Property Hunter Issue 51 - February 2014 by Sam Lee

/// COVER STORY

Is Sabah Ready for Visit Malaysia Year 2014? FEB

2014

ISSUE 51 RM5.90

/// EXCLUSIVE INTERVIEW The Pioneer of Leisure and Tourism Property in Sabah /// HOT TOPIC Why are Top Developers and International Developers Still Jumping Into Iskandar Malaysia?

TOP 5 Gravest Fallacies in Property Investment • Boosting Sarawak’s Tourism Industry in 2014 Visit Malaysia 2014, Budget 2014 Giving a Special Attention to Tourists Flow to Malaysia Inside this Issue: Over 470 Properties for Sale & 180 Properties for Rent

06  07 | Cover Story /// Contents

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What’s inside... 08

Cover Story Is Sabah Ready for Visit Malaysia Year 2014

East Malaysia Property News

Exclusive Interview The Pioneer of Leisure and Tourism Property in Sabah

Contributor: Ahyat Ishak TOP 5 Gravest Fallacies in Property Investment

Hot Topic Why are Top Developers and International Developers Still Jumping Into Iskandar Malaysia?

Contributor: Chris Tan Where There is a Will, Iskandar Malaysia Shows You the Way

Hot Topic Boosting Sarawak’s Tourism Industry in 2014

Feature Property Event Free Passes to Talk by Top Experts at the 2014 Property Hunter Expo

West Malaysia Property News

Feature Property Launch Mah Sing Group Hosted a Carnival to Launch its KK Project

Contributor: Dr. Daniele Gambero Visit Malaysia 2014, Budget 2014 Giving a Special Attention to Tourists Flow to Malaysia

Contributor: Michael Yeoh 2014 Property Strategies

International Property News

Banking & Investment News

Property Listing

08 Is Sabah Ready for Visit Malaysia Year 2014?

Tourism is a major source of revenue and one of the most profitable sectors, where the spill over effects will be felt by all Malaysians.

26 Why are Top Developers and International Developers Still Jumping Into Iskandar Malaysia? More and more international developer is spending billions in acquiring land parcels in Iskandar Malaysia for development; who are they?

34 Boosting Sarawak’s Tourism Industry in 2014

As one of the most lucrative industries in Malaysia, the tourism industry is expected to garner total receipts of RM168 billion by 2020.

Sneak Peek of March Issue Feature Interview

Special focus on the future direction of the town planning and infrastructures in Kota Kinabalu

Hot Topic

Project line up for 2014: The full range of properties lined up in 2014

Hot Topic

Tomorrow’s Tycoon of Sabah - Find Out How Entrepreneurs Build Wealth Fast in Property and How You Can Do It Too

/// Cover Story

Is Sabah Ready for Visit Malaysia Year 2014?

/// COVER STORY

ourism is a major source of revenue and one of the most profitable sectors, where the spill over effects will be felt by all Malaysians. And Sabah has a vibrant tourism industry and hopes that Visit Malaysia Year 2014 (VMY2014) will be a big success.

connecting Kota Kinabalu to Kota Bahru (Kelantan) Malaysia’s North-Eastern Peninsula capital and gateway to Southern Thailand, 3x-weekly, with full capacity in the next few months. And in December 2013 AirAsia also launched its Kota Kinabalu-Cebu direct flight 3x weekly.

According to Datuk Seri Panglima Masidi Manjun, Minister of Tourism, Culture and Environment Sabah, since 2008 the arrival of tourist to Malaysia has increased by leaps and bounds.

Datuk Dr. Ong Hong Peng, General Secretary Ministry of Tourism Malaysia said that in the preparation of the Visit Malaysia Year (VMY) 2014, a whole projection of promotion was held.

“In 2008, a total of 22 million tourists visited our country and the numbers have been rising since, and by 2012, a total of 25 million tourists have visited Malaysia,” he said.

“2013 was a comprehensive year for us and we want the tourism industry players in Sabah to work closely together. What we are trying to do is to keep Malaysia clean and green. We also intended to hype up tourism quality and services and also tourism destinations and maintenance aspects, and build up the mind-set of those involved in tourism, and display Malaysian hospitality,” he said.

He disclosed that out of the national total Sabah contributed a total of 2.3 million tourists in 2008 and 2.876 million in 2012, and added that the Sabah government is very optimistic in further developing the industry, and ensuring the tourism sector in Sabah will progress to its fullest potential. “The national income from tourism industry also showed an increase from RM49.5 billion in 2008 to RM60.6 billion in 2012,” he said. Sabah made good progress in tourism business, the first-10 months of 2013. There were increased air accessibility and flight-frequencies into Sabah with more airlines connecting from regional capitals and cities into Kota Kinabalu, including record arrivals of charter flights from the region. In October 2013, Malaysia Airlines re-launched its Kota Kinabalu-Tokyo 3x-weekly direct flights and added a second-direct flight direct to and from Perth, Australia. A month later, AirAsia launched its direct domestic flights

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The Ministry of Tourism has organized the VMY campaign three times, starting in 1990, 2004 and in 2007 the VMY coincided with the celebration of the 50th year of Merdeka. The VMY campaigns have had a positive impact on tourism with tourist arrivals increasing at an all-time high. DEMAND FOR ECO-TOURISM According to the president of the Malaysian Tourist Guides Council (MTGC) Jimmy Leong, “Tourists are moving away from wanting to visit big cities and are now more interested in seeing the beauty of nature in the countries they visit.” Therefore, the MTGC chose to kick off VMY2014 with a community service project in Kundasang, Sabah. Aimed at promoting Sabah as a tourist destination, the tourist guides from

all over the country will gather there and spend a day cleaning up the village. The three-day community service project will be held in conjunction with World Tour Guides Day on 21 February 2014. During the programme, guides will be taken on a visit to Kinabalu Park, the Desa Cattle farm and Poring hot springs, which are the major attractions in Kundasang. Sabah Native Registered Tourist Guides Association president George Rejos said trekking and hiking activities are very popular among tourists, especially the Europeans. “Sabah has been, without fail, among the top five states which received the highest number of tourists every year over the past 20 years because of the wildlife, jungle and, of course, Mount Kinabalu. Tourist guides must be prepared to provide the best services and be up to date on all the latest tourism products,” he said. Sipadan-Mabul Resort Chief Executive Officer Robert Lo added: “Sabah is very lucky because we are naturally blessed with world-class islands and tropical rainforests. We have a lot to offer to tourists, but we have to further develop our tourism industry. We have to learn from other countries and understand why they are doing well so that we can improve and become better. We have to address the root problem. There’s a lot of work to improve especially in the area of services and providing education and training will help solve this.” TAP INTO RM2 BILLION FUND The government has allocated RM1.2 billion for the tourism industry over two years beginning last year to implement the VMY 2014 programmes. Prime Minister Datuk Seri Najib Abdul Razak said that the tourism industry

has managed to garner a total of RM65 billion income for the country and has the potential to do more. Najib also announced 2015 as the Year of Festivals and that the government will organise and showcase a variety of cultural programmes and festivals in the country. “To promote the tourism industry, RM2 billion will be provided to the Special Tourism Infrastructure Fund under Bank Pembangunan Malaysia, to finance the cost of building hotels, resorts and theme parks as well as purchase and replacement of equipment related to the tourism sector. “The Fund will provide soft loans at low interest rates between 4% and 6%, with the government providing a subsidy of 2%,” he said. Masidi urged tourism players in Sabah to take advantage of this special tourism infrastructure fund. He said stakeholders should for instance think about building four or five-star hotels in Kota Kinabalu where there is a growing demand. “I recently met with hotel operators and was informed that the hotel occupancy rate in Kota Kinabalu is 92% and among the highest in Malaysia. This shows that we do not have enough hotels. “We received a lot of tourists particularly from China in 2013 but the challenge now is we don’t have enough four or five-star hotels and resort hotels,” he said. Plus, the current transport infrastructure also needs to be improved.

