spoke to several exhibitors to get their views about the property market in Sarawak.

Already having one of the highest cost of living in Sarawak, a new township taking shape in Bintulu will prepare it for the even greater expansion of its borders, population growth and quality of life. Ryan Jalla Ridu of Samalaju Properties talks about the longterm plans of this new centre of activity that embraces the company’s dictum – building sustainable & vibrant communities. “Samalaju Township is being built to cater to the new industrial park that’s coming up on site,” he says.

There is a land bank of 2000 acres to construct a township with all the necessary economic, social and recreational infrastructure to support a thriving population.” “Samalaju Industrial Park which sits on 8000ha of land is the cornerstone of SCORE and presently has four industries on site and a further commitment of about 13 industries in various stages of negation with the government,” he adds. Construction workers currently have to commute the 62km from Bintulu town to the site daily. The developer is targeting to complete the first batch of housing units which include 600 walk-up apartments and a mix of double-storey and singlestorey terrace houses by 2016 to reduce commuting time and boost safety and work efficiency among its staff. Ryan points out that the new township is not all about housing and industries but making these two essential components sustainable. A Singapore-based consultancy firm has been engaged to obtain green certification for the project and when this happens, Samalaju will be the first green certified township in Sarawak.

“We have gone out of our way to plan the township and have included a canal system within the industrial park with heavy influences from San Antonio, Texas and Seoul’s River of Life,” says Ryan. The whole area used to be an oil palm plantation so now we need to revitalise the landscape and make it liveable for the community that is expected to grow here.” Residential and commercial shoplots fronting the canal is expected to be completed by the second or third quarter of 2016. Samalaju Properties has earmarked land for schools and hospitals which would potentially be built on a turnkey basis with the government to ensure that necessary facilities are developed in tandem with the current industrial expansion. The present on-site population of zero is expected to develop and grow between 30,000 to 40,000 people by 2018 once all the necessary facilities are in place. The new Samalaju Township will cost an estimated RM5 billion and will see completion in the next 20 years.

Ryan Jalla Ridu, Sales & Marketing Executive, Samalaju Properties

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/// Feature Property Event

There are many attractions to lure people to live in areas outside Kuching like less traffic and more space but we have to build a better Kuching first with Kuching city centre as a core development area,” he says

A family legacy in property investment and continue to live by this principle till today.” Following in her grandmother’s footsteps, Josephine has built on and diversified her investment portfolio to include all kinds of properties in diverse geographical locations. It is a befitting continuation of her grandparents’ rags to riches story that continues to inspire her and a whole generation of family members to place their trust in property investment as one of the most secure ways to financial wealth.

There is still room for development in Kuching and although housing prices have gone up, it is still within reach of the majority of property investors. According to Chai, about 20% of buyers of Kuching Riverine Resort are from outside Kuching like Bintulu, Sibu and Miri with some keen interest shown by investors from Indonesia and Singapore. They fall mainly in the 40 year and above age group who are able to afford the average RM600,000 to RM700,000 per condominium price tag. The growth rate in Kuching is around 6% - 8% per year due to urban migration and business development but this increase has not warranted a tremendous acceleration of property development, adds Chai.

Kuching: Waterfront city on the rise Soaring high above the city is the iconic Kuching Riverine Resort consisting of four 22-storey towers housing condominiums with full facilities to cater to the selective taste of new Kuching urbanites. Phase 2 of the project is nearing completion, and with its enviable location right beside the Sarawak River, is set to raise the bar of condominium living and lifestyle to new heights in this laid-back waterfront city. High-rise accommodation is slowly taking root despite still strong preference for landed property in Kuching which account for about 60% to 70% of property buyers. Chai King Sing, general manager of IJM Land (Sarawak) is confident Kuching Riverine Resort is able to capture a sizeable portion of the 30% who will be looking into investing in strata title products such as condominiums, town houses and apartments.

Chai King Sing, General Manager (Sarawak), IJM Land Kuching, Sarawak

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“We have to instil confidence in our potential buyers by offering top-notch service and a soughtafter lifestyle. This means facilities like swimming pool, gym, restaurants, and a waterfront esplanade which is a highlight attraction of the property. Security is also a key deciding factor when people

want to switch from landed to strata property and we have this covered to a high standard,” says Chai. Another huge plus point of the gated and guarded Kuching Riverine Resort is its superb location. Sandwiched between the languid Sarawak River and city skyline, it offers residents unparalleled panoramic views to complement the trendy ambiance of the waterfront esplanade. Chai also points out the many of Kuching’s residents have made the move to the city’s suburbs like Tabuan Jaya and Matang previously. vibe in Kuching needs to be revitalised to make it a vibrant city where locals and tourists can enjoy a lifestyle that embraces the unique geographical and cultural features of the city. “There are plans to develop Kuching’s waterfront into a leisure and entertainment hub and we will be right in the middle of it. We are in a good location to take advantage of this new and ongoing development and am able to contribute to it by meeting the demands for a secure place to live in that is also convenient, modern, and stylish.”

IJM Land is one of the early condominium developers in Kuching and has seen its investment paying off as more Kuching residents are buying into the high-rise lifestyle. The convenience of living in a ready community with essential facilities and needs within easy reach is starting to take firm foothold. As the community continues to grow and mature, more businesses will open up to cater to more discerning lifestyle aspirations. This waterfront city is set to take on the challenge of becoming a top choice destination to live, work and have a really good time!

On the property market in Kuching, Josephine holds local property developers in high regard especially in their commitment to build a wellplanned city. “The Sarawak property market is slow and steady but it is very firm. It is not as fast as Peninsula Malaysia but it is gaining pace and momentum,” she adds. Josephine Chong (Mrs.), Manager (Sales & Marketing), IJM Land Kuching, Sarawak

Life was hard and hard choices had to be made to get by. When he got married, he even had to borrow a wedding ring from an aunt to put on his wife’s finger but it was a marriage that would define a legacy that lives on till today. Josephine Chong remembers how her grandfather had to struggle in the pre-war old days in a small town in West Malaysia where he grew up but it was her grandmother who had the upper hand when it came to making money. “She was illiterate and could not read or write but taught herself numbers and simple Arithmetics. Thus in her own simple way, she managed to keep an account of all the business transactions that she did,” muses Josephine. She was a strong, frugal and hardworking woman who dabbled in all kinds of small businesses to save up enough money to invest. And what she invested in was property from land to shophouses, cemetery, rubber estate, fruits orchard, coconut plantation and paddy fields.” Josephine credits her grandmother’s steadfast determination and razor-sharp business acumen as the greatest influence on her interest in property investment and a career with top property developer, IJM Land.

Kuching city is well-planned and beautifully laid out which is due to the contributions of local property developers, architects and government planners. They have done a good job and a great service to the city to ensure that it is a liveable and attractive city. Property prices have appreciated over the last ten years and we are beginning to see more overseas investments coming into Sarawak, especially in the Sarawak Corridor of Renewable Energy (SCORE).”

Following in her grandmother’s footsteps, Josephine has built on and diversified her investment portfolio to include all kinds of properties in diverse geographical locations. It is a befitting continuation of her grandparents’ rags to riches story that continues to inspire her and a whole generation of family members to place their trust in property investment as one of the most secure ways to financial wealth.

“She started from zero but she had this remarkable foresight and belief that investing in property was the way to make money. I became aware of this from a very young age

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/// Feature Property Event

Ericca Ernatasherra Binti Jimmy, Marketing & Admin Executive, (Mega Emart (Bintulu) Sdn Bhd) left with Chan Kheng Seng, Property Executive

Going Local is Big Business Despite having big flashy multi-storey shopping malls, shoppers still have a soft spot for homespun local stores.

Ericca Ernatasherra, who was at the SHEDA Property Expo in Kuching recently, said that the project in Bintulu will be their biggest one yet.

Emart opened its first store in Miri in 2005 offering a range of products targeting shoppers in the lower and medium income groups. Its concept is typical of any shopping mall with a supermarket, food and beverage outlets, and food court but its addition of a wet market (fresh market) helped cement its reputation as a store with local flavour. Its weekend specials is a big hit with shoppers as evidenced by the regular discount updates and feedback on their facebook page.

“The focal point of the project will be the emart Mall but there will also be shoplots and apartments as well,” she explains.

Customer loyalty has seen emart grow from strength to strength with the opening of its Kuching outlet at Batu Kawa this year and another one in Bintulu scheduled for completion in 2018.

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The project area spans 28 acres and includes 166 units of 3-storey and 5-storey shoplots. It has yet to be decided if the apartments will be put up for sale to the public or reserved for shoplot tenants and emart staff.

The selling price for our shoptlots starts from RM1.8 million upwards with the 5-storey shoplots coming equipped with an elevator bank. And we have sold out almost 80% of the saleable units.” Since the opening of its first store, emart has upgraded its project concept to provide better service to its loyal customers and to attract a more diverse clientele. The Batu Kawa supermarket is considered the second-generation emart where its fully air-conditioned, is more spacious and the wet market is moved outside to make it more pleasant for shoppers.

“Bintulu is not large but it is expanding. The expatriate workforce here is significant which has pushed up the price of properties here,” says Ericca. Despite this, the demand for residential and commercial properties in Bintulu is still high.

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/// Feature Property Event

The organising committee pose with the Chief Minister who is flanked on his right by YB Datuk Amar Abang Haji Abdul Rahman Zohari Tun Abang Haji Openg (Minister of Housing) and on his left by Tuan Haji Zaidi Ahmad (President, SHEDA) and Sim Kiang Chiok (Organising Chairman)

Condominium properties were well received at the expo

Sarawak Chief Minister Tan Sri Datuk Amar Adenan bin Haji Satem delivering his speech at the launch of SHEDA Property Expo 2014

Photo Gallery: SHEDA Property Expo 2014

Properties on display included mixed developments with office and retail lots

An overview of exhibitor booths inside the spacious BCCK hall

he striking Borneo Convention Centre Kuching (BCCK) once again played host to the annual SHEDA Property Expo (formerly SARBEX) from 22 â&#x20AC;&#x201C; 24 August, 2014.

The spacious interior was the perfect venue to accentuate the impressive booth displays to maximum advantage while visitors browsed the many properties on offer at leisure and in comfort. The event was officiated by Sarawak and Chief Minister Tan Sri Datuk Amar Adenan bin Haji Satar. Lee Onn Construction Sdn Bhd was judged Best Booth (Developer) which Echo Global took the Non-Developer honour. Here are some highlights of the event in pictures. Tan Sri Datuk Amar Adenan bin Haji Satem beating the gong to signify the official opening of the expo

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Lee Onn Construction Sdn Bhd, winner of the Best Booth award

Property Hunter team in high spirit at the SHEDA Expo

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/// Feature Property Showcase

better than a carefree life.” This will be achieved among the residents through practising of the 5Rs, which are Rethink, Reduce, Reuse, Recycle and be Responsible. Zero Waste Community Tanah Sutera prides itself as a pioneer in promoting sustainable living in all of its development projects. Sutera Utama, the community that The Seed is located in, is indeed a “zero waste community”. Considering that kitchen waste makes up approximately 80% of all household waste, the developer had initiated a refuse collection centre where all kitchen waste is collected, processed and the composite produced is used as fertilizer in the landscaping work around the community.

Tanah Sutera made its first foray into Sabah with an exclusive showcase of its prime developments. The team was led by Josephine Chai, Wong CY, Max Loh and Mike Sia(6th, 5th, 4th& 3rdfrom right respectively)

Tanah Sutera Offers New Phase For Sale In Sabah

ne of Johor’s most established property developers, Tanah Sutera, held a property preview for the first time here in Kota Kinabalu to showcase the latest developments the company has to offer. Tanah Sutera Development Sdn Bhd, a company backed by a consortium of Malaysia and Singapore companies, owns a landbank covering an area well over 1000 acres located in the western corridor of Johor Bahru city. The project on offer at the Kota Kinabalu roadshow is called The Seed, an exclusive secured development that comes complete with resort facilities offering a vibrant lifestyle living in a tropical setting. Developed on 47 acres of prime freehold land, The Seed is a stratified development featuring

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Such practise has proven to be effective in preserving the environment as no chemical is used in the up keeping of the landscape, and at the same time reduces maintenance cost in the long run. Apart from that, extra fertilizer generated from the compositing process is sold to farms and nurseries. Income generated from such sales is deposited back into the community’s management fund pool.

Application of EM (Effective Micro-organism) Tanah Sutera demonstrates an exemplary application of Effective Micro-organism (EM) in its development. EM is a combination of useful regenerated microorganisms that exist freely in nature and are not manipulated in any way. This mixture increases the natural resistance of soil, plants, water, humans, and animals. EM is widely used in the landscaping as well as building materials at The Seed. The developer claimed that EM is cultured in the concrete during the construction stage, thus reducing harmful particle emission from construction and is effective in eliminating odour in the home. To date, the construction stage is near 50% completed. The developer launched its Phase 3 for sale during the event, giving Sabahans privileged access to prime units in the development. Units at The Seed start from 1,240 sq ft and come complete with resort facilities such as a massive swimming pool, water playground for children, amphitheatre and many more. Interested parties can contact 0123663230 for more information.

/// FEATURE PROPERTY SHOWCASE

individual strata titled Garden Suites. The Seed, which is a low-rise lifted condominium, is home to some of the finest schools in Johor Bahru (Education Hub) – Seri Omega Private Primary and Secondary School, Kuo Kuang Primary School (2), Calvary Victory Centre, Kiwanis Careheart and others.

Please call

012 - 366 3230 for more information

The residential development is part of an integrated township which includes condominiums, landed terrace houses, commercial shoplots as well as a shopping mall called Sutera Mall, which is a family oriented retail mall within the project precinct. The Seed was conceived to live up to the green living concept. At The Seed, the developer encourages recycling to be a way of life with the commitment of “Good habits are

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/// West Malaysia Property News

Property Hunter Opens New Office in Mont Kiara

WEST MALAYSIA PROPERTY NEWS

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

Hua Yang Confident of Sustaining Sales Momentum With Launch of New Projects Ho said as the company’s main target was those aged between 25 and 40, it would maintain the price for the house at below RM500,000 to make it affordable to them. For the projects in Johor Baharu, the group has Citywoods, The Gardens @ Polo Park, Taman Pulai Indah and Taman Pulai Hijauan (a mixed development township with 10 phases of development comprising terrace and cluster houses, semi-detached units and shops). In Perak, the company has developed a residential area called Greenview Residence, consisting of double-storey and triple-storey terrace houses with a GDV of RM12 million. New launches in the Klang Valley region include Phase 6 @ One South in Selangor with a GDV of RM185 million.

Hua Yang Bhd, property developer in the affordable housing market, is confident of sustaining its sales momentum for its financial year ending March 31, 2015 with the launch of new projects with gross development value (GDV) of RM1.1 billion. Its chief executive officer, Ho Wen Yen, said the company would focus on four key regions -- Klang Valley, Negeri Sembilan, Johor and Perak -- to launch its projects.

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“With innovative packages planned for the future, the company intends to continue to focus on the affordable housing segment and consolidate our position as one of the leading property brands in the market. “These four projects, which will cater to the younger population, will be launched at the end of this year until early next year,” he told a media briefing after the company’s annual general meeting.

The group also has also expanded into Negeri Sembilan with on-going project, Senawang Link, with an estimated GDV of RM26 million. For financial year ended March 31, 2014, Hua Yang’s revenue rose to RM509.9 million from RM408.7 million in the same period last year, fuelled by a resilient demand for affordable housing which has propelled a strong take-up rate for the group’s projects. For more information please visit http://huayang. com.my/

Property Hunter teamed with ENK Venutres in their new establishment in Mont Kiara, Kuala Lumpur

Property Hunter, a home grown property publication from Sabah has recently launched its new establishment in Solaris Mont Kiara Kuala Lumpur. To commemorate this auspicious occasion, the publisher held a by-invitation private event with its Peninsular clienteles and business associates. Over the years, Property Hunter has evolved from just a monthly magazine into a full fledge property exhibition organizer, complemented by its fast growing property portal – PropertyHunter.com.my. Ever since the early days of the magazine, Peninsular developers and agencies have always made up a significant portion of its business portfolio. According to Elson Kho, one of the 5 aspiring directors of Property Hunter, the establishment of the Peninsular office is a strategic one as it allows the company to serve the ever growing clientele base. “Our office in KL is set up in partnership with Enoch Khoo, Director of ENK Ventures Sdn Bhd.

Enoch and us share the same vision in bringing quality property developments to investors in East Malaysia, and at the same time assisting developers in West Malaysia to make their entry and market their project in both Sabah and Sarawak.” said Kho. Caleb Tseu, who is also a director at Property Hunter shared that “Property Hunter has been around for close to 3 years. We have survived a steep learning curve and we owe our achievement today to everyone who has supported us since day one. Today, we are ready to share with you our experiences that we have gained in the past with developers and agencies alike and to add value to their exploration into the East Malaysian market.” To date, Property Hunter offers the most comprehensive marketing platforms for developers and agencies who are looking to market their project in both Sabah and Sarawak. It consists of four major platforms namely magazine, web & mobile portal, expo and private event.

MAGAZINE

PRIVATE EVENT

Property Hunter magazine is a monthly publication with an average circulation of 8,500 copies per month. The magazine is distributed mainly in East Malaysia and with subscription copies sent to Peninsular subscribers.

By popular demand from the clients, Property Hunter ventured into organizing private event for discerning developers who are looking for exclusiveness and quality encounter with sophisticated investors. Private events are high impact and sales oriented platforms which have proven to be effective.

WEB & MOBILE PORTAL The web portal www. PropertyHunter.com.my was launched in August 2013, while the mobile portal was launched in following year. Now, the content rich and interactive portal is accessible both via the web browser on a computer and mobile devices. EXPO

Property Hunter, a property media company with headquarter in Kota Kinabalu, Sabah providing multi aspects marketing platform reaching the lucrative investor market in East Malaysia. Download a free copy of Property Hunter e-magazine on www.PropertyHunter.com.my/emag. php .

Having organized its first exhibition in 2012, Property Hunter has since then staged 11 exhibitions in 5 cities across Sabah and Sarawak. Known as the Property Hunter Expo, the event generated event-day registered sales of up to RM550 million to date.

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/// West Malaysia Property News

Insist on the Real Estate Authority Tag materials including billboards, ads in print and digital media.

Seagate Invests RM1 Billion on New Penang Plant

“Failing to do so, an individual who commits the offense shall be liable to a maximum fine of RM300,000 or imprisonment not exceeding three years or both, under Section 30 of the Valuers, Appraisers and Estate Agents Act 1981,” he said. Lim also revealed, to date more than 11,000 companies have registered under Bovaea and 10 per cent were from the states of Sabah and Sarawak. Lim also urged the public to play an important role to help combat crimes committed by illegal brokers to reduce fraud in the real estate business. Career opportunities in the Real Estate industry

As the nation is moving towards a developed and high-income status, the demand for real estate or private homes is increasing from time to time. Protect your real estate interest by not falling prey to brokers who are not qualified, lack the knowledge and skill to effectively represent you. As such, the Board of Valuers, Appraisers and Estate Agents Malaysia (Bovaea) has initiated an exercise to register Real Estate Negotiators (RENs) by identification tags to all registered RENs. The identification tag is to enable the public to distinguish the registered agents and consultants from illegal brokers and to prevent them from being cheated. Bovaea board member Eric Lim said, now the public can identify every agent or consultant on duty through an identification tag and each identification tag will have a QR code that can be scanned to check whether the agent or consultant is registered or not. “Negotiators who have yet registered and wish to obtain the identification tag must first attend a one-day course to enhance their professionalism in the field before registering with Bovaea.” “This step is important because it will reduce the number of illegal brokers. “RENs are also required to include their registration number in all promotional

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Institute of Estate Agents of Malaysia president Siva Shanker noted that the implementation of the registration exercise will offer new job opportunities to the youth, especially for those interested in the field of real estate. “It is not difficult to become a registered agent or consultant. You only need to pay RM600 and attend courses for two days. “At the same time, we also hope that the number of agents or consultants who are registered will be increased from time to time. We strongly encourage the public, especially young people to participate in this field because it has great career opportunity. “ “Malaysian Institute of Estate Agents (MIEA) will especially help those who are interested in becoming a real estate agent or consultant where MIEA has collaborated with local universities to offer diploma programmes,” he said. Siva added real estate education is to ensure graduates are ready to provide professional services in the real estate industry. “For example, in Sabah and Sarawak, MIEA has partnered with the Open University of Kota Kinabalu, Sabah and Kuching Open University. Moreover, with Bovaea’s recognition, diploma graduates can first register as a temporary estate agent before deciding on joining their preferred real estate company,” he added.

American multinational firm Seagate will invest RM1.05 billion in Penang, which is set to boost the island’s manufacturing sector, Chief Minister Lim Guan Eng said today. “The state government is pleased that Seagate are expanding their operations in Penang,” he said in a statement today. Seagate, which manufactures hard disks and provides data storage solutions, would purchase 40 acres of land, with the option to purchase another 30 acres at the Batu Kawan Industrial Park. “The land purchase is in line with the company’s strategic business model to support their long-term operations in Penang.” Lim said Seagate’s investment in Penang over a five-year period would serve as an economic stimulus for the growth of the manufacturing sector in the island state. “It will also endorse Batu Kawan as a preferred global location to invest, work, live, learn and play. “The manufacturing sector has contributed almost 50% of Penang’s Gross Domestic Product over the past five years. “The state government will continue to support this sector as it is a necessary condition for the growth of the services sector.”

Seagate is a US-based company involved in the data storage industry and manufactures hard drives and storage solutions. It was incorporated in 1979 with its principal executive office in Cupertino, California, and is listed on Nasdaq stock exchange with over 50,000 employees worldwide. Penang Seagate, which was founded in 1988, operates a hard-disk manufacturing plant and an information technology (IT) shared resource centre. Penang has keenly promoted the services sector by launching the RM3.3 billion “Business Process Outsourcing-Information Communication Technology Hub” in March this year. Penang Development Corp (PDC) signed a memorandum with investment firm Temasek Holdings of Singapore to form a joint-venture company to develop the Penang International Technology Park and Business Process Outsourcing Prime on a 206-acre site in Batu Kawan. In June this year, Lim announced SanDisk Corp’s investment in a RM1.2 billion flash-memory product manufacturing facility in Batu Kawan, south Seberang Prai.

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/// West Malaysia Property News

Mah Sing Plans RM3.4 Billion Worth of Projects in KL and Penang “The mall will take about three to four years to complete. “We are currently constructing a 424,000 sq ft shopping podium trends@southbay city for Southbay Plaza, which is expected to be completed in 2016,” he said. Mah Sing Group Bhd will develop RM3.4 billion worth of residential projects in Penang and Kuala Lumpur over the next five years. Group chief executive officer Ng Chai Yong told StarBiz two of the projects would be located in Penang, while another two would be in Kuala Lumpur. In Penang, Mah Sing plans to develop The Coastal for the RM320 million Southbay City in Batu Maung and the RM750 million Ferringhi Residence Precinct 2 in Batu Ferringhi.

Despite the stringent bank loan conditions which had caused the property market to slow down in the country, Ng said the group’s sales had remained buoyant. “We don’t expect the pricing of our projects to soften, as they are all located in prime and strategic locations like the Southbay project, which is a stone’s throw from the first and second links in Penang and the Tun Dr Lim Chong Eu Expressway, leading to town,” Ng said.

The projects, opened for registration now, will be launched in October and November respectively.

From Penang, the sales contribution for 2014 fiscal year is expected to increased to RM371mil compared to RM326 million last year.

In Kuala Lumpur, the group will launch the RM1.5 billion Lakeville Residence in Taman Wahyu, Jalan Ipoh, and the RM900 million D’sara Sentral in Sungai Buloh soon.

“From Greater Kuala Lumpur, the sales contribution is projected to increase to RM2.217 billion in 2014 from RM1.563 billion in 2013.

“The projects in Penang are competitively priced at around RM800 per sq ft and RM900 per sq ft respectively for The Coastal and Ferringhi Residence Precinct 2, as they are located near the sea, with accessibility to the main trunk road and expressway leading to George Town.

“From Johor, the group is targeting to achieve RM831 million in sales this year, compared with RM959 million last year. “We set a lower sales target for Johor this year as we have already launched most of the key projects in the state last year,” Ng said.

“The Coastal comprises 156 professional suites and 100 residential suites, with built-up areas ranging between 575 sq ft and 1,300 sq ft.

According to Ng, the Southbay project in Batu Maung has achieved sales of about RM811 million as at March 31.

“The projects in Kuala Lumpur are attractively priced at around RM550 per sq ft for Lakeville and RM660 per sq ft for D’sara Sentral,” he said.

“To date, the take-up rate is over 90%. The value of Southbay properties has risen by 100% in terms of capital appreciation since completion four years ago.

To add value to the Southbay City project, Mah Sing plans to develop a 750,000 sq ft shopping mall in 2016.

“A terraced unit at Residence@ Southbay had risen from RM780,000 to RM1.45 million in the secondary market,” Ng said.

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Cyberjaya to Get MRT Connection

Mah Sing’s focus for this year is to ensure that its products stay affordable. “Over 80% of our planned residential product launches will be priced below RM1mil,” he said. The group’s main focus is still on the Klang Valley, where the projects are expected to contribute 60% to sales this year, followed by Johor Baru (23%), Penang (10%), and Kota Kinabalu (7%). “The prospects of the property market in this country continue to be positive in the middle to long term as the population is projected to grow, especially in the Klang Valley, which is expected to increase from seven million now to 10 million in 2020. “The key infrastructure projects such as the mass rail transit lines and the proposed high speed rail connecting Singapore to Kuala Lumpur will continue to spur interests in the Klang Valley,” Ng added. In Johor Baru, Mah Sing plans to launch the RM5 billion Bandar Meridin East project in the second quarter of 2015. The projects for Bandar Meridin East will be previewed end of 2014. “The design for the master plan will take advantage of the natural terrain of the site and incorporate several lifestyle communities comprising terraced, semi-detached and bungalow dwellings. “Focus will be on creating a living lifestyle with particular emphasis on community participation, and security and sustainability in guarded and gated environments. “To enhance safety further, traffic calming devices will be incorporated to control speeds and provide safe environments for cyclists and children,” he said.