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/// Cover Story

According to managing director of KR Synergy Group Kevin Ratnasingam, “The interconnectedness between transport and tourism is an important relationship within the wider tourism system because it facilitates the movement of tourists between their place of origin and their destinations.” He added: “Transport acts as the means of movement within a destination itself. Transport relies on the viability and attractiveness of a destination, and a destination relies on transport for visitor access.” DEVELOPING SUSTAINABLE TOURISM Sabah’s economic development is heavily predicated on tourism but if Sabah is to remain pristine and intact, Sabah must balance continued development with safeguarding its heritage and environment for future generations. Organisations such as The Sabah Society, Kinabalu National Park, and Sabah Wetlands Conservation Society do much to protect Sabah’s flora, fauna and culture. But efforts need to be taken to a new level by making the protection of the environment an everyday part of our lives and a key consideration in development. Recognising tourism as a key driver of Sabah’s development and economy, the developer of Kota Kinabalu’s PacifiCity, Pacific Sanctuary Holdings, is eager to inspire Sabah’s movement towards sustainable development. The organisation plans to develop a luxury resort brand, Green Village Resorts, which will bring sustainability to the forefront through inspiring buildings constructed from bamboo and other sustainable materials. Green Village Resorts hope to inspire the emergence of a whole green industry in Sabah. Bamboo plantations, whilst remaining considerate to Sabah’s irreplaceable forestry, will offer Sabah renewable timber with a four-year growth cycle and a large carbon sequestration capacity – absorbing excessive carbon dioxide in the atmosphere. Bamboo factories will be built to process the timber. For construction purposes, bamboo can be treated using a natural salt solution (borax), which increases the material’s lifespan by making it indigestible to insects and weevils such as woodborers. Used as a construction material, bamboo can offer a compressive strength similar to concrete and a strength-to-weight ratio of steel whilst retailing natural flexibility. Bamboo can also be manufactured into yarn, to make material for clothing or soft furnishings and be used in composite materials replacing, for example, energy intensive glass fibers used in fibreglass. Bamboo fiber possesses a strong and more sustainable fiber that could one day be used in many other industrial processes. Using bamboo and other sustainable materials within the construction industry will have long-term benefit to Sabah, reducing Sabah’s carbon footprint and allowing easier decommission and redevelopment in future years as the materials are readily able to be relocated, re-used or recycled. As the world looks towards the East for future development, Sabah will need to pioneer and model a State worth visiting, investing and living in. This has to be hand in hand with environmental education in a unique and experiential manner to provide a holiday, not found anywhere else in the world.

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ENHANCING SECURITY In February 2013, Lahad Datu gained worldwide attention due to the incursion of Sulu militants at Kampung Tanduo, situated 130 km from the main town. The government established the Eastern Sabah Security Command (ESSCOM) headquarter in Lahad Datu, further enhancing the security. However, in November 2013 tragedy struck again. A Taiwanese tourist was shot dead and his wife was kidnapped when gunmen raided a resort in Pulau Pom Pom in Semporna. According to ESSCOM Director-General Datuk Mohammad Mentek, the incident in Semporna which occurred in one of the 10 districts put under the Eastern Sabah Security Zone (Esszone), was an isolated case perpetrated by criminals.

Heavy development scene at the southern corridor of Kota Kinabalu City

As such, Mohammad said foreign tourists should not be unduly worried as places of interest in the east coast of Sabah, including island resorts were well-guarded by local security forces. A standard operating procedure (SOP) for better tourism industry security maintenance in Sabah’s east coast will be drawn up as a guideline for the industry operators. Mohammad said the SOP would also help create effective communication between the tourism industry operators and the security forces. “This SOP will give a clear guideline on the role of all parties concerned in ensuring cooperation and commitment in security maintenance,” he said adding that in drawing up the SOP, feedback from various parties, especially the tourism industry players, would be taken into consideration.

Panoramic view of Kota Kinabalu City from Karamunsing

He said the SOP which will be implemented this year would also be proposed for use by the resort operators as a condition for approving their operating licence in future. The SOP was necessary as there was lack of attention given to security aspects by the resort operators in the Esszone.

Sutera Harbour Marina

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/// East Malaysia Property News

EAST MALAYSIA

PROPERTY NEWS

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

Tram Services to Fix KK Congestion?

TESCO Plans to Expand to Sabah

Tram service shown in Japan

Musa (in red cap) being given a briefing by Fischer (left). Also seen are (front row, from left) Dr Abdul Malek, Khalil and Mohamed

Deputy Chief Minister Datuk Raymond Tan Shu Kiah said the state government is keen to introduce tram services as a solution to the perennial traffic congestion in the state, particularly in the state capital according to Borneo Post. He said this when Kuching-based China’s new Consul General, Liu Quan and fellow consuls, Sun Xia and Chen Hao, paid a courtesy call on him at his office. In response to Raymond’s statement, Liu proposed that the state government works with China in realising such services as China’s transportation technology is advanced.

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Liu said Sabah’s strategic position in the region as one of the members of the Brunei, Indonesia, Malaysia and Philippines-East Asean Growth Area (BIMP-EAGA) augurs well for its economy. This, coupled with better air and sea transport services, would spur the state’s economic development to greater heights, he opined. Raymond, who is also the Minister of Industrial Development, said that with the introduction of more direct flights between Sabah and China, the state has seen a big increase in the number of tourist arrivals from China and Hong Kong. He said China is also one of the largest importers of crude palm oil from Sabah.

Sabah’s Chief Minister Datuk Seri Musa Haji Aman, on the invitation of the TESCO, Malaysia retail mall’s management, visited the mall’s in Petaling Jaya near Kuala Lumpur. Musa was briefed by TESCO Malaysia’s chief executive officer, Georg Fischer on TESCO business chain in Malaysia especially in the peninsula. TESCO is proposing its intention to expand its retail business to Sabah.

Among TESCO senior officers present were its advisory board members’ chairman, Datuk Seri Mohamed bin Abid, director of board members, Datuk Dr Abdul Malek Hanafiah, director of corporate and government affairs, Azlan Shah Alias. Sabah’s Innoprise chairman, Tan Sri Khalil Haji Jamalul was also present.