In line with the government’s goal of transforming Cyberjaya into Malaysia’s Silicon Valley, the town will get additional infrastructure such a mosque, hospital and a transport hub that will the link town with Putrajaya. “The Government is finalising the study to bring the MRT Line 2 to Putrajaya. We are going to build an overhead ‘walkalator’ about 400 metres long to connect Cybercity centre to Putrajaya Sentral, to ease people’s movement, which makes it more commercially and financially viable,” said Faris Yahaya, Managing Director of Cyberview, the landowner of Cyberjaya. However, Cyberview will now prioritise the technology component of Cyberjaya instead of its property component. “We have stop selling land owned by Cyberview and we want to be more strategic, we are rebranding to be a global technology hub…attracting more multinational companies, high-tech companies,” he added. Nevertheless, Cyberjaya’s gross

development value is expected to reach RM20 billion by 2016 from just RM11.1 billion last year. Meanwhile, the last phase of the Cyberjaya Global Tech Hub Blueprint, which aims to turn the town into a global technology hub, will soon be submitted to Prime Minister Najib. According to Tan Sri Dr Irwan Serigar Abdullah, SecretaryGeneral of the Ministry of Finance: “After we have tabled and finalised the report, then we will present it to the Prime Minister, hopefully very soon. We are now getting feedback and input from stakeholders and government entities,” At present, Cyberjaya houses about 800 ICT and non-ICT companies, including two colleges, four universities, eight banks, 40 MNCs, 486 MSC firms. And by 2016, the town is projected to have a population of 100,000. “The story was originally published by www.propertyguru. com.my and is reproduced as part of an editorial partnership between PropertyGuru Group and Property Hunter.

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/// West Malaysia Property News

Penang Capture RM3.1 Billion in Investments Up Until May 2014

Exclude Commercial Properties From Bulk Buying Limit, Investor Club Founder

Datuk Seri Gavin Tee being interviewed by media

Penang has captured a total of RM3.1 billion in investments until May this year, up from RM3.9 billion for the whole of last year.

CitiGroup, Air Asia, IHS, First Solar Global Service and TOLL, which offer high-income and high-value jobs to locals in the last two years.

In announcing this yesterday, Chief Minister Lim Guan Eng said up to May this year, Foreign Direct Investment (FDI) into Penang’s manufacturing sector amounted to RM2.34 billion, an increase from RM1.8 billion for the whole of last year.

He said that even though investments by SSO industries are not captured in MIDA figures, the industry, which currently employs over 7,000 jobs, provided average net salaries of RM5,783 per month against an average of RM2,786 per month in the manufacturing sector.

He said, however, that the Malaysian Investment Development Authority (MIDA) FDI figures of RM1.8 billion do not include US-based hard disk and storage solutions manufacturer Seagate Sdn Bhd’s recent announcement of a RM1.05 billion investment in Batu Kawan. “As Penang is undergoing high income economic transformation, our focus is on sustainability to remain competitive in the long run. “The state remains attractive to high technology and innovationbased investors and there is a gradual trend of investors moving their higher knowledge content jobs, especially research and development and design. “Three to four new projects in the state will be announced in the course of the year which may not be recorded in MIDA investment figures,” he said in a statement read out in a press conference here yesterday. Lim also noted a surge in Shared Services Outsourcing (SSO) investors in Penang, like Wilmar,

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He further stated that the state government had signed a RM11.3 billion joint-venture agreement with Singapore’s Temasek Group to undertake the Penang International Technology Park in Batu Kawan and Business Processing Outlet (BPO) projects in Bayan Baru that will create 21,000 high-value jobs. “Also not captured in the MIDA figures are investments in six new hotel projects with an approximate gross development value (GDV) of RM693 million materialising on the island between this year and 2017. “Using the multiplier factor of 4.75, 1,157 new hotel rooms is estimated to create 5,500 new jobs in accommodation and food services activities in the next three years,” he added.

Swhengtee International Investment Alliance founder and president Datuk Seri Gavin Tee, who is also the founder and president of SwhengTee International Real Estate Investors Club, wants the limit on bulk purchases to be restricted to residential properties only.

commercial properties like shopping malls. Those are the sectors that need speculation,” he said.

The limit on bulk purchase was first mentioned in February when Urban Wellbeing, Housing and Local Government Minister Datuk Abdul Rahman Dahlan said that the government is considering ways to restrict bulk-buying of properties by investor clubs.

Tee said exclusive investment programmes should be introduced to allow for the participation of corporate investments and funding managements as this will not affect the public’s affordability in purchasing residential properties. “A healthy supply and demand scenario in the case of commercial properties will add to our cultural and economic vibrancy,” he added. Tee said commercial properties such as shopping malls, hotels and student accommodation should be excluded from the four-unit limit on bulk purchases as these type of properties are purely for investment purpose. “To promote or develop this area, especially in tourism, we just cannot call for first time home buyers to support…we should exclude the four unit bulk purchase limit from hotels, student accommodation and

Tee did not answer questions on whether the ruling has affected membership and activities at his investor club.

As part of an effort to curb speculative buying of properties by investor clubs, which is one of the causes of runaway prices of properties in the Klang Valley, Abdul Rahman said developers who intend to sell more than four units to a purchaser must obtain prior approval from the Controller of Housing. The recommendation on bulk purchases is part of Tee’s Budget 2015 wish list, which includes an amendment of the RM1 million floor price for foreign purchasers to be applied only on residential properties; excluding foreign quota from Malaysia My Second Home applicants; more flexibility from banks when dealing with loan applications for commercial properties and adjustment of maintenance fees to be calculated based on the number of rooms per unit instead of per square foot basis.

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/// Contributor

FIRST PAYMENT Both HDA and HDE provided that the first payment of 10% is payable immediately upon the signing of the SPA (5% for HDO). Nonetheless, the norm nowadays is to pay a minimal booking fee upon signing the booking form as part payment and the remainder of the first payment upon signing of the SPA which is on a later date. As for the remaining 90% (or 95% in HDO) is paid progressively throughout the construction period according to the stage of work done.

LOAN

Chris Tan

The homebuyer has to obtain a loan within 14 days from the date of receipt of the stamped copy of the SPA and notify the developer with the name and branch of the financing bank. Do take into consideration that Developer Interest Bearing Scheme or any similar schemes are no longer allowed and tighter financing measure has been implemented such as the recent changes to the base lending rate.

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

After securing a financing loan, you will only need to pay the remaining sum not covered under the loan sum (ie. not up to 90% of the purchase price) and thereafter service the loan on time. It is also prudent to check if the bank has released the sum during progressive billings intervals as any delay on payment may incur the late payment interest. In any event that late payment interest is applicable and the homebuyer wishes to claim for the interest charges against the bank, he will need to prove the bank’s delay.

Nonetheless, the developer is entitled to terminate the SPA and forfeit 10% of the purchase price if the homebuyer fails to pay the instalment or interest for any period in excess of 28 days after the due date of instalment or interest. An advice for the homebuyer is to check the current stage of work done by the developer as not all homebuyer purchases their property at the early stage of construction. Taking HDA for example, the purchaser has to pay 45% of the purchase price upon buying the property where the construction has reached stage 4, ie. the purchaser has to have sufficient amount of funds to pay the 45% progressive payment or a penalty of 10% may be imposed by the developer after 21 working days. Nonetheless, the developer has the discretion to grant the homebuyer a grace period to settle the 45% progressive payment and you may want to confirm this with the developer prior to signing the booking form or SPA. The rationale behind the late payment interest is not to penalize the homebuyer but to ensure the homebuyer to make timely progressive payment for the developer to keep the ball rolling. While homebuyers are not anticipating for any late delivery of vacant possession, the developer is definitely hoping for punctual progressive payment to ensure sufficient liquidity to keep the construction progressing on schedule.

SUBSEQUENT PROGRESSIVE PAYMENTS AND LATE PAYMENT INTEREST

Trending Up Legally in view of the Property Boom in Malaysia (Part 5)

Unless you have secured a loan to finance 90% of the purchase price, you may want to be alert on any notices from the developer for the progressive payment. For cash rich homebuyer, this is important to observe as ignoring notices from the developer may incur more cost to purchase the property. Below is a simple illustration on the time frame and the late payment interest applicable:HDA

HDE

HDO

Time period

21 working days

14 days

Penalty

10% per annum

8% per annum

10% per annum

alaysia day is right around the corner and it marks the establishment of the Malaysia federation for 51 years. Throughout all these years of this national occasion, the property market in Malaya, Sabah and Sarawak has never cease to prosper and is evidential with the launching of abundance new developments in each corner of the federation. Property market does not only provide a platform for buyer seeking residential, commercial or industrial assets, but also serve as a form of investment to most people who have the extra cash in their pockets as the return may be better than saving in a fixed deposit account. As mentioned in my previous articles, any purchase of new residential property in West Malaysia from the developer is subject to Housing Development (Control and Licensing) Act 1966 (HDA). For readers in Borneo island, the new residential development in the land below the wind is governed under the Housing Development (Control and Licensing) Enactment 1978 (HDE) while the Housing Developers (Control and Licensing) Ordinance 1993 (HDO) is applied in the land of the hornbills. 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.

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HDA, HDE and HDO has stipulated a standardize Sale and Purchase Agreement (SPA) for all homebuyers purchasing the sell then build model from the developer for Malaya, Sabah and Sarawak respectively. Similar to those we have familiarized ourselves with in HDA, the SPA is provided in the regulations under Schedule G and H.

TREND NO 4: PAYING YOUR PROGRESSIVE BILLING PROMPTLY Any prudent homebuyer will realize that the third schedule of the SPA (second schedule for HDE) details out a table for progressive billing payment. You are required to pay according to the specifications provided upon signing on those dotted lines in the SPA.

This is a series of articles that examine the latest trends and issues in real estate investment. Stay tuned. NOTES

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/// Contributor

Different banks have different approval criteria and risk tolerance. You might not fit in that bank but it does not mean other banks will not lend to you. Don’t panic when your loan is rejected. Find out the reason behind the rejection and learn about other banks approval criteria and submit to the bank that you have the higher chance of approval.

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.

Income Criteria Not Met Well, this is the most classic where most loans are rejected because of this reason. Look at this fact. If a loan borrower makes a net income of RM3,000 and the monthly loan repayment is RM2,500 . Let’s say you are the lender ask yourself will you lend to this borrower. This does not even include the daily expenses. I guess you will say a big “No”. How is this guy going to afford to pay back the monthly installment? This is how a bank determines credit approval based on the borrowers repayment capability.

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

Top 10 Reasons Why Banks Can Reject Your Loan

anks can have thousands of reason to reject a home loan application. In some situation it can be unique to the loan applicant only. In some cases, the loan applicant is not even at fault. For those of you who have not submitted your loan application, if you learn why a bank can reject a loan you will be able to avoid these mistakes when you submit your loan application. This is why I have picked the top 10 reasons why a bank can reject your loan from my 18 over years of experience in the mortgage industry. Developer Or Seller Is Declared Bankrupt Banks will check whether your seller is a bankrupt or under legal proceeding using a system called Credit Tip Off System (CTOS). If a seller is bankrupt, it can be either an individual or even a company under the Malaysian Law a property sale cannot be transacted.

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.

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Developer Is In The Bank’s Negative List Every bank will have their own negative list of developers. It will vary from bank to bank. Banks will have their own specific reason why they blacklist a developer. Some reasons includes the developer is bankrupt, being sued in court or have previous bad experience when the bank finance the developer’s last project.

Existing Loan Repayment Is Not Prompt Whenever a bank process a loan, it will check a system called Central Credit Reference Information System (CCRIS). CCRIS, which is managed by Bank Negara will reflect the borrower’s loan repayment record for the last 12 months. The report will include any home or commercial loan, car loan, credit card and personal loan. If the loan repayment record shows irregular repayments then there will a very high chance the loan will be rejected. I always encourage a loan borrower to go to Bank Negara to print the CCRIS report before submitting the financial documents to the bank for processing. You can print as many times as possible and it is free.

Different banks have different credit approval criteria. The banks will look into the borrowers existing debt ratio before granting approval. Fake Financial documents If you think of doing fake financial documents or engaging someone to do this for you to get loan approval better think twice. If the bank finds out the loan will be rejected or even worst it might be a police case. I have come across borrowers who do fake EPF statement. The banks will have ways to verify the statement. Property Is In Negative List Just like the developer negative list, every bank will also have their own property negative list. This is for completed property. Landslides area, flood prone area, property structure , properties located below high tension wire or even properties which did not obtain strata tile after 10 years are some of the factors the banks uses as a guide.

NOTES

Leasehold Property With Less Than 30 Or 60 Years Tenure Depending on the banks, properties with remaining lease either 30 or 60 years or less will not be financed. The banks will view this type of properties as high risk financing as the property value will drop towards the end of the lease. No Income Proof Banks will always look at the financial documents that you submitted. If you were to only submit a salary voucher your loan will be rejected. You also need to proof the source of income. Documents such as EPF contribution, savings account and income tax declaration where your salary is credited is paramount importance when you submit your income documents.

It Is Not Your Fault, It’s The Banks Approval Criteria If 1 bank rejects your loan application, is it the end already. The answer is NO. Different banks have different approval criteria and risk tolerance. You might not fit in that bank but it does not mean other banks will not lend to you. Don’t panic when your loan is rejected. Find out the reason behind the rejection and learn how other banks approval criteria and submit to the bank that you have the higher chance of approval. If you would like to learn more on how banks approve a loan, I encourage you to attend my 1 day seminar. For more information please log on to www.gmtrainingacademy.com/seminars/ mortgage/

The Mortgage Officer Who Process Your Loan Application Yes, this is totally not your fault. The experience of the Mortgage Officer plays a very important role in your loan approval. If the person do not know how to process and recommend a loan for approval there is a very high chance the loan will be rejected. I have seen and consult many loan borrowers who got their loan rejected by a bank but manage to get approval from another bank or even the same bank but different branch. Sometimes because they are new to the bank, the documents collected from the loan borrowers are not enough to support the approval.

Keep reading up on more information and articles from experts in Property Hunter to get the latest news and views in and around the market.

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/// Contributor

Green-RE From a practical point of view if you need to go from Kuala Lumpur to Seremban you may decide to use at least three different routes which will all bring you to your destination with different times and costs. Green RE is precisely this, a Green index that offers to the construction industry a different way of looking at all the multi-facetted components of a “Green Certification”. Departure point and arrival destination are exactly the same and James has been emphasizing that neither Rehda nor him want to deny the very good work done with the GBI by Pertubuhan Akitek Malaysia (PAM) and the Association of Consulting Engineers Malaysia (ACEM).

Dr. Daniele Gambero

A basic comparison between GBI (M) and Green RE is showing how stringent are the two Green indexes and the reader may understand how cost-efficiency is not necessarily linked to lower scoring.

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. 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.

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AWARD CLASSIFICATION COMPARISON BETWEEN GBI & GREEN RE % 0-49% GBI

GREEN RE

50%

BCA GREEN MARK AWARD TYPE

55%

60%

65%

CERTIFIED

66%

70%

75%

SILVER BRONZE

76%

80%

85%

86%

90%

GOLD

91%

95%

100%

PLATINUM

SILVER

GOLD

PLATINUM

GREEN PREMIUM COST % OF TCC

“Walking The Green Talk”

Green-RE Executive Director always likes to bring up, to clarify this concept, how the different approach of Green RE on some of the features prescribed by GBI allows a more economic yet Platinum 2% to 8% practical and effective impact for the services offered to the residents. GBI award 1 point if the developer is constructing within the project a BUS Stop area even though no busses are actually Gold Plus 1% to 3% passing by that area. In a multiple layer society as Malaysia is with the commixture of so different Gold Plus 1% to 2% cultures and habits, the need for a flexible Green tool is a must and for James, GBI can be classified Certified 0.3% to 1% as quite rigid. One of the key points that Rehda has kept in mind while designing the Green-RE is TCC = Total Construction Cost the effective impact of all the different components or, in other words, how to make the offer of Green-RE certified building more attractive for the purchasers. It is a fact that Green is costing and the Singapore experience is giving a rough idea of how much going green is actually impacting the cost/selling value of properties. The table below gives a good idea in term of numbers and is based on more than 350 certification done by Green Mark between 2005 and 2008.

Green Mark Sg – Green Building Index (M)

Why Going Green?

How Malaysian developers are moving towards the Green and Eco-friendly concept

Almost 10 years ago and after deep analysis and studies on similar systems in other countries around the world, our neighbor Singapore introduced the Green Mark for their construction industry. A man with a deep experience in “Green cost efficiency” and actual benefit evaluation of the different categories of “green action/ credits”, has been engaged with Rehda (Real Estate Housing Developer Association) as Green consultant for their new Head Quarter in PJ. Wisma Rehda’s construction was initiated in 2009, with occupation in early 2012. In early 2009, Malaysia was preparing the inception of its own GBI (Green Building Index) as a profession driven initiative to lead the property industry towards more environment-friendly buildings. Rehda, which is representing the largest part of this industry, responsibly decided to have Wisma Rehda designed and constructed as a Green Building to set an example to achieve the GBI certification as it did. During the construction of their new Head Quarter Rehda intent to implement Leed as their based greentool (Leed is the US Green Index) but decided not to, partially overlooking on all the practical differences between equatorial climate Countries, as Malaysia is, and the four seasons ones as US is. Cultural and life-styles habits should also have been looked at and considered when defining categories of action and related scorings. Another weakness is the fact that our local tool has not been implemented as a costeffective and efficient tool and has not been undergoing periodic updates which, considering the high moving speed of the Green industry and related technologies should be looked at on a minimal yearly basis. Concerned with the rising of an overall construction related costs and consequently of the selling values of residential properties, where the public was and is asking for more affordable per square feet prices, Rehda decided to champion and propose possible amendments and improvements to the newly launched GBI (M). While analyzing the GBI and by comparing it to the Green Mark, the development industry realized that a Green Building Index System purposely designed for the Malaysian climate and the South East Asian culture, instead of adopting one designed for a Country, as US is, where the temperature differential during the 12 months goes from -20 Co up to 35 Co.

There is not a day in which newspaper are not talking about quality of air, pollution of rivers, CO2 emissions and so on. Going Green is a MUST for responsible citizens and, hopefully in construction, will be implemented as compulsory by the Authorities soon. As a matter of fact in Singapore a developer must make sure that their project will at least score a Green Mark certification before applying for a construction permit. The alternative is simply having the permit application directly and New Residential New Non-Resdential Existing Non-Resdential instantaneously rejected. CATEGORY Building Maximum Building Maximum Building Maximum Energy Efficiency

Water Efficiency

Enviromental Protection

Indoor Enviromental Quality

Other Green Features

Carbon Emmision of Development

TOTAL CREDITS OBTAINABLE

156

BCA GREEN MARK AWARD TYPE

GREEN PREMIUM PAYBACK PERIOD

Platinum

2 to 8 years

Gold Plus

2 to 6 years

Gold Plus

2 to 6 years

Certified

2 to 5 years

The citizens and businesses or end users of the “development project” should be the ones requesting it but here in Malaysia we still do not have a clear idea of cost/pay-back period/profit that going Green

Building will generate for our pocket. The whole Green Building scenario will look more promising if we can estimate how long it may take to recover the inevitably higher cost of buying a green house or office and which are the areas where to request a stronger green performance. The higher is the impact of credits the better at the end will be the relief on the purchasers’ wallet and the payback period might not be as long as expected as both electricity and water costs are on a continuous rise. Buyers for own use will enjoy after a reasonable lap of time less expensive bills while investors will be able to justify higher rentals based on user-friendly electricity and water bill offered by a Green Building living. 164

184

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/// International Property News

Price Growth of Luxury Homes in US Cities Eclipsing Europe & Asia

Sun Hung Kai Properties Ltd is asking a record per-square-foot price in Asia for a house on Hong Kong’s Victoria Peak after it failed to attract satisfactory tender bids for two other units in the project.

INTERNATIONAL

The 4,661-sq ft house in Twelve Peaks, a development at 12 Mount Kellett Road, is priced at HK$175,735 (RM72,620) a sq ft, or a total of HK$819.1 million, according to a document posted on the project’s website.

PROPERTY NEWS

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

Los Angeles

Construction of China-Thailand High-Speed Train Routes to Start Next Year According to Soithip Traisuth, the Permanent Secretary for Transport in Thailand, the maximum speed of trains operating on the routes between Nong Khai and Map Ta Phut and between Chaing Khong and Ban Phachi will be 160 kilometres per hour. She added that the high-speed train project will greatly improve the transportation network within Thailand, linking up the capital city Bangkok, key cities, ports, airports and freight hub centres.

A 143 billion RMB project intended to connect China and Thailand with high-speed trains has been approved by the Thailand National Council for Peace and Order.

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A source said the routes align with a proposal by China to link its lower southern region to Southeast Asia via Thailand, allowing the nation to extend its economic influence.

The whole project costs around 143 billion RMB, equivalent to around 7,414 billion baht. The route between Nong Khai and Map Ta Phut will be 737 kilometres in length and cost 392.5 billion baht. The other route connecting Chaing Khong and Ban Phach will be 655 kilometres in length and cost 348.8 billion baht.

The Most Expensive Property in Asia

Construction is set to begin next year and is slated to be finished in 2021 as part of Thailand’s eight-year infrastructure development scheme. The group, led by the Thailand National Council for Peace and Order deputy chief Prajin Jantong, said that funding sources for the project would be revealed in about a month. China Railway Engineering Corporation has allegedly set up a project department for the ChinaThailand railway which has already begun preparing for construction of the China-Thailand high-speed trains.

Knight Frank Asia Pacific, the independent global property consultancy, has launched the Prime Global Cities Index report. Prime residential prices across the index’s 32 cities rose by 6.2% on average in the year to June 2014. Luxury homes in key US cities are now increasing in value at a faster rate than those in several European and Asian cities.

Key Findings:

Results for Q2 2014

• Jakarta and Dublin stood out due to their stellar performances, ending the year to June 27.3% and 23.5% higher respectively. However, in both cases the rate of growth has slowed in the second quarter.

• Residential prices rose by 6.2% in the year to June 2014, up from 5% a year earlier. • 27 cities recorded positive annual price growth in the year to June 2014, up from 21 a year earlier.

• We noted last quarter the improving performance of luxury homes in North America, this trend has continued in the second quarter with New York, Los Angeles, Miami and San Francisco all recording double-digit annual growth in the 12 months to June, placing them all in the top 10 rankings.

• Dubai saw annual price growth slip from 11.7% in Q1 to 6.3% in Q2.

• In Dubai, prime prices rose by 6.3% in the year to June, down from 11.7% last quarter. The mortgage cap and the doubling of transfer fees at the end of 2013 influenced buyer activity more than forecast as new research by Knight Frank revealed around 25% of purchases are mortgage financed in the Emirate. More than previously thought.

• Key Asian and European capitals dominate the bottom of the annual rankings with US cities positioned at the top.

To download the report, please visit: http://my.knightfrank.com.my/researchreports/prime-global-cities-index.aspx

• Jakarta and Dublin recorded the strongest rise in prime prices in annual terms.

Kate Everett-Allen, Partner, International Residential Research at Knight Frank, says, “New York, Los Angeles, Miami, San Francisco all recorded double-digit annual price growth in the 12 months to June, placing them in the top 10 rankings.”

Sun Hung Kai last week withdrew a tender for two other smaller houses in the 12-home complex as the bids didn’t reflect their real values, said deputy managing director Victor Lui.

Hong Kong’s second-biggest developer by market value, have climbed 17% this year, compared with a 5% advance in the benchmark Hang Seng Index. Purchasers who are required to pay the foreign buyer’s tax will be given a 11.75% rebate, while local buyers will get a cashback equal to 8.5% of the purchase price, according to the Twelve Peaks website. The cheapest unit is priced at HK$105,441 a square foot, or HK$393.4 million. Luxury-home prices will have to fall from their peak to attract buyers and developers will have to offer incentives, Raymond Lee, chief executive officer of Greater China at Savills plc, said yesterday.

The house on the Peak, an exclusive neighborhood with sweeping views across Victoria Harbour, would be the most expensive property in Asia if it finds a buyer, according to Colliers International.

The sector has been hit the hardest by the extra tax on foreign buyers, he said.

Demand for luxury properties in Hong Kong has been damped since the government imposed an extra 15% levy on overseas buyers in its efforts to curb surging demand from mainland Chinese. Sun Hung Kai’s record asking price could be an advertising tactic to raise the project’s profile for overseas buyers, said David Ji, head of research and consultancy for Greater China at realtor Knight Frank LLP.

Swire Pacific Ltd sold an apartment last month by tender at its Opus Hong Kong project, the Frank Gehry-designed building also in the Peak district, for HK$430 million, or HK$79,497 a sq ft. The buyer applied for a 8.5% cash benefit, the company said. Two other units in that tender weren’t sold as they didn’t receive satisfactory bids, the company’s property unit said in response to questions last month.

“It’s not surprising that it’s selling for an astronomical price” given the limited supply on the Peak, Ji said by phone today. “It’s an investment class of its own. It would still be attractive to wealthy mainland Chinese looking to put their money abroad.” Shares of Sun Hung Kai,

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/// International Property News

China Home Glut May Worsen as Developers Avoid Price Drop

Chinese Student Nabs Apartments With Harbour Bridge Views Centaline. “They’re also worried that excessive price adjustments may reinforce the wait-and-see mood, and therefore they’re choosing to put out small amounts to test market demand.”

including Nanjing, Tam said. The average price at Shimao’s Junwangshu project rose to 17,500 yuan ($2,850) per square meter in July, from 17,100 yuan in June, according to Sohu.com Inc.’s real estate portal.

Developers are normally required to begin selling within two weeks of obtaining pre-sale permits, Zhang said.

Cash Flow

The average new-home price in 100 cities tracked by SouFun Holdings Ltd., owner of a real-estate website, fell 0.8 percent in July from June, the third consecutive month of declines.