China’s Firm to Build Labuan Bridge International Terminal and to move the Air Force to Tawau.

Malaysia’s First Oil and Gas Terminal to Open Soon in Sabah

“Labuan Airport will then be a 100 per cent civilian airport and Tawau Airport will become partly a military airport. The proposal to develop Labuan into a major transit point for the whole island of Borneo is logical,” he said. The bridge plan designed by Innotech Design Architect Sdn Bhd shows the bridge linking Labuan at Tanjung Aru with the mainland of Sabah at Menumbok The proposed bridge to link Labuan and Sabah is now possible after it was merely talked about by the people years before. Representing former chief minister Tan Sri Harris Mohd Salleh at a briefing session for the committees of Malay, Kadazandusun, Chinese and Indian chambers of commerce at Tiara Hotel here, Raden Kakung said both the people of Labuan and Sabah were looking forward to have the bridge built. The bridge is possible as a company from China is willing to build it for a land swap without cash payment. “An entry port with an integrated bridge has also been planned. The Labuan side will provide sea land for reclamation, which will be developed into commercial and residential properties especially for retired overseas people. “This is also the plan for the Sabah side. To realise this aspiration, the Federal Government should formulate a policy allowing foreigners to have permanent residence permits in exchange for their investment on the island,” he said. Reading a speech on behalf of the former chief minister, Raden said that Harris recalled a concept initiated by the British to make Labuan like a little Singapore

or Hong Kong, which remains a dream to the people of Labuan. “Indeed, Labuan is just like Singapore. The economic activities of Singapore are tied up with the financial centre as well as oil and gas. Tourism, property management and other businesses just simply follow. “Nevertheless, Singapore is far away from Labuan. Therefore, it is not a direct competition as Singapore is a well-established oil and gas centre. Any establishment trying to compete with it in the same business will fail. “Its friendly neighbours of Sabah and Sarawak recognise the fact that Labuan with a population of 100,000 can only survive and thrive with the presence of oil and gas industries, which will guarantee employment,” he said. He said further that in order to make Labuan a fully integrated and functional oil and gas centre as well as tourist destination especially from the mainland of China, there were discussions currently in progress to make Labuan the hub for tourists to visit Borneo Island. “There has been a proposal by a company to take over the management of Labuan Airport to extend its runway by another 1,000 meters in order to accommodate larger aircraft. Plans are also underway to build large new

Raden explained that the Airbus A380 aircraft would fly directly from China to Labuan while the Boeing 737 aircraft would bring transit passengers to whichever destination in Borneo they wished to spend their holiday. Raden was optimistic about the plans as the funds were available for the physical development of Labuan. He estimated that in three years’ time, there would be around 120 million Chinese visitors going overseas. “If twenty million or one sixth of these tourists visit Borneo through Labuan, it means that there will be about 55,000 Chinese tourists a day passing through Labuan. “These numbers could be doubled taking the return journeys into account. The people of Labuan must work to catalyse the completion of the physical and economic development of Labuan. “At the same time, the free port status must be maintained in Labuan alongside with its vision to be an economically viable island,” he said. Raden said that Harris remained personally committed to the survival of Labuan, as he was responsible for the handing over of Labuan to the federal government for administration. Also present at the event was the architect for the Labuan Bridge, Sim Sie Hong.

The Sabah Oil and Gas Terminal (SOGT) project in Kimanis, Sabah The country’s first integrated oil and gas terminal is set to be operational by early next year after undergoing several months of a commissioning process. Project director Noor Illias Mohd Idris said the commissioning process of the RM3.8 billion Sabah Oil and Gas Terminal (SOGT) in Kimanis was due to begin soon. “This is one of our biggest projects and is capable of processing 1.25 million standard cubic feet of gas and 260,000 barrels of oil daily,” he said at a media briefing yesterday. During the commissioning process, he said, loud noises due to the emission of gas flares as high as 100m would be heard by villagers within Kimanis and nearby areas.

to the standards set by the Department of Environment,” he said. Illias said Petronas officials had briefed some 500 villagers living near the plant as well as about 1,000 fishermen in Papar on what to expect during the commissioning process. “A 12km radius of the Kimanis Bay off the terminal has been designated as a nofishing zone for the safety of fishermen. It will be hazardous for small fishing vessels as tankers nearly 290m long will be entering the area,” he said. The SOGT was built on a 104ha site 80km south of Kota Kinabalu.

“The flare is normal during commissioning due to the release of gas during equipment testing. “The high-pressured gas needs to be burned before being released, according

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/// East Malaysia Property News

SHAREDA Fears More Cannot Afford Houses After GST “Demand for properties, however, will prevail but loan approvals will dampen. “Right now many are complaining about not being able to obtain homes although they are earning a monthly salary of RM2,000.

SHAREDA President, Francis Goh It is likely that more Sabahans will not be able to afford to buy houses once the 6% overnment Services Tax (GST) is implemented on April 1 this year. Despite about 50,000 units of affordable homes believed planned for Sabah in five years, Sabah Housing and Real Estate Developers Association (SHAREDA) fears that more Sabahans may not be eligible for housing loans. Naturally, with the introduction of the GST, property prices will go up and are expected to slow down due to uncertainties in the bank borrowing policies, said its President Francis Goh .

“Imagine those with a way much lower salary, when the GST is implemented,” he said after listening to two expert presentations on the impact of the Budget 2014 on the State’s real estate industry. Two experts have earlier presented the impacts of the introduction of the GST, Real Property Gain Tax (RPGT) and Developers’ Interest-Bearing Schemes under the Budget 2014. While banks normally approve loans based on the assessments on their creditors, the stringent process is normally regulated by the central bank, Bank Negara Malaysia. Instead, Goh suggested that the Government look into introducing rent-to-own schemes than affordable homes. He said by providing

a low rental fee more will likely purchase the units after a certain period, rather than burden housebuyers with a 10% deposit up front and facing the risk of not getting any loans. “Affordable homes are also market-driven, whereby the respective buyers need to get their loans approved on tougher borrowing policies,” he said. However, Goh opined that the Real Property Gain Tax will not pose any impact on the speculative buying in Sabah, saying there are more genuine buyers to only about 1% of speculators. Besides, he said, “How is the RPGT being implemented. Should housebuyers pay up straight, or is it part of the Sales and Purchase Agreement or whether the RPGT is liquefied into the house selling price?” He said the Government should be clear on the RPGT which was once known as the Anti-Speculative Act.

200 Premises in Sabah Do Not Have Safety Certs He told a seminar on fire safety in Sandakan that to date, only 281 such premises had been accorded a fire certificate.

Kota Kinabalu, Sabah Nearly 200 public and business premises in Sabah that require a safety certification from the Fire and Rescue Services Department have yet to do so.

Department director Nordin Pauzi said these were among the 474 premises in the state that were required to be certified to be safe from fire risks.

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Exciting Activities for the Kids to Be Held at the 2014 PH Expo in Kota Kinabalu!

Nordin said the department’s officers at the 21 fire stations around the state would be stepping up enforcement activities to ensure operators of premises, which required certification, complied with the law.

The 2014 Property Hunter Expo scheduled in Kota Kinabalu on 7 to 9 March will be a family affair for all the enjoy! While parents explore the different booths for investment opportunities, children can participate in a drawing and colouring competition which is sponsored by Logistics Company, ABX Express Sdn Bhd for the third year running during Property Hunter Expo. The contest will be held on 8 March (Saturday) from 2:00pm to 4:30pm, pre-registration is essential.

Contestants will be divided into three groups namely, Group A: age 4 to 6 years old, Group B: age 7 to 9 years old, and Group C: age 10 to 12 years old. ABX Express will be sponsoring five prizes for each category: first prize worth RM 300, second prize worth RM200, third prize worth RM 100, fourth prize worth RM 80 and fifth prize worth RM 50. All winners also get a certificate each.

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/// Exclusive Interview

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/// EXCLUSIVE INTERVIEW

The Pioneer of Leisure and Tourism Property in Sabah Exclusive Interview with Robert Lo

Education for human resources is the key to tourisms future in Sabah

ipadan-Mabul Resort Chief Executive Officer Robert Lo was previously working in the banking industry in Hong Kong. He decided to come back to Sabah for a holiday and it was during his visit to Sipadan that he fell in love with the gorgeous island and its crystal clear waters. Lo toyed with the idea of starting his own resort in Sipadan and strongly believed that he could make the business a success if he managed to acquire a plot of land on the island. Entering a new industry was a huge learning process but Lo stayed confident throughout the ups and downs. He said, “Sabah is naturally blessed with world-class islands and tropical rainforests. We have a lot to offer to tourists, but we have to further develop our tourism industry. We have to learn from other countries and understand why they are doing well so that we can improve and become better.” According to Lo the root problem lies in service. Regardless of how wealthy Sabah is in terms of pristine nature, the state cannot grow if our human resources do not improve. And in his opinion, education is the key. He said, “We need to provide a lot of training for our people especially in terms of mastering language and learning about how to effectively operate a tourism business. If we want to progress we have so much to do.. He added: “The problem with some players in the industry is that they view this solely as a money making business and they don’t really care about their customers. When we do something, our hearts must be in it. We need to provide the best for our customers and have proper quality control to ensure the wellbeing of our guests. It’s a lot of work, but we have to be professionals.. The tourism industry is extremely important to Sabah and its economy. This sector has transformed significantly over the past decade to meet growing demand. In 2013, tourism grew tremendously and the grand total nett arrivals recorded a double digit growth compared to 2012. The North Asia market, namely China and Hong Kong, South Korea, Japan and Taiwan was the largest source of international arrivals, accounting for 51.2% of total international arrivals to Sabah. And according to Lo, his business wasn’t really affected by the kidnapping in Semporna that happened last November.

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/// Exclusive Interview

Lo said, “There wasn’t a significant slowdown in business, but some countries did put up travel advisories against travelling to Malaysia, so we had to take measures to calm their fears. We hope that with the strengthening of our security, people will have more confidence to come to Sabah. The safety issue is also a problem in West Malaysia with the crime rate rising. This will seriously affect us in the long run if we don’t solve it.”

He commented: “The ocean is crying out because of dynamite fishing and our leaders have to play a role and ensure that we see change. If we don’t get our hands dirty and address the fundamental issues and root problem to solve this. It’s the same when it comes to cleanliness. This is a big problem especially in Semporna. We have to educate the people, implement penalties and also invest in waste disposal management.”

He added: “Although we have a lot of Chinese tourists coming in, but can’t put all our eggs in one basket. We need to cater to other markets as well and continue to promote to other countries in Europe. You never know, if an outbreak suddenly happens our tourism industry might suffer. That is why we should market to all countries and treat each market equally to ensure continuity.”

Lo said this also refers to the lack of infrastructure that we have for tourists. Management has to identify the right people for certain jobs and make sure it’s conducted efficiently. And this involves everything including issues like managing public toilets which are dirty and sometimes doesn’t have water.

Lo is also concerned about destructing fishing practices and overfishing that poses the most severe threats to the Sabah waters. Fish bombing is practiced along nearly the entire cost of Sabah. Fishermen use illegal explosives made of fertiliser and fuse-caps inserted into bottles. The use of cyanide to poison fish is on the rise and it is just as destructive. Blast and cyanide fishing has accounted for the loss of more than 80% of the original cover in many areas. This has resulted in the virtual eradication of commercially valuable species along many parts of the coastline..

Panoramic view of Kota Kinabalu City and Gaya Island

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He added: “We need a wakeup call. This is the responsibility of the government and every individual company and person. Before we address the problem, we have to first create prevention so the problem doesn’t even happen at all. We must have the knowledge of how to handle different situations, make sound decisions, delegate properly and have good time management. Time lost is lost for good so we must improve and make the most of it.”

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The Ria Showrooms Block A, Lot 210, Taman Ria, Jalan Lintas, KK Monday-Friday Saturday

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/// Contributor

Ahyat Ishak Investment Expert

Ahyat Ishak is the author of the bestseller “The Strategic Property Investor” book and the founder of “The Strategic Property Investment Model & Program”, which has helped many Malaysians create immense and sustainable wealth through property investment. He first began property investing for more than a decade ago and became a property millionaire before the age of 30, having started from humble beginnings. Through his experience and learning from many successful property millionaires, he has discovered the REAL Wealth Formula™ and has also trademarked his Strategic Property Investor Model™, which is the framework for his highly acclaimed workshops, seminars and talks.

TOP 5

Academically, Ahyat Ishak has an IT Degree and MBA with the University of Southern Queensland (USQ), Australia, specializing in Strategic Marketing. He also holds the CPT or Certified Professional Trainers with IPMA, UK. Professionally, he is an entrepreneur and is the executive director of his family’s group of companies, which he 1st joined in the 90’s. This group has businesses ranging from services, technology, trading, food, agriculture and property investment.

he Strategic Property Investor today needs to drill through the fallacies or myth of property investment. Sometimes we hear too much of common adage or common wisdom and just accept it without really understanding if they are true or just a misconception. You get senior investors passing such wisdom to junior investors. You hear an investor passing such wisdom to another fellow investor in networking sessions. And sometimes, we do not take the trouble to really investigate if they are indeed wisdom or just misconceptions. Lets visit some of my top 5 great fallacies in property investment of all time!

Gravest Fallacies in Property Investment

Website: www.ahyat.com YouTube channel: AhyatPropertyTV

#1 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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Property is an Asset

How many of you have been told this great fallacy when you were growing up? It’s as though everyone had parents that went for the same property investment class and was told, “Property is an asset”. Are properties always an asset? The answer is NO! And when something is not an asset, what is it? It becomes a liability! In simple terms, an asset is like the superhero that helps you win in the battle to create wealth and liability is like the villain that exists to ruin your world! So when does a property NOT become your asset? Well for starters, lets understand how properties IS your asset. For me, I only invest in IGA’s or income generating assets. If that property does not give me income, I don’t consider it investment-grade and not an asset that helps me create more wealth. So if my asset is not tenantable and not easily sold at a premium, it is the worst asset to hold; basically, it is your perfect villain or liability. So the next time someone tells you if a property is an asset, you know that that is not true all the time. Your goal as a strategic property investor is to understand when a property is an asset or a liability!