The biggest immediate risk facing China’s economy is about to get worse. A reluctance among some developers to sell units at prices lower than they could fetch just months ago threatens to cause a swelling in unsold properties. The worsening glut would extend a slide in construction that’s already put a drag on the world’s second-largest economy, and counter policy makers’ efforts to stimulate the real-estate industry with loosened rules. In Nanjing, eastern China, nine housing projects originally planned for sale in the first half of 2014 were held for later this year, consulting firm Everyday Network Co. says. The number of homes added to the market in July in 21 major cities dropped 25 percent from June, according to Centaline Group, parent of China’s biggest real-estate brokerage. “The completed apartments will be in the marketplace sooner or later, and potential buyers will continue to expect prices to fall,” said Hua Changchun, China economist at Nomura Holdings Inc. in Hong Kong. “The property-market weakness hasn’t changed, despite the policy adjustments.” July economic data due over the next week, starting with tomorrow’s trade numbers, will give a sense

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of how well growth is holding up after accelerating to 7.5 percent in the second quarter from a year earlier. The statistics bureau releases inflation figures Aug. 9, followed by industrial production, fixed-asset investment and retail sales on August 2013.

Credit Measure The central bank reports lending and money-supply figures by the middle of August. China’s broadest measure of new credit rose in June to the highest level for the month since 2009, underscoring the role of debt in supporting expansion. Homeprice data for cities are due from the statistics bureau on Aug. 18, after June prices fell from the previous month in 55 of 70 cities tracked by the government. China’s home sales slumped 9.2 percent in the first half of this year from a year earlier, following a fullyear 26.6 percent increase in 2013, while new-property construction plunged 16.4 percent. Developers are responding with sales delays and discounts as well as incentives including no-down-payment purchases and buyback guarantees. Developers’ sales delays in the first half were “very widespread” because prospects were poor given weak demand and tight credit conditions, said Donald Yu, a Shenzhen-based analyst at Guotai Junan Securities

Co. “Will the increased supply lead to declines in prices in the second half? That for sure will happen.”

Unsold Homes The inventory of unsold new homes in 20 large cities jumped to an average of more than 23 months of sales in June, according to Shenzhen World Union Properties Consultancy Inc. data compiled by Bloomberg News. The floor space of unsold new apartments nationwide on June 30 surged 25 percent from a year earlier, government data show. “Should future demand for property be met increasingly from running down these inventories rather than from new supply, construction activity would also slow significantly,” Moody’s Investors Service said in a report last week. Developers seeking to sell yet-tobe-completed homes in China must apply for local government approval first. In July, the companies gained permits to sell about 7 percent less housing space than they received in June, according to data on 40 cities compiled by Centaline.

On Sidelines “Developers have been unable to build up adequate client interest as buyers are still waiting on the sidelines,” said Zhang Haiqing, Shanghai-based research director at

Twenty-eight Chinese cities have eased home-purchase curbs through Aug. 4, according to SouFun. The loosening hasn’t boosted sales, as mortgage restrictions from the central government remain in place and buyers are still hesitant, data provider China Real Estate Information Corp. said last week. “All of these will be helpful in mitigating near-term pain, but the combined impact will be unlikely to reverse the downtrend,” Societe Generale SA economists, led by Yao Wei in Paris, wrote in a report yesterday. “Recent trends appear to indicate precisely how concerned local governments are about the current pace of deterioration of the property sector and how grim the outlook seems.”

‘Worst Times’ Construction is slowing and inventories of unsold homes will keep rising without an increase in sales, Standard Chartered Plc said in a report yesterday, citing its quarterly survey conducted in June and July of 30 developers, most of which are small and unlisted. “Our survey suggests that the worst times for China’s real-estate sector are still ahead,” economists Lan Shen and Stephen Green wrote. Shimao Property Holdings Ltd. (813), a Hong Kong-based developer, delayed sales in the first half in cities with high inventories including Ningbo and Hangzhou due to weak demand and cut prices for some homes, said Tammy Tam, a spokeswoman. The company also brought forward sales at higher prices in some cities

Some developers are deciding to offer only a portion of homes built instead of entire projects. In central Wuhan, developers since April have typically offered less than 70 percent of homes in projects with pre-sale approvals, while some companies in Shanghai are selling homes in small batches, according to Centaline. The delays mean lower cash-flow for developers. Smaller ones face “massive” debt-repayment pressures, as cash and equivalents at 137 mainland China-listed real estate companies, excluding four of the largest, were sufficient to cover just 74 percent of their short-term liabilities in the first quarter, according to Shenzhen World Union. That’s less than half the average ratio of the other four, including China Vanke Co. (2202) Greentown China Holdings Ltd. (3900), a developer based in the eastern city of Hangzhou, said this week that firsthalf profit probably fell more than 65 percent from a year earlier, due in part to “relatively lower gross profit margin” on property sales. Its shares have dropped 16 percent this week in Hong Kong and Moody’s lowered its outlook for the company’s credit rating to stable.

Stocks Gauge A gauge of property stocks in the Shanghai Composite Index fell 0.6 percent at 2:12 p.m. local time, headed for the third straight daily decline. “Property investment will remain the biggest macroeconomic risk in the second half,” even as a deceleration in investment is less severe than in the first half, said Zhu Haibin, chief China economist at JPMorgan Chase & Co. in Hong Kong. “It’s a quite natural response from property developers to delay sales and land purchases amid a weak market, and this may affect investment activity in the future.”

A Chinese buyer who only saw a Kirribilli harbourfront apartment block on Saturday morning said he got a “fair” deal, the property selling for $300,000 under reserve. The Chatswood student bought the two apartments at 2 Waruda Street for $4.3 million on behalf of his parents, who divide their time between Australia and China. During the auction, the student tried to knock out all competition with a $500,000 bid. “I loved the feel of it,” the 22-yearold said. “I thought the price was fair, we have other properties we have bought in Sydney. “The best part of this one is we can see the new year’s fireworks from both balconies.” The 283-square-metre property – with each apartment having two double bedrooms, two car spaces and direct views of the Harbour Bridge – with waterfront parklands was one of 408 Sydney auctions listed to go under the hammer on Saturday. With 310 of the results in by Saturday evening, the Domain Group put the clearance rate at 79.1 per cent. The new owners were one of five registered parties in the crowd of 45. They were up against two other Chinese buyers and two locals. After one minute’s silence after opening proceeding, Auction

Works auctioneer Lorenzo Giunti took a first offer of $3.5 million. Even though Mr Giunti was happy to work with $100,000 increments, the next bid by the new owner of $500,000 took the price to $4 million.

with council and how to sort out everything. It has great redevelopment potential, with some wanting to build a stunning architectural home on the site while others are keen on the rental income stream.”

Three bids later, and after gruelling negotiations with the vendors and other registered parties, it was called on the market. Despite the auctioneer confirming $10,000 raises were sufficient, there were no other takers.

He said the vendors ended up paying $30,000 for the local advertising during the five-week campaign and an extra $10,000 worth of advertising in Chinese circles.

Agents Steam Leung from Colliers International and Michael Zhu from House 18 World Square had more than 50 groups inspect, with 10 taking out contracts. Mr Zhu said that, out of the six potential buyers from China, two flew into Sydney to inspect, while the others had local family or real estate representatives inspect on their behalf. “Some Chinese buyers who flew to Sydney to have a look were disappointed because you can’t see the Opera House, only see the Harbour Bridge,” he said. “If you saw both Sydney icons, they said they would be prepared to pay between $8 million to $10 million easy. “Most Chinese buyers don’t know what to do with it, they prefer something to move in straight away. “They like the location but don’t know how to rebuild, negotiate

The rental return for both apartments is $2100 a week. Mr Zhu said it last traded in 2011 for $3.15 million. Another big result on the weekend was the sale of a three-bedroom, 129-square-metre apartment at 405/24-26 Clarke Street, Crows Nest, which went for $1.21 million, $110,000 above reserve. There were five registrations. Auctioneer Rocky Bartolotto of Property Auction Services advised of two other huge results. There was a crowd of more than 150 people at the auction of 3 Nowra Street at Campsie, which sold for $932,000, $152,000 over reserve. There were 10 registrations for the four-bedroom home sold by Francois Vassiliades of LJ Hooker Campsie. A three-bedroom unit at 9/49 Charlotte Street in Ashfield sold for $725,000, which was $65,000 over reserve, by Domenic Bucciarelli of LJ Hooker Ashfield.

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/// International Property News

More Foreigners Turn Their Backs on Singapore Luxury Property

Rich Chinese Seeking Safe Haven for Their Money Park Funds in Aussie Property

A television news report in Australia

According to the report, the top groups of nonSingaporeans buying up property here consist of Malaysians, mainland Chinese, Indonesians and Indians. On the other hand, the share of Singaporeans in this price bracket held firm at 16 percent between H2 2013 and H1 2014. “The impact of the ABSD and TDSR framework is stronger for the non-Singaporean buyer groups, clipping their purchasing power, as a larger proportion of their purchases have shifted towards units with smaller price quantum,” DTZ noted. In the first six months of 2014, the proportion of private home purchases below $1 million by the top four non-Singaporean buyer groups was at 46 percent (636 units), higher than the 34 percent reported in H2 2013.

Malaysians led the search for more affordable homes in the city-state. For this group, the proportion of transactions below $1 million jumped by 17 percent between H2 2013 and H1 2014. At the same time, the share of units transacted above $1 million fell significantly. Meanwhile, Indonesian buyers saw their share of private home purchases below $1 million climb 14 percent on a half yearly basis to 31 percent in H1 2014, while the share of private home purchases above $2 million decreased from 37 percent to 20 percent during the period. Despite the drop, the proportion of private home purchases above $2 million in the first half of 2014 was still the highest amongst Indonesian buyers compared to the Indians (17%), Chinese (17%) and Malaysians (6%). This story was first published by www. propertyguru.com. my and is reproduced as part of an editorial partnership between Property Hunter and PropertyGuru Group.

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sistance and bought an investment property.

Perhaps they should look into further topping up of capital adequacy to close in the gap with their regional counterparts. A problematic transaction monitoring software system at Standard Chartered Plc is causing a backlog of possible anti-money laundering and other criminal activity cases to be reviewed.

The proportion of more expensive private homes priced above the $2 million mark purchased by the top four groups of non-Singaporean buyers fell to 13 percent in H1 2014 compared to 21 percent in the six months before, said DTZ.

53% of Gen Y Owns a Property in Australia

China, which took top spot as foreign investor in Australian real estate last year, is expected to see further demand over the next 12 months. The country is expected to see an annual growth of 20% in outbound real estate investment in the next decade, up from US$11.5 billion last year, says Reuters, quoting property agent Savills. That will help push Chinese demand in Australian property by 15% over the next 12 months, says Reuters, quoting Andrew Taylor, co-CEO of Juwai.com, the largest real estate portal that targets Chinese buyers looking abroad. Resulting from the boom, Australia’s apartment construction is set to hit record levels by 2017, and remain elevated through to 2020, says Reuters, quoting a CLSA report. As the corruption crackdown gathers momentum in China, more wealthy Chinese are parking their funds in Australian property which has seen a surge in interest lately, says Reuters. The priority, apparetly, is not so much on returns, but on finding a safe haven for their funds. Australia is now the secondmost favoured destination for Chinese property buyers,

behind the United States but ahead of Canada and Britain, according to Juwai. Apart from warnings on risky bank lending, the Australian property sector should brace itself for any asset potential bubbles. The current hot demand from Chinese buyers is set to drive prices further up but planners should look beyond that to achieve a sustainable equilibrium. China is going ahead with its plan to fortify its banks aginst the risks of a slowing economy. China’s top five banks will raise 128 billion yuan (US$20.8 billion) in a two-week bond offering spree, to meet higher capital adequacy requirements under Basel III, says Reuters. The fundraising spree still leaves China’s top lenders lagging regional counterparts. Asian banks (excluding Japan and Australia) have raised more than US$32 billion in Basel III compliant securities to-date, which includes US$26 billion issued in 2014, in local and international markets, says Reuters, quoting Moody’s data. In view of the trillions of assets held by these large Chinese banks, it is good to note that they are capable of meeting even higher capital adequacy demands, should the need arise.

That monitoring system was supposed to flag suspect transactions; however, the “detection scenarios” that tell the system what to flag for human review, was not properly calibrated, says Reuters, quoting a source. Although just “a handful” of the monitoring system’s dozens of detection scenarios were flawed, the errors went uncorrected for years, the source says, adding that people assumed it was being tested. Many of the scenarios have been corrected and the bank plans to install a new transaction monitoring system. As it is, the bank clears about US$2 million transactions per month and the process of sieving through past data can be lengthy.

First-home buyer Rachael Duncum has just bought a completed home at Stockland’s Sovereign Pocket community in Deebing Heights. The 22-year-old decided to invest her savings in property and plans to live in her new home for two or three years before renting it out. First-home buyer Rachael Duncum outside her new house in Deebing Heights

Generation Y are the most positive generation when it comes to housing affordability, according to a new report.

They are also getting into the market at a relatively young age, with 50 per cent of those buying their first property between 25-29 years.