I Can Grow My Portfolio Without Growing My Income I’ve spent thousands of hours arguing this fallacy with my students and fellow investors. I’m beginning to get tired of this! I am simply baffled at how some investors feel that there is somehow a magical way that they can continue to buy property without increasing their income! And the funny thing is that there are some people in the market, who claims that they can help you do this! Amazing actually. I call these people miracle workers or magicians! The reality is that there is no way that you will be able to without growing your income. If there were, magicians would be the richest people in the world, snapping millions from thin air! The truth is this ladies and gentlemen, imagine the income you have is the same size as the property you buy. If you desired to buy one property, the size of your income has to be the size of 1 property. If you desire to buy 10 properties, the size of your income has to be the size of 10 properties! There are no shortcuts to this and certainly no magic! Some people share tricks where you can simulate income from borrowed credit to make it look like you earn more so that you can get your next loan approved. Let me tell you this, bankers are not as dumb as you think; they can smell this from a mile away. Perhaps you can get that loan approved but I doubt that you can for the next and the next. Remember, just as fundamental as the law of gravity, you can only grow your portfolio when your income grows. So make a decision to grow yourself and your income first, and this will automatically mean that you will be able to buy more properties!

I Want to be a Full-Time Investor

This is another one of those fallacies that I have to debunk almost at a daily basis! NO! You do not want to be a full-time investor! Many investors, especially youth investors below the age of 30, tell me, ‘Ahyat, I’m tired of my job’, or ‘Ahyat, I hate my boss’ and ‘I want to quit and become a full-time investor!’ Well, there are many who are full time investors, but if you want to be a full-time property investor, things are going to become difficult very quickly! If you are talking about stocks, forex and such investors, it may be possible, but let me tell you why it is not for property investors. The name of the game in property investment is leveraging, and who else do we borrow from, if not from our wonderful financial institutions; the banks. I’ll be as blunt as I can right now, banks are not going to lend you money if you do not have a primary source of income! And this I explained in my book, “The Strategic Property Investor”, where the real wealth formula is the PSI + MSI. And this is read as Primary Source of Income ‘plus’ Multiple Sources of Income’! In property investment, you cannot have a standalone MSI, without the PSI, at least in the beginning stage that is. Make a decision today to have a super PSI so that you have a super MSI. And maybe, when the time comes, your MSI will be massive enough to totally replace your PSI and then you can decide if you want to continue to work!

Property Will Always Increase in Value

Ooh, this is going to be a sensitive one! Everybody wants their property prices to increase in value, correct? At least I do! Nobody wants their properties to decline in value! But how many of you have actually heard this one before, property prices will ‘always’ increase in value? I would think all of us. In more mature property markets like in developed countries, this so called wisdom is the one that many buyers and investors find to be a joke and the scariest of all because they have felt the pain of massive crashes. And during such crashes, they have seen it with their own eyes, when property prices do not actually just go up, but it can go down. So a misconception that property prices will always go up is like believing that everything you touch will always turn to gold! Here’s the thing, because of this misconception, people will always continue to buy property even if they felt that it is already very expensive. I would think that this belief is the only thing that justifies this to happen. If the belief is strong, markets would seem to push through to dizzying heights and when the belief is gone, due to many market events that will challenge this belief, then markets are suppressed and the motivation to buy and to make quick gains is quickly dissipated. While real estate would generally increase in value over the long term, booms and busts do exist. I present to you this fallacy not to incite fear but to instigate a deeper thought process to allow you to think more strategically when making investment decisions!

Property Investment is a Short-Term Game

To some, just by calling it a ‘game’ is wrong. But ladies and gentlemen, truly it is just a game. If you are not having fun in the game, don’t do it at all. And most importantly is that we play to win. Losing in the game of property investment is not an option. And mind you that there’s a fundamental mistake made by many investors who ‘plays not to lose’. It is not similar to ‘playing to win’. Now the moment you want to play the game for the short term play, you are ultimately limiting your thought process to consider all the benefits and risks. Often times, the risk part of the equation is often neglected. You go through a shorter though process when playing any game for that matter for the short term. The truth about property investment is that it was never designed to be a short term play, it is a medium term to long term play. Property investment is a marathon and not a sprint. I also shared this investment value of mine early in my book and it remains a core value of my teachings. Make a decision today to be strategic property investor and always plan for the long term, but always ready to make short term decisions!

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/// East Malaysia Property News

What are the Occupancy Rates of Malls in Sabah?

A recent popular mall to visit in Kota Kinabalu The mall culture has become an integral part of our lifestyle. As the number of shopping centres increases, older and less strategically located malls may struggle to attract the local crowd and tourists.. Malls are increasingly dependent on nearby hotels guests and tourists to boost business sluggishness especially after the 2014 Lunar New Year. Total retail space in malls in Malaysia has doubled since 2002, rising from 68 million sq ft to 121 million sq ft in 2001. However, the occupancy rate has hovered between 77.7% to 81.85 over the past 10 years. What is certain for sure, Star City will go into 2014, as an abandoned project, an indication that there may be too many retail floor outlets in Kota Kinabalu without an influx of foreign buyers or new business ideas, products and services. Some Star City buyers are worried that the new mall with a hotel to be built beside it will be completed even before Star City gets rescued, relegating it to the business backwaters of desirability. Suburban niche market malls like City Mall and the upcoming Grand Merdeka would be successful based on their captive catchment market along the main road with a traffic count of more than 11,000 vehicles passing by per hour during peak periods of the day.

As they vie for a critical mix mass of tenants and shoppers, the competition is expected to intensify and in the end, it will be all about business survival. When KK Times Square’s IMAGO Category A Mall opens, it would be a new showcase of how a totally leased tenant mixed mall should be run and positioned for the benefit of shoppers and tourists. Anybody investing in property needs to make sure that they are thoroughly appraised on what is going on in the occupational markets – the people who will be occupying buildings, shops warehouses, factories and homes. Property is a story of two halves: you have people who build and invest in property, and the people who occupy the property. If people stop occupying the property, if most of the buyers cannot pay their bank loans, the market collapses, which is unlikely for 2014. In Sabah, some people can afford to buy a property without needing any bank loan. It is also a sign pointing to the widening income disparity gap in Sabah which makes it a tale of two groups of buyers: the ones who can afford without financing except just for income tax showmanship, and the ones who really need help to buy affordable units who would be burdened further by rising interest rates or higher inflation cost of living.

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Calls for Takeover of ‘Abandoned’ Star City is facing winding-up proceedings from its bankers and creditors with amount due in excess of RM70 million.

Kota Kinabalu member of parliament, Jimmy Wong briefing the press at a press conference The State Government has been urged to step in and take over the development of the abandoned Star City shopping mall project, given the winding up proceedings that the developer is currently faced with reported by Borneo Post. Kota Kinabalu member of parliament, Jimmy Wong, has questioned the abandonment of the project, which was jointly developed by AC Property Development Sdn Bhd (ACPD) and Sabah Urban Development Corporation Sdn Bhd (SUDC) and Sabah Economic Development Corporation Sdn Bhd (SEDCO). “SUDC and SEDCO are developers themselves. Why do they need a third joint-venture partner in the first place? They have their own land provided by the state government, free of charge with minimum premium. Now the project has ended up abandoned. He added that purchasers and the contractor were attracted to the project due to the trust and confidence they have in SUDC’s and SEDCO’s reputation

as government-linked companies. “And rightfully, these two companies are government-linked some more. Taking over the project should be ‘sap sap sui’ (easy) for them and yet, why are they not doing anything about it?” questioned Wong. Wong was speaking to reporters at a press conference in a hotel, here yesterday, attended by the purchasers and contractor involved in the project, along with Democratic Action Party (DAP)’s state legal advisor, Joan Goh, and other members. Wong disclosed that the sales of the commercial shop units in Star City had started in 2005 and purchasers were promised delivery of the shops within 30 months. Eight years later, the project remained uncompleted. Construction works commenced in 2005 but was suspended in 2006 due to disputes between the developer and the contractor. It restarted in 2007 but was halted again in 2009 due to financial difficulties faced by the developer. Currently, the developer

Wong called on SUDC and SEDCO to step in and stop the liquidation of the project, and take over the development of the last four acres of the project, which is estimated to be of more than RM15 million in value. “If the state government can spend RM388 million to develop a new administrative centre, what is RM15 million to rescue the project? It will be the best Christmas gift for the purchasers and contractor, who would be the ones who lose out the most in this issue,” said Wong. Wong also advised the purchasers to approach their lawyers accordingly to file in their claims either individually or in groups to settle the issue. “The purchasers and the contractor are the ones at the losing end because they are not secured. The only secured party in this matter is the banker,” he stressed. He also expressed the hope that the purchasers will join him in petitioning to the government to step in and rescue the project.

Higher RPGT Rate in 2014

Development Cost to Rise With GST in Sabah

Full house turnout to the seminar hosted by SHAREDA

Currently, it stands at 1pc for properties priced RM100,000 and below, 2pc for properties over RM100,000 to RM500,000, 3pc for properties over RM500,000 to RM2 million and 4pc for properties over RM2 million. The maximum loan-to-value ratio for third and subsequent homes was also not reduced from 70pc as expected. The 50pc stamp duty exemption for first-time homebuyers still applies to sale and purchase agreements signed between 1 January and 31 December 2014. The determining factor in many cases is how easily or quickly buyers can get loans as banks have tightened requirements. The secondary market has slowed down generally but with many exceptions in different locations and property types from the first half of 2013. Buyers have to make bigger commitments as valuations and asking prices do not match. The secondary market is expected to be subdued in the first half of 2014 while getting use to the Budget 2014 terms. Some market observers say the cooling measures introduced by the government in Budget 2014 will dampen activity. Some developers now developing property priced between RM500,000 to RM1 million (previously capped at RM500,000 upwards) in 2014. Foreigners will only be eligible to buy homes above RM1 million.

This is blamed on the risk of the yo-yoing government policy that is not instilling confidence in picky foreign investors wary of flip-flopping uncertainty on residence and business requirements. The window of opportunity also closes for property flippers, speculators and owners with the intention to sell before being trapped by the 30% new RPGT effective 1 January 2014. The new RPGT will trap a lot of speculators who bought new launches with the intention of the flip. A lot of people sold their newer properties last year to avoid the higher RPGT. Some of these profiteers are softening the market by reducing prices to close deals as in some cases, valuation could not match the asking price, sometimes even of property still in construction. Hence the higher RPGT rate in 2014 will have a rush impact on property deals based on getting the date of the sale and purchase agreement executed before 1 Jan 2014. The impact is not severe for those having hold property for more than four years prior to putting it up for sale. Any sale and purchase agreement signed before the end of 2013 for RPGT is still calculated at 15% for gain on disposal within two years and 10% for gain on disposal within the third to fifth year.

The goods and services tax (GST) will increase the cost of development throughout the country. It would impact the middle and low wage earning home buyers who are sensitive to the cost rise said the Sabah Housing And Real Estate Developers Association (SHAREDA) deputy president, Chew Sang Hai. “The GST will cause developers to absorb the rising cost, which in turn will lead to higher cost of houses which would hamper the growth of building affordable homes,” he said. He added that the present pricing in services and building material industries were inclusive of 10% sales tax and 6% service tax. Hence, he called on the government to work with the relevant stakeholders and make the pricing more transparent and allow developers to formulate strategies to reduce cost input. Meanwhile, SHAREDA president Francis Goh said many people were concerned about the GST and the implemented tax.

“For example, if the 6% tax is applied to commercial properties, how will it be implemented? Will the purchaser fork out the sum immediately when they sign the sales and purchase agreement as with the stamp duty, or will the 6% be included in the price of the property whereby the purchaser will be able to get financial support in their loan application with the bank?,” he said. As of now, SHAREDA is still in the dark as guidelines have not been received from any relevant authority. He added: “It is unfair because they only consider hybrid projects such as Harbour City, which is sited at a prime city land and is sold at RM700 to RM800 per sqf unit.

of properties were concerned. Sabah developers have to cope with the higher costs of building materials. “The analysts need to understand that the material cost in Sabah is higher by 30% when compared to Peninsular Malaysia. A ton of steel is RM2,250 in Sabah whereas in Peninsular Malaysia, the price per ton of steel is RM1,800. And the price of a bag of 50kg cement in Peninsular Malaysia is only RM15, while in Sabah it is RM18.50 And if the cement is to be transported to Lahad Datu or Tawau, we have to pay an extra RM1.50 for the transportation fee,” he said.

On average, most of our members have built more than 18,000 units as compared to the 2,000 units of hybrid development are still selling at the range of RM300 to RM400 per sq f unit. He said also Sabah was still lagging behind Penang and Kuala Lumpur where the average prices

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/// East Malaysia Property News

Kota Kinabalu Needs Monorail, Not Tram new employment and business opportunities and at the same time transform Kota Kinabalu into a modern and progressive city.