The annual realestate.com.au Housing Affordability Sentiment Index (HASI) showed that Queenslanders overall are feeling less positive about housing affordability compared with last year, dropping from a score of 4.7 points out of 10 to match this year’s national overall score of 4.4 points.

One in two gen Yers are willing to increase their debt to achieve their desired standard of living and many are receiving assistance to attain their property goals.

However, generation Y recorded a HASI score of 4.7 points. The report revealed 53 per cent of generation Y are already property owners (up five percentage points from 2013), with 23 per cent owning investment properties (up 3 per cent).

only apply to residential properties and be made more flexible when it comes to commercial properties. “This will help to attract more foreign investments in these developments,” said Tee.

Once again the hard lesson of automation is that it is no guarantee of success.

Columnist Yap Leng Kuen realises that carelessness in monitoring automated systems can be a costly lesson.

Sixty-seven per cent of current/previous property owners bought their first property before they turned 30 and those who bought properties prior to turning 20 were significantly more likely to have received as-

“People over-estimate how much a mortgage actually costs — it’s $200 extra a fortnight compared to renting,” she said. “It’s essentially a saving account.” Finance expert Bruce Brammall said the positive attitude of generation Y was not surprising. “Gen Y are getting older and settling into their careers,” Mr Brammall said. “This, coupled with the saving strategies their Baby Boomer parents have educated them about and the financial assistance many are receiving from their parents, means that a large proportion of Gen Ys now have the skills, financial confidence

Different strategies are being adopted and considered to achieve these goals including working two jobs (13 per cent), drawing from other financial assets (12 per cent), selling valuables (6 per cent) and leasing a room once they had bought (4 per cent). In addition to owning a home, overseas travel has become an increased focus compared to 2013 results. Among respondents with plans to buy a residential property, 62 per cent also expected to travel overseas and 39 per cent to buy a new car. Of current homeowners in the market to buy another home, 77 per cent also sought to travel overseas in the next five years and 68 per cent of those who did not own their home but were hoping to buy, also sought to travel overseas in the next five years.

Government Urged to Review Policies on Foreigners

Standard Chartered has been fined a total of US$667 million for violating US sanctions by hiding transactions linked to Iran.

Human input is still required and, in this case, it was taken for granted that the transactions were tested when the system was still faulty.

Over a quarter of current/previous property owners had received financial assistance to buy their first property, with the majority receiving it from their parents.

“I figured I may as well get in now,” Ms Duncum said. She admitted most of her friends were not yet thinking about their financial future.

and family support to achieve their property goals.” Overall, property is still very much leading the way when it comes to achieving the great Australian dream with 32 per cent of homeowners having a goal to buy another home, 50 per cent of those who did not own a home hoping to buy one, and 23 per cent of those who did not own an investment property hoping to buy one.

In the wake of the two MAS incidents, Swhengtee International Investment Alliance founder and president Datuk Seri Gavin Tee has urged the government to review some of its policies involving foreigners. This is because foreigners, particularly the Chinese, are avoiding Malaysia due to their negative perception of the country. For one, he proposed that the minimum floor of RM1 million should

He also seeks to abolish the foreign quota on Malaysia My Second Home (MM2H), with the foreigners treated equally as locals when it comes to buying properties. Tee noted that the trend of MM2H applicants clustering in designated areas will cause an imbalanced and segregated social environment which in turn contradicts the idea of MM2H. Meanwhile, Tee also wants the limit on bulk purchases to be restricted to residential properties only.

“The government’s policy of requiring developers to submit purchasers’ details for purchase of four units and above should apply only for residential purpose and be waived when purchasing commercial properties such as complexes, hospitality and tourism properties, as well as projects within the education and medical industries,” said Tee, who is also the founder and president of SwhengTee International Real Estate Investors Club. He explained that exclusive investment programs “should be introduced to allow for the participation of corporate investments and funding managements as this will not affect the public’s affordability with respect to residential properties.” Tee added that a “healthy supply and demand scenario in the case of

commercial properties will add to our cultural and economic vibrancy.” Notably, the above proposals are part of Tee’s Budget 2015 wish list, which also calls for more flexibility from banks when dealing with loan applications for commercial properties as well as an adjustment of maintenance fees to be calculated based on the number of rooms per unit instead of per square foot basis. This story was first published by www.propertyguru.com.my and is reproduced as part of an editorial partnership between Property Hunter and PropertyGuru Group.

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/// International Property News

China’s Falling Real-Estate Prices Trigger Protests, Clashes

The sharp drop in China’s housing prices has led to an outburst of anger among property owners, leading to violent clashes in some cases, according to local media reports Tuesday. In one case, scores of property owners surrounded a Shanghai sales office of Greentown China Holdings Ltd. 3900, +8.58% GTWCF, -33.19% to protest the developer’s 25% cut to prices within a five-day period, according to a report on the NetEase NTES, +0.65% news portal site 163.com. Protesters held banners with slogans such as “You cheated us!” and “300,000 yuan [$48,750] worth of assets evaporate within five days — years of work in vain!” according to photographs of the demonstration posted on the site. The report quoted a sales manager from Greentown as saying that the price-cut was aimed to boost sales and “cope with competition” from rival China Vanke Co. 2202, +1.48% the nation’s largest residential property developer. In other Chinese cities, such confrontations between buyers and developers have turned violent. In the eastern city of Jinan, banner-carrying owners blocked a street to protest another 25% price cut for a local housing development, this one conducted over the space of two weeks, according to the local-government-run Life Daily newspaper. The protesters clashed with a group of counterprotestors suspected to have been hired by local developers, injuring some of the demonstrators and forcing the police to break up the fight, 163. com said in a separate report.

Rich Chinese Seeking Safe Haven for Their Money Park Funds in Aussie Property compare [them] ... with units that would be used to house refugees, or even earthquake victims, in other places,” Cheung said.

At a glitzy show stall for a new residential development in Hong Kong, property agents with loudspeakers are promoting the latest trend in the overcrowded city — high-end “micro-flats” which still come with an eyewatering price tag. Hong Kong’s poorest residents are used to making their homes in cramped accommodation, but now developers are touting minuscule upmarket apartments to reel in young middle-class buyers. Although they are part of swish modern complexes, some of the newly-built studio flats measure as little as 177 sq feet and are on sale for HK$1.5 million (RM620,938). Single entrepreneur Mike Ko is typical of the buyers developers are targeting: aspiring homeowners who are priced out of the overheated Hong Kong housing market. Ko currently lives with his parents in public housing and has been saving to buy, but says that current price tags mean he can only afford tiny properties. Agents are selling the pint-sized flats on the basis that the market boom will only continue. “You want to buy now because prices will just go up,” said one agent at the new Mont Vert development in the suburban neighbourhood of Tai Po. “You are saving, in a sense.” Mont Vert boasts a clubhouse, sea views and surrounding greenery — but at 172 sq ft, its smallest units are only three

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times larger than cells in Hong Kong’s most populous prison. The main space doubles as both bedroom and living room, with a kitchen and bathroom tucked away. Developer Cheung Kong says 10% of the 1,000 apartments on offer are studios, but could not confirm how many of those had been sold. The development is not yet completed, and — despite being a massive investment for potential buyers — there were no show flats, models, or pictures of the interiors of the studio units immediately available. While some prospective buyers are desperate enough to snap up the tiny flats, there are those who are outraged by the conditions Hong Kong residents are having to bear. “They are not only small, it is repressive. You are paying that much to be living there, it’s ridiculous,” Kenneth Tong, a spokesman for local NGO “No Flat Slaves” told AFP. The organisation believes the government is to blame for a lack of affordable homes and being slow to build more public rental housing. There is a “surging need” for cheaper homes in the city, vice-chairman of Hong Kong’s pro-democracy Labour Party Fernando Cheung told AFP. “As a result, you see these very small flats that I think could be described as inhumane if you

With many larger and pricier flats bought by wealthy mainland Chinese buyers, the smaller homes are targeted at young professionals, university graduates and newly married couples, among others, who are seeking to live independently from their parents and are looking for more reasonable prices, he said. “It’s really mind-boggling to see how the private residential market in Hong Kong has developed to such an extent,” Cheung said. The overcrowded southern Chinese city suffers from a serious housing shortage, with property prices doubling since 2009. Half of the apartments in a quiet neighbourhood to the east of Hong Kong Island measure less than 300 sq ft and are priced around HK$5 million. But developers say they will attract single “yuppies” and young families. “A lot of people who have studied overseas and return love this kind of lifestyle,” said David Fong, managing director of the new Le Riviera tower project, private developer Hip Shing Hong. “In London, even in metropolitan New York, the flat size is both small and old. We are small but beautiful.” he said. “It’s a compromise. Everyone would love to live in much bigger flats if they could afford it,” he said. But campaigner Tong says the demand for tiny apartments is “twisted”, a product of the city’s entrenched desire for home ownership. “You lose your dignity even though you have the bricks and mortar,” he said.

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/// Banking and Investment News

$₤ € BANKING & $ INVESTMENT

How Will the GST Affect Rental Income? “Look at the tenancy agreement, its resident or user, and activities. If purely residential, then there is no charge,” Yong says. “But if the unit is used as an office, the owner is responsible for declaring for GST if his rental income from commercial properties exceed RM500,000.” Serviced apartments, which bear either residential or commercial title, will also be assessed based on their usage. This is due to the fact that serviced apartments are naturally a dwelling place. Even the sale of a serviced apartment that is used as a residence will not incur GST.

NEWS

Ultimately, it helps to remember the direct corelation between the rental and sale of real estate when it comes to GST.

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

TENANTS BEARS THE GST

Sabah’ largest list of property “For Rent” at www.propertyhunter.com.my

There is bound to be some confusion on the effect of the goods and services tax (GST) on the rental income of properties once the value-added tax takes effect on April 1, 2015.

Ivory Properties Group Pulls Out of Plaza Rakyat Redevelopment Plan

Ivory Properties Group Bhd is walking away from a deal to redevelop the long-abandoned Plaza Rakyat in Kuala Lumpur after it failed to agree on the terms with the project’s receiver and manager.

and Plaza Rakyat Sdn Bhd (PRSB) could not come to an agreement following their discussion to extend the conditions precedent period of the acquisition and rehabilitation agreement (ARA).

It said in a filing with Bursa Malaysia that its unit, Ivory Place Sdn Bhd,

“Accordingly, the ARA has been terminated, both Ivory Place Sdn Bhd

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and PRSB have acknowledged and will observe the terms and conditions therein to come to a satisfactory conclusion arising from the termination of the ARA,” the Penangbased property firm added.

It was reported that DBKL was awaiting the completion of arbitration proceedings between it and PRSB and was set to reclaim possession of the site following the green light from the arbitrator.

Group chief executive officer Datuk Low Eng Hock told StarBiz early last month that Ivory was intent on seeking an amicable solution to the troubled Plaza Rakyat along Jalan Pudu even though Kuala Lumpur City Hall (DBKL) had other plans for the project.

The original plan for Plaza Rakyat had comprised a 79-storey office tower, 46-storey condominium, 24-storey hotel and seven-storey shopping centre.

Ivory had won the rights to revive the project after a tender exercise conducted by PRSB in September last year. It had proposed a mixed-use development comprising a shopping mall, serviced residences and hotels with a gross development value of RM8 billion. But Kuala Lumpur mayor Datuk Seri Ahmad Phesal Talib said in June that DBKL did not recognise the appointment of Ivory as the new developer of Plaza Rakyat.

The RM1.4 billion project was 30% completed about 15 years ago when the developer, PRSB, ran into financial difficulties during the 1997/1998 Asian financial crisis that forced them to abandon the project. The Government decided to terminate PRSB’s contract in 2010, 12 years after the company gave up on Plaza Rakyat. Subsequently, PRSB went into receivership and came under the administration of a consortium of lender banks.

It has been announced that the sale or leasing of residential property will be spared the value-added tax as it is categorised exempt-rated, while the leasing of commercial property will be subject to GST at a standard-rated 6%. But it may not be that straightforward as some residential properties could be used for commercial purposes, and vice versa. Currently, the Government is still pending a decision on the treatment of GST on rental income. “This is because the Royal Malaysian Customs requires the landlord to determine the actual usage by the tenant in deciding whether GST is applicable, which in practice will be very difficult to do,” Moore Stephens executive director Chow Chee Yen tells StarBizWeek. Chow, who is also executive director at Advent MS Tax Consultants Sdn Bhd, urges the government to issue guidelines specifically on rental income to clear the air on the uncertainties. PROPERTY TITLE VS USAGE “The Government should obtain feedback from professional bodies and the (property) industry before issuing guidelines,” he says. According to him, participants at GST seminars are in favour of Customs qualifying GST on rental income based on the title of the property rather than usage.

“I concur. That would be more practical,” Chow says. Meanwhile, other tax consultants disagree on the matter, asserting that levying GST based on actual usage instead would simplify the process. “Consider carefully the usage of the property. If it is to be used solely as residence, that would be clear cut – no tax. But the anticipated interpretation is that the GST will be applied according to its usage, not title, as published previously. The public must be clear on this,” Tax Advisory And Management Services Sdn Bhd executive director Yong Poh Chye says.