SHEDA Hopes Residential Housing Developers Be Exempted From GST

Funding the Kota Kinabalu Monorail or KKMR should not be an issue. If Putrajaya can finance RM36 billion for the Greater Klang Valley Monorail Transit, there is no reason for the federal government not to finance up to RM12 to RM15 billion to build the KKMR. The Sabah government should build a new monorail transport system in Kota Kinabalu to alleviate the traffic jams, especially during rush-hours. STAR Sabah chairman Datuk Dr Jeffrey Kitingan made the call when responding to the statement of Industrial Development Minister Datuk Raymond Tan Shu Kiah on considering the building of trams for Kota Kinabalu during the courtesy visit by the new counsel and vice-counsels from China recently. Jeffrey said the government owes the people a social responsibility to address the social needs of the growing population, especially in Kota Kinabalu He said the Chief Minister last week said that the government would make all cities in Sabah “liveable” cities, so all growing cities need to solve the everpresent traffic congestion problems. This is more so in the case of Sabah which is a world-renowned tourist destination with a growing and thriving tourism industry with yearly increasing tourist arrivals, he said in a statement yesterday. “We should not be putting off foreign tourists from

visiting Kota Kinabalu due to bad traffic jams. “Building two or three more flyovers, although they are badly needed especially in Inanam and the intersections along Jalan Lintas in the city, may reduce traffic jams but they do not resolve the problem long term. “What is needed for Kota Kinabalu is a good public transportation system!” he stressed. According to Jeffrey, a monorail public transport system is a proven system. If not, there is no reason for the federal government to invest RM36 billion to build the Greater Klang Valley Monorail Transit System. The Kota Kinabalu Monorail can link the Kota Kinabalu city centre to major centres in 1 Borneo, University Malaysia Sabah, KKIP, Karambunai Nexus and Sepanggar and back to Donggongon and Putatan and include stops at Likas Hospital, State Museum, Queen Elizabeth Hospital and the Kota Kinabalu International Airport. The construction and building of the Kota Kinabalu Monorail will create a further boost to the local economy. This economic vibrancy will also generate

Sabah will be contributing an additional RM8.70 billion in oil and gas revenue to Petronas and the federal government in 2014 increasing from RM17.88 billion in 2012 to RM26.60 billion in 2014. It is expected that this oil and gas revenue will further increase to more than RM50 billion in 2015/2016. Raymond, who is also a Deputy Chief Minister, had informed Kuching-based China’s new Consul General, Liu Quan and fellow consuls, Sun Xia and Chen Hao that the State Government is keen to introduce tram services as a solution to the perennial traffic congestion in the state, particularly in the state capital. Liu proposed that the State Government works with China in realising such services as China’s transportation technology is advanced.

Key members of SHEDA Sarawak Housing and Real Estate Developers Association (SHEDA) hopes that residential housing developers would be exempted from the Goods and Services Tax (GST), which would be implemented in 2015. SHEDA secretary-general Sim Kiang Chiok said as the cost of building materials and location was increasing year by year, GST might cause the cost of houses to increase slightly although it would not be passed on to purchasers or buyers. “The cost (of houses) would not be directly increase 6%. It could be lower (than 6%) because there is a saving from sales and service tax (SST). “For example, if you buy a house in a non-strategic area, if the cost is too high, nobody would buy. So there would be slight adjustments. That adjustment does not mean that the house prices would go up tremendously because there would be an offset to the SST,” he told a press conference after officiating at a SHEDA seminar on GST. Sim said the seminar

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was aimed at preparing SHEDA members for the implementation of the GST, particularly the procedures and documentation. “Of course, developers will incur a little more cost in running the GST like invoicing, tax, and more administration work, but more job openings would be created too,” he said. Apart from educating its members, Sim said he hoped that after some insight on GST, its members would also give some feedback especially to exempt residential housing projects from GST. “We hope that maybe with this seminar and with our feedback, they (Government) might give us zero rated, we never know. The feedback would be reported to Putrajaya and maybe would reach our good Prime Minister (Datuk Seri Najib Tun Razak) where residential houses should be zero rated. “That is what we are pursuing so that we would also reduce administration cost for implementing the GST,” said Sim.

Engaged Architect Centre to Inspect Houses to Protect Your Rights the developers, contractors, architects and engineers were requested to submit their resolutions and feedback to the Ministry of Local Government and Housing on the conference.

A New Luxury Living Landmark to Rise in Kuching

The three resolutions submitted by PAM Sabah Chapter were: •

PAM Sabah Chapter, Chairman, Ar. Victor Wong The PAM Sabah Chapter has urged the public to engage the Architect Centre, Malaysia to check their houses to protect their rights. Its chairman, Ar. Victor Wong, said there are 32 building inspectors in Sabah who are accredited by the Architect Centre, Malaysia, 21 of whom are architects and 11 are either engineers or quantity surveyors.. “Their professional services could prove invaluable to house purchasers who are mostly nontechnical and unable to judge if the work has been constructed to specifications, and if the works are of reasonable quality and workmanship,” he said in a statement yesterday. According to him, the building inspector’s report can protect the right of the house purchasers, especially if there is any dispute and the case ended up with the Housing Tribunal. The building inspectors carry out inspection and identify defects during vacant possession and before the expiry date of the Defects Liability Period. The range of services provided by the Architects Centre are: Structural Deficiencies; Defective Roofs/Ceilings; Defective Plumbing, Dampness, Leakages and Electrical Safety; Slope Stability, Retaining Wall and Drainage, and Safety, Security, Regulatory Checks i.e. unsafe and illegal renovations. “Property is a big

investment, and it will be penny wise and pound foolish, if the building defects are not checked before possession. One might be ended up with recurring cost of maintenance and being unhappy in his own dream home,” said Victor. He said the professional fees charged by architect building inspectors are small, and generally less than RM1 per square foot, depending on the types of buildings and the complexity of the jobs. Victor lamented that most people are forgetful most of the time. He was referring to the Sabah Housing Conference 2009, organized by the Ministry of Local Government and Housing, the theme of which was “Good Governance Towards Quality Housing and Services”. “The question of poor quality of workmanship happening to the MM2H (Malaysia My Second Home) properties is a big surprise, since the selling prices is over a million ringgit, even for a semi-detached house. How can the quality be compromised for such expensive and profitable project?” he asked. “If such trend happens to the MM2H homes, then it is unthinkable what will happen to the thousands of units of the affordable homes, of which the selling price is much lower, that are to be erected in the coming years?” After the Sabah Housing Conference 2009, he said all

•

The introduction of the Building Inspection Services as part of the process in deterring poor quality of workmanship, identifying building defects and rectification; The training of Clerks of Works to ensure that they understand their roles and responsibilities in the building industries, and The accreditation of tradesman by CIDB (Construction Industry Development Board) to semi-skill workers such as the carpenters, bar benders, brick layers, plasterers, plumbers, electricians, and so on.

Since then, Victor said many architects, engineers and quantity surveyors have been trained by the Architect Centre, Malaysia to become qualified and competent building inspectors, and they are providing the much needed inspection services to the housing sector. “The suggestion to have accreditation of semi-skilled workers by CIDB is still relevant today. The training of the workers in their respective trades will improve their knowledge and skill, and therefore likely to improve quality of the work they are doing. The use of any worker as a Jack of all trades, to carry out all the work from excavation, carpentry, bar bending, brickwork and so on will only result in more poor quality of workmanship. “The specialization in the skill level of the workers is a must, if we are to hope to achieve the standard as expected in the industries,” he added.