Although the onus of registration and filing for the value-added tax is on the property owner, the GST is borne by the tenant. As long as the former qualifies and registers, he can impose GST on the buyer or tenant. GST for total rental income or sale of commercial properties exceeding RM5 million is to be paid at the end of the month. For instance, GST for April 2015 is payable May 31, 2015. But if the total amount is below RM5 million, then GST is payable quarterly. “If possible stipulate in the rental agreement the purpose or usage of the property rented out to minimise disputes with Customs. If you are still unclear after GST kicks in, write in to them,” Chow says.

“We need to know for sure if the rental and sale of properties will be assessed based on usage rather than title. The matter is still being discussed by the government. Hopefully, a decision will be announced at the upcoming Budget 2015.” An apartment that is rented out to a dweller will not incur GST. The first criteria that qualifies a commercial property for GST of 6% is that the owner’s total rental income exceeds RM500,000. The RM500,000 is the total rental derived from of all the properties registered under an individual’s name or that of his company’s. Similarly, the rental of small-office-home-office (SoHo, SoVo and others similar concepts), which bear a commercial title, will be subject to GST. However, if the owner can prove that the unit is used as residence rather than commercial use, the tax won’t apply.

There is bound to be some confusion on the effect of the goods and services tax (GST) on the rental income of properties once the value-added tax takes effect on April 1, 2015.

This is an instance in which units within a building with a commercial title may be exempt from GST.

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OCBC to Sell Property Firm Stake to Thai Billionaire

Overcoming the GST Challenges

Rising Cost: Property developers want government to soften impact of new tax on industry

Oversea-Chinese Banking Corp (OCBC) is in talks to sell its stake in United Engineers Ltd (UE), a Singapore property and construction company, to Thai billionaire Charoen Sirivadhanabhakdi, said people familiar with the matter. The discussions are at an early stage, said one of the people, who asked not to be identified as the deliberations are private. OCBC, its insurance unit and the bank’s founding Lee family together own 34.1 per cent of UE, according to a report by Bloomberg. Buying more than a 30 per cent stake would trigger a mandatory takeover offer for UE under Singapore rules. UE shares were halted from trading yesterday after they jumped the most in more than four years, prompting Singapore’s stock exchange to ask the company to explain the move. With trading volume of more than five times the six-month daily average, the stock was up 7.4 per cent to S$2.46 (RM6.22) before the suspension, . Selling the stake would help OCBC bolster capital after its US$5 billion (RM15.85 billion) takeover of Hong Kong’s Wing Hang Bank Ltd this year. This story was first published by www.propertyguru.com.my and is reproduced as part of an editorial partnership between Property Hunter and PropertyGuru Group.

Even as property developers struggle to regain traction and cope with the rising cost of construction, they now have to deal with the six per cent Goods and Services Tax (GST). GST, a multi-stage consumption tax that will come into effect on April 1 next year, will replace the government sales and service taxes (SST) of 10 and six per cent, respectively. There are 950 items that will be taxed under the GST and more details on this will be realised at the forth-coming 2015 Budget. The impact on prices is expected to vary, where some items will be cheaper, some goods will maintain their prices, while others will become more expensive. Among the key challenges that the property market is facing are high land cost, which includes conversion, development charges, premium cost, quit rent and stamp duty, and scarcity of land, especially in urban areas such as Klang Valley and Penang. Real Estate and Housing Developers’ Association (REHDA) patron Datuk Ng Seing Liong told Property Times that there is an increased cost of doing business due to the high capital contributions and compliance cost that developers can’t run away from. Other key challenges include highly regulated policies, laws and regulations, he said at REHDA’s GST roundtable discussion entitled “Impact of GST on Property Industry”, here, recently. Also present were the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM)

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chairman of construction, property and infrastructure committee and deputy secretary-general Tan Sri Teo Chiang Kok, Building Materials Distributors Association of Malaysia president Yang Kian Lock, and Master Builders Association Malaysia treasurer-general (MBAM) Eric Lai Wee Meng. Ng said REHDA and 13 other associations that are directly and indirectly involved in property development and construction have submitted a memorandum to the Ministry of Finance Inc to highlight the impact of GST on the industry. From April 1 next year, purchasers of commercial properties will have to pay the six per cent GST, while buyers of residential properties are exempted. Ng said the GST, in its current form, will cause financial hardship by adding to the cost of development and resulting in higher property prices, which will eventually be passed on to house buyers. He said residential properties are tax-exempted instead of being zero-rated, leaving developers unable to claim back the six per cent as part of input tax contributed to the GST. “We cannot claim back input tax. A developer has to add the tax to the cost of construction and that will increase the selling price. We have sent signals to the government and they are not responding fast enough. There are only a few months left before the GST is implemented,” Ng said. REHDA is proposing that residential properties, including affordable houses, be zero-rated and commercial and industrial units to be standard-rated. Zero-rated means builders can claim back the input tax; hence, they don’t have to pass on the increase to house buyers, while for standard-rated, GST is collected by the businesses and paid to the government. If their input tax is bigger than their output tax, they can recover the difference.

at the point of sale, that is when houses are sold by the developers. The goods and services that are used by the developers in the making of these tax-exempt goods are not exempted from GST. “For example, building materials such as cement, steel bars, sand, bricks, wood, ceramic and roofing tiles are not tax-exempt and developers will either have to absorb the cost or raise house prices. The government is also proposing that land owners should start charging developers the GST as construction cost service. “All these will add to our current construction cost, which is around 55 per cent. With the GST, our margins will be tighter and house prices will continue to rise. We can expect a more than three per cent increase in house prices next year.” Ng said, with the rise in land prices and higher cost of construction, it would be quite difficult to get affordable homes below RM400,000, especially in prime areas in the Klang Valley, Penang and Johor. Meanwhile, according to Yang, the impact of GST on cash flow for building material suppliers will be more severe. “In our business, we provide credit facilities ranging from 30 to 90 days. But under the GST, we have to pay the tax under 21 days, even though we have not collected the money from our buyers. If we don’t pay within 21 days, there will be a penalty of RM50,000, among others. The government has to be realistic and not impose such a ruling,” Yang said. Lai of MBAM said contractors have estimated a four per cent rise in cost. “The four per cent increase in construction cost coupled with the six per cent GST on other goods and services would eventually lead to higher overall cost of doing business,” he said.

“The reality is that tax-exempt goods are only exempted from GST

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/// Banking and Investment News

GST to Be Imposed on Uncompleted Commercial Properties uncompleted portion. For instance, a project that is only 40 percent complete on 31 March will be levied GST on the remaining 60 percent. According to BDO Malaysia advisory executive director Mok Chew Yin, “The bearer of this tax will depend on the agreement between the contractor and the developer, and between the developer and the buyer.” He noted that if it was not stated in the agreement that such tax will be passed on to the buyer, then the tax will be absorbed by the developer.

A scale model of a multi-storey complex development

Goods and Services Tax (GST) will be imposed on commercial properties that are not completed by 1 April 2015, reported the media.

Notably, projects under construction will be valued on 31 March, with GST imposed on the project’s

“Ultimately, the implementation of GST is likely to bring about a slight increase to residential property prices in general – perhaps two percent to three percent by my estimation – as developers would not be able to claim input tax as sale of residential properties is exempted,”

said Mok. “The increased cost will either be passed on to buyers or absorbed by the developer or shared, but it wouldn’t be as high as six per cent.” However, BDO tax/GST executive director Jeff O’Connell explained that GST would actually reduce cost to businesses in some cases since GST input tax can be claimed, unlike the sales and services tax, which cannot be claimed. “The Price Control and AntiProfiteering Act is in place to safeguard against profiteering from the implementation of GST,” said O’Connell. This story was first published by www.propertyguru.com.my and is reproduced as part of an editorial partnership between Property Hunter and PropertyGuru Group.

Homebuyers Warned Against Syndicate Collecting Deposits housing units in the five districts and the selection by the Selection Process Enhancement Committee (SPEC) would soon take place. “The housing units will go to those truly deserving. “So, I hope the public will be aware and not fall prey to such syndicates,” he urged.

Housebuyers here need to be more cautious not to fall victim to a syndicate which is going around securing payments for units at an affordable housing project developed by the state.

Speaking after launching a corporate social responsibility programme by KDU College Penang at Cheshire Home here on Friday, Jagdeep said the developer had lodged a police report about the matter on July 22.

Penang Town, Country and Housing Committee chairman Jagdeep Singh Deo said there were claims that the syndicate was promising and guaranteeing affordable units at a project in Tanjung Tokong.

“I have written a letter to state police chief Senior Deputy Comm Datuk Wira Abdul Rahim Hanafi to look into the matter.” - Jagdeep Singh Deo

He said the developer’s company which was developing the project at the site had received several complaints from the public that there were members of a suspected syndicate going around promising affordable units at the project by taking a payment of between RM10,000 and RM30,000.

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He said he had also written a letter to state police chief Senior Deputy Comm Datuk Wira Abdul Rahim Hanafi to look into the matter. “I have received a reply from his office dated July 25 that they received my letter and the matter was under investigation.

“I hope the problem can be resolved as soon as possible,” he said. Jagdeep assured the public that the state government’s low-cost and affordable housing units could not be secured by any agent or syndicate. “The public must apply directly to the state and the application will be processed before they receive an approval letter from the developer if they are eligible for the units,” he said.

“I have written a letter to state police chief Senior Deputy Comm Datuk Wira Abdul Rahim Hanafi to look into the matter.” Jagdeep Singh Deo

He added that the concerned project in Tanjung Tokong has 390 units of low mediumcost apartments and 859 units of affordable condominiums located on a 4ha site. Jagdeep said that about 50,000 applicants had applied for affordable

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/// Banking and Investment News

Eight Tips for Buying a Resort Residence

Tax Evaders to Be Barred From Leaving Country Until They Pay Up treat the due diligence process as a fresh purchase, conducting all necessary checks relating to the value and legality of your property. It is important to look at how the access roads around the resort link to a public road. You should also look at utilities meterage; the position of transformers; and ensure that the M&E and infrastructure for the residences is operated transparently. 4. Check the service charge rates and their potential for change

A leisure property under construction in Port Dickson

Why buying into a hotel or resort requires special considerations There is no ‘one size fits all’ method of analysing mixed use residential and resort operations. Some have distinct residences separate from the hotel, while some are indistinguishable from the hotel or resort. Certain branded operations have a commonality, as their structures generally follow their corporate standards. If you have never bought a property for investment purposes in a hotel / resort, ensure you talk to a lawyer who has actually guided purchasers through the process, and seen the positives and negatives arising out of managed operations. In the meantime, these eight tips cover eight issues you should be aware of. Legal Analysis Resorts June 2014 1. Understand how branding works and how it affects your investment Many hotel assets are owned by local owners and local companies but are ‘operated’ by a brand. Often, the owner of the hotel will build adjoining residences with the knowledge that they have secured a branded hotel operator to manage the assets. The management agreement between the operator and the owner may extend to looking after and servicing the residences, but sometimes that is not the case. You must be aware that the relationship between owner and operator can affect your individual investment, as you will have no direct relationship with a hotel operator as an owner of a unit in the residences section of the hotel. Conduct your

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calculations of rental return and consider capital appreciation and capital depreciation risk in view of this. You should ensure that you obtain independent legal advice and that you do not seek advice from a law firm or consultancy that mixes commercial advice with legal advice. It is imperative that your contracts are vetted independently. 2. Plan your future re-sale at the time you acquire If the documentation you receive is prepared professionally and the seller has set up processes in the contracts under which you could assign your legal interest in an efficient manner, this significantly improves the marketability of the property. In particular, where there is a rental return guarantee or rental income split, you should consult with your adviser on any matters which might hinder such being assigned. Look carefully at the mechanism of a sale or assignment and any fees you might be liable for so you can consider this when negotiating your sale price. 3. Check the property, but also the surrounding hotel land and access ways There is a mistaken assumption that if your property is in a resort or hotel environment, the land title and the legal access ways will already be in order. Exercise caution and avoid making assumptions. Branded operators are interested in ensuring they control the hotel asset, but if the branded operator is not the seller of the residences and the hotel owner and original developer of the hotel is, then you should

As an owner placing your unit back into a resort of hotel rental pool, you will be aware that guests will not know that your unit is privately owned. They will use your unit as if it were part of the hotel. Therefore, the service charges billed to your account, depending on the commercial arrangements for the revenue split with the owner/ operator, should be at a fixed level so that you can compute this charge in your calculation of return on investment. The contract referring to charges should be reviewed for potential changes, terminations, notice periods and other pertinent matters, which might affect your investment. 5. Look carefully at your usage rights, ‘subject to availability’ and priority for bookings If the residential element of a resort or hotel is planned properly, the operator will be aware of the number of ‘blackout dates’. However, to run the operations effectively, the dates should be agreed far enough in advance so as not to conflict with advance bookings. Key prime room rate periods should generally not be available. If you do wish to secure particular dates of use for your unit when it is not being used in the rental or hotel program, you should ensure this is placed very clearly and unambiguously in the contract. Some operators will decline to allow you to insist on certain dates because they are trying to maximise your return and theirs during peak periods. 6. How often will you be charged for capital renovations, common area renovations and for any Furniture Fixtures and Equipment replacements? When you buy your unit, an initial furniture pack may be included in the

package. Beyond that, the operator will look to the hotel asset owner to ensure the hotel is updated. The hotel asset owner may pass the costs responsibilities of some of its obligations towards the operator onto you, the owner of a unit. If that so, you need to look very carefully about the provisions for regularising the frequency of such costs, as this can eat into your ROI projections. It is true that the unit must be kept up to the standards of the hotel operation to ensure usability and that the hotel is operated in accordance with the brand standards of the hotel. However, how the costs are apportioned between the hotel asset owner and individual unit owners requires scrutiny and an understanding of industry norms.

the investment for you in a way that allows you to make a proportionate return. However, if the returns do not materialise or the hotel is operated well but the occupancy and room rates are affected by extraneous factors, you will be sharing in the downside on such risks with the other parties. In such circumstances, other than to sell your unit without much upside, then your options are limited.

7. Understand penalties and remedies that affect your unit, bottom line and security of ownership

(b) if the operations are handled negligently; with gross negligence or willful misconduct (not all of these will necessarily apply depending on the contracts and jurisdiction)

If you are purchasing a resort or hotel unit, you may be considered an investment-style purchaser, as opposed to a pure consumer, in many jurisdictions. If so, you may not be afforded the same potential protections which ordinarily make unfair provisions void when consumers are involved. This means that penalties applicable for failing to meet obligations—such as payment of fees and expenses due on the property and the upkeep of the property in accordance with brand standards— may be more severe than would apply to consumers. Look at the contracts and focus on all provisions that set out the consequences of a failure to your obligations. What are your potential losses in such circumstances? Importantly, could your actual property right—if this is a ‘leasehold’ right—be terminated? What are the interest penalties on overdue sums? Does the operator have a right of entry to your unit, and in what circumstances? 8. Understand the risks of the investment not performing and your potential legal and commercial options If you have invested into a resort property, then you have taken a risk in relation to your belief that the operator can perform and that the overall asset owner has structured

However, there are circumstances in which you would have legal rights if the following matters have affected your investment, with varying degrees of applicability, depending on the legal jurisdiction: (a) if what you have bought was misrepresented to you

(c) if there is fraud or deceit (d) If there is breach of a guarantee— such as a guaranteed rental yield or return on investment When you enter into your contracts, you should be aware that your options to ‘sue’ for a breach of performance by the operator / asset owner are exceptionally limited, and that if there is clear breach of obligations or laws, you also have to deal with the difficulties that a country’s legal system may present. Some resorts are in very nice remote tropical areas, but may also be under a lethargic and unpredictable legal system. It pays to understand what the limitations on your rights are before you encounter a scenario in which you wish to test those rights. Resort properties offer clear investment returns for savvy investors. Instead of taking a risk on the standard residential letting market, by buying into a resort, you are making your investment contingent on guests and the operation of that hotel. This means the manner in which you conduct due diligence; review contracts and choose your advisers will be different to that which would apply to a standard residential acquisition.

Kenneth Chin was flying in to KL International Airport 2 from Australia on Aug 15, a trip he has been making regularly for the past five years, when his passport was barred at an auto-gate. He checked at a counter – and found out that he had been blacklisted by the Inland Revenue Board. He is one of thousands who now have to settle the matter or they cannot leave the country. The IRB is on the hunt. Tax evaders – even those owing as little as RM200 – are being barred from leaving the country until they have paid their dues.

any Commissioner of Police or Director of Immigration a certificate containing particulars of the tax, sums and debts so payable with a request for that person to be prevented from leaving Malaysia unless and until he pays up,” she said. The authority to issue a stoppage order, or to blacklist a tax defaulter from leaving the country, is granted to the IRB under Section 104 of the Income Tax Act 1967 (Act 53). The law allowing the IRB to do this has been in the books since 1967 but active enforcement has only been done in recent months.

The officers have been very busy in the last few months. This year alone, the IRB has successfully recovered RM8.37mil (RM8,378,871.48) from those who had been planning to leave the country.

Nor Azirah gave an assurance that tax offenders would not be held in detention at Immigration checkpoints but if the offender wished to continue on his or her journey, the person is expected to pay all liabilities.

The IRB has engaged the support of the Immigration Department to enforce the travel “blacklist”.

Income tax from qualified citizens forms a substantial portion of the country’s income, with the amount being on the increase every year.

“Whether the purpose of leaving Malaysia is for leisure, business or migration, the no exit order will apply to all tax offenders,” IRB corporate communications director Nor Azirah Mohd Said told The Star. “The law explicitly says the IRB director-general may issue to

The IRB is chasing after 97,343 defaulters to get them to settle an accumulated unpaid tax totalling a staggering RM2.88bil (RM2,886,891,630.59). This year, 8,332 new names were added, with cumulative unpaid taxes totalling RM162.97mil (RM162,971,207.33).

Offences under a tax gap may occur in several forms, including non-payment or a deliberate avoidance of tax, as well as a false declaration of income tax returns which results in an under-payment of taxes. Under the Act, any person who is found guilty of failing to furnish an income tax return may be liable to a fine of between RM200 and RM2,000 or a jail term not exceeding six months or both. Any person who makes an incorrect return by omitting or understating income received may be brought to court and, upon conviction, be liable to a fine of between RM1,000 and RM10,000. The offender may also be liable to pay a special penalty of double the amount of undercharged tax. Tax defaulters get a rude awakening at the airport. Concerned that you may get your holidays disrupted by being barred by the Immigration Department from leaving the country? Here’s an easy way to check your travel status: click on this link to find out! http://sspi2.imi.gov.my/

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/// Banking and Investment News

US Construction Company Sets Sights on Greater Kuala Lumpur

The Effect of Inflation on Mortgage Loan Repayments might be much less than you think simply because of the effect of inflation.

With property development increasingly reaching for the skies, a company from the United States has established its roots in Greater Kuala Lumpur to tap the ever-growing market segment in Malaysia and the Asean market.

SUMMARY The mentioned scenarios were based on certain assumptions. What is more likely to happen is a random fluctuation in BLR and inflation rates over time. Still, the principles shown hold true. What we want to highlight is how you can extract maximum value from your money by just following Loanstreet’s three simple rules for stretching the value of every ringgit.

Turner Construction Co, a multinational construction firm, has been in Asia since 1965 when it managed the construction of Hong Kong’s Mei Foo Sun Chuen, one of the world’s largest residential developments at that time. Since then, it has placed its fingerprint on a number of iconic developments dotted throughout the Asia-Pacific region.

In a nutshell: 1. If loan interest rates are higher than inflation:a. Pay off your Loan (This article disregards investment options)

From Taipei 101 in Taiwan to the Bitexco Financial Tower in Vietnam, Turner has carved a position in the development of iconic projects in South-East Asia. “Our current focus is in South-East Asia, particularly Malaysia, Indonesia and Vietnam, where we carry out our assignments through a regional and country-focused management structure,” Jack Cummiskey, vicepresident and regional manager, Asia Turner International Malaysia Sdn Bhd. said of its work in the Asian markets. In Malaysia, it is now doing infrastructure work on the Tun Razak Exchange, involved in the construction of the Warisan Tower and the Warisan Merdeka Mall, the Four Seasons Place KL and working on Tradewinds Square, Menara Tun Razak and the Etiqa office tower, a 38-storey office tower in Greater Kuala Lumpur. “While Turner is contracted directly for these projects, we routinely work side by side with a host of local firms providing design and specialty consulting for many aspects of the projects,” he said. With more than a handful of projects in Malaysia, Turner’s decision to set up an office in Greater Kuala Lumpur was based on more than just the potential of the Malaysian market. “Our decision was guided by three factors, including the potential the Malaysia market offers not only in Greater Kuala Lumpur but throughout the Peninsula.

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“In addition, we have found a very business friendly environment which supports our overall growth strategies for the region. In turn, KLIA offers the best access to the SouthEast Asia region making Greater Kuala Lumpur a natural choice for our regional headquarters,” Cummiskey said. As there is a tremendous amount of building happening in South-East Asia, Turner believes that many firms will find the property segment and the business-friendly market in Malaysia, specifically Greater Kuala Lumpur, a prime spot for developing their regional hub.

We are well known internationally for our experience with super tall towers and megascale projects but we also bring a deep depth of experience in projects in healthcare, science and research, hospitality and specialised technology facilities “We also believe the high levels of foreign direct investment, which we see as a leading indicator for Malaysia’s economy, will continue to

grow sustainably making Malaysia a strategic market for a wide array of market sectors,” he said. From Turner’s perspective, the edge Greater Kuala Lumpur presents is the strength of the property development sector itself. “While regional neighbours are also experiencing impressive growth, the business and living environment in Greater Kuala Lumpur make it a very easy place to attract our best professionals to the scale and quality of developments such as Warisan Merdeka and Tradewinds Square are quite rare and unique globally giving us yet another excellent recruiting tool,” said Cummiskey. The assistance given by InvestKL has also proved to be invaluable in supporting Turner’s business in Malaysia. “By contrast with other countries where we operate in the region, we have in InvestKL a best of class partner that has helped us navigate the many important steps to properly establish both our Malaysia base of operations and our regional headquarters. “We have come to rely on their insightful guidance in many areas including talent recruiting and development, employment passes and business regulations. They have made several important connections for us with like-minded businesses that allow us to share and learn

from each other’s experiences,” said Cummiskey. With the projects in hand and an office here, Turner is evaluating opportunities in Greater Kuala Lumpur as well as other cities in the country. “We are well known internationally for our experience with super tall towers and mega-scale projects but we also bring a deep depth of experience in projects in healthcare, science and research, hospitality and specialised technology facilities,” he said. Turner is planting deep roots in Greater Kuala Lumpur, Malaysia as a whole, and in the Asean region. Its current project activity is a solid indication of the depth of the market which clearly reflects the maturing of Malaysia’s overall economic development into a “first world economy”. “It is our goal to increase the proficiency and knowledge of our staff so they can take on new challenges. We are also actively educating young staff so they become leaders in the construction of future projects in Greater Kuala Lumpur and all of Malaysia,” said Cummiskey.

“RM5 for a bowl of curry noodles? In my day, it was 50 sen!” Sounds familiar? No doubt you hear your parents and grandparents griping about today’s prices more often than not. The reason for these price differences is simple and straightforward: inflation. We won’t go into the mechanics of inflation and its causes here; all we need to know in this context is that it devalues a currency over time by increasing the prices of goods and services. Now, you might be wondering about the significance of inflation when it comes to mortgage loan repayments, and how you can utilize this knowledge. Let’s start from the beginning. A MISLED MINDSET? There’s a piece of conventional wisdom when it comes to property loans – pay them off whenever you have spare cash, and the more the better because you’ll be done with them earlier. However, the opposite could ring true if you take into account the inflation factor. Simply put, RM1 – 30 years ago has a higher value than RM1 today due to inflation. Going by the same logic, RM1 now would obviously be of a higher value than RM1, 30 years down the line.

Imagine that a simple roadside meal will cost 10 times more, 30 years later. So, logically, paying ahead on your property loan instalments, you’d be using ringgit that would worth more compared to years down the line. Thus, wouldn’t you be losing out by paying more than you have to, despite shortening your loan tenure? INFLATION VERSUS INTEREST Of course, the one major argument against this logic is that while you might save some money by outsmarting inflation, you would end up paying more anyway due to the huge amounts of interest over the years. To gain a clearer understanding of the impact of inflation here, we have to get a little technical. Let’s take a home loan of RM450,000 paid over 30 years at a steady Base Lending Rate (BLR) of 4.2%. Your monthly repayment would work out to RM2,201. For argument’s sake, let’s compare two hypothetical scenarios. Scenario 1 – Standard repayments made to bank throughout tenure length Scenario 2 – An overpayment of RM100 is added on each month throughout the tenure length

From the table above, it can be noted that overpaying your monthly instalments consistently throughout tenure will save you RM30,729 in total. But, does that value reflect the actual value saved when taking inflation into account? Let’s now look at the two different inflationary scenarios to get a picture of how much value you actually stand to save from repaying earlier. All calculations are based on the discounted cash flow of the mortgage amortisation. * Discounted cash flow payment = Payment/ (1+ (inflation rate)) number of months If average inflation rate in Malaysia is at 4% throughout tenure: The amount saved after taking inflation into account = Only RM157 in today’s ringgit. This is the value of the amount saved based on present day value. If average inflation rate in Malaysia is at 5% throughout tenure: You actually don’t save any money but end up “losing” money in a sense. The total amount lost after taking inflation into account = RM 2,786 in today’s ringgit.

2. If loan interest rates are lower than inflation = Use your money for either: a. Investments or b. Consumption items 3. In most situations, keep only a minimum amount of cash (in savings/ Fixed Deposits (FD), etc, as your money generally devalues over time (though there are certain exceptions). One final note, please remember not to discount the importance of saving. There are times when you just might need that extra cash, or must save up for a future use. Do, however, practice wisdom and save just enough for practical purposes. This is our simple guide to stretching the value of every ringgit.

The reason for these price differences is simple and straightforward: inflation.

From here, it becomes clear that by overpaying and saving that additional RM30,729 in the future, translated into today’s equivalent, the amount

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/// Property Listing

APARTMENT FOR SALE

Extracted from PropertyHunter.com.my