Artist impression of Windsor Estate Windsor Estate, a 53-unit development with a gross development value of around RM100 million, is poised to become Kuching’s new landmark for luxury living, according to Rantau Johan Sdn Bhd, a joint venture company comprising Travillion and Timber Land group. Kevin Choo, Timber Land Group managing director, said the project’s first phase witnessed robust demand, with only a fifth of its 26 units are available. Choo attributed the successful take-up to Jalan Hup Kee area, which is crowded with developments and is near crucial locations like malls, the airport and medical care centres. “It is an up and coming area. It all started at Jalan Song which overheated which then lead to the development at Hui Sing and Stampin … But due to limited choice in the area as well as increasing land cost in the area, they started looking for the ‘next door’ location, which is Hup Kee,” noted Choo, adding that semi-detached homes within the area ranged from RM1.2 million to RM1.6 million. He also revealed that the project’s second phase will be unveiled only after the full sale of the first phase. Given the implementation of the goods and services tax, revision in prices will, therefore, be unavoidable. He also explained that the company invested in high-end residences primarily due to branding. “We wanted a project whereby people will know and remember us by and the best way to attain that is by targeting the high end market. But at the end of the day, our bread and butter will still remain on the affordable housing side.”

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/// Hot Topic

/// HOT TOPIC

Why are Top Developers and International Developers Still Jumping Into Iskandar Malaysia?

The Astaka at Bukit Senyum peaking at 70 storeys high ISKANDAR, DONâ&#x20AC;&#x2122;T KILL THE GOLDEN GOOSE There is a saying that one should not kill the goose that lays the golden eggs. Iskandar Malaysia (IM) has been the golden goose for the past two to three years/ OM has brought huge investments into Johor. According to data from the Iskandar Regional Development Authority, some RM128 billion has been committed, of which 44% has been realized. As investments poured into its infrastructure, people began to realize its potential as a much cheaper and attractive alternative to Singapore across the Straits of Johor. With its well-planned theme parks and educational, residential, commercial and industrial hubs, IM was beginning to look like a good place for Malaysians, Singaporeans and foreigners to live, work, and play. Due to both foreign and local buying, property prices have doubled over the past two years. Land deals of all shapes and sizes have been done and new launches snapped up. However, the two most recent launches tell a very different tale. UEM Sunrise launched Almas Suites, a SoHo (small office/home office) development in Puteri Harbour, comprising 546 units. It is the first of four blocks that includes apartments, offices and retail outlets. The net average selling price was around RM800 psf, although it was listed as RM895 psf. After one week sales booking stood at 15%. Identification of Iskandar flagship zones

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In contrast, a year ago when UEM Sunrise launched Teega, a condominium project also in Puteri Harbour, it was almost sold out. The first two towers were priced at RM750 psf and Tower 3 at a higher RM825 psf. Completed sales currently stands at 93%, with the balance booked but pending legal completions. In fact, when Teega was launched, there was a long queue, with more than 70% of the units booked in the first weekend alone. Another project of note is Medini Signature at Medini North by WCT Holdings. Tower 1 was launched in July 2013 at an average price of RM630 psf and is 80% sold. In contrast, Tower 2, launched a month later is only 20% sold. This is partly due to an increase in the average price to RM680 psf and party to more competition and the new â&#x20AC;&#x153;cooling measuresâ&#x20AC;? imposed. WHY ARE THE INTERNATIONAL BIG BOYS BANKING ON ISKANDAR? More and more international developer is spending billions in acquiring land parcels in Iskandar Malaysia for development; who are they? Country Garden among the most well known developer in China today headed by the wealthiest female individual in China, Miss Yang Hui Yan aged 33. Country Garden made its entry to Iskandar back on 16 October 2012 and since have launched its maiden project Country Garden Danga Bay back in August 2013 and have stolen the lime light by sell over 6000 units of its 9400 units development. Just in the recent months several others followed; 3-Dec-13

China-based developer Guangzhou R&F Properties Co Ltd is buying six plots of land in Johor Baru for a whopping RM4.5 billion from the Johor Sultan, making it a record deal

16-Dec-13

Singapore-listed Albedo Ltd buys 6 more parcels of Iskandar land

27-Dec-13

Singapore-based developer Hao Yuan Investment Pte Ltd has acquired six parcels of waterfront land for RM1.6 billion development in Danga Bay

30-Dec-13

Ekovest to acquire more land in Iskandar Malaysia

With all the latest cooling measures in Budget 2014 announcement and speculation that the property market will be on the downhill roll with majority of the homebuyers and investors now strongly believing the property in Iskandar Malaysia is way over-supplied & way overpriced why would they still spent billions of ringgit in acquiring land for development with even record-breaking prices? With already so much negative perceptions by majority of people, why would the top developers in Malaysia and many international developers from all over the world putting their eggs together on this area that just a decade ago was never to be seen possible to invest at all? Iskandar Waterfront Holdings, S P Setia Group Berhad, Mah Sing Group Berhad, UEM-Sunrise, UMLand, MCT, WCT, Eco World Development, Tropicana Corporation Berhad, IOI Properties Berhad, E&O Berhad, Gamuda Land, Sunway Berhad, I&P, Sime Darby, IJM Land, IGB, Temasek, and CapitalLand just to name a few of the local made developers making their moves in Iskandar. WHAT HAPPENED AND WHY? A number of cooling measures were imposed in Budget 2014. The measures, which were effective from 1 January 2014, include raising the Real Property Gains Tax (RPGT) of 30% for the first three years, 20% in the fourth year, and 15% in the fifth year. After the fifth year, there is no RPGT for local individual buyers but properties bought by local companies will be taxed 5%. Am mortgage-financing scheme, the developer interest bearing scheme (DIBS), was banned. More crucially, the minimum foreign purchase restriction was raised from RM500,000 to RM1 million. The above

Country Garden Danga Bay sales gallery the largest in its league

Setia Sky 88 a 55 storey twin residence towers

measures would have been more sufficient to cool down the property market in Johor and elsewhere in Malaysia. However, in Johor, when it rains, it pours. More negative news came in quick succession. First was the introduction of a stamp duty of 2%, specifically for Johor, on foreign buyers. Next, was the changing of the official weekend to Friday and Saturday without any prior notice or consultation with the public, business community or other stakeholders. The industry was further dumbfounded by talk that a 4,000-acre land reclamation project would be awarded to the Hong Kong listed but China based Country Garden Group. And on 3 December 2013, Guangzhou P&F Properties, a Hong Kong public listed company, announced a mind blowing RM4.5 billion land acquisition deal with the Sultan of Johor. This was for 116 acres of land in Johor Bahru with an estimated saleable floor area of 3.5 million sq m. To put it into perspective, this one development alone proposed by Guangzhou R&F is almost equivalent to the entire Kuala Lumpur city centre residential zoning floor area of 3.8 million sq m by the year 2020. Is there more land reclamation to come? Will existing vacant land be approved for even higher density developments to raise values? Apparently more reclamation works will be undertaken in Tebrau and even the mangrove areas of Ramsar. WHAT WILL HAPPEN TO UNSOLD UNITS? From 1 January 2014, foreigners will no longer be allowed to buy any property below RM1 million, up from RM500,000 previously. Until now, foreign buyers have formed a significant number of those who take up units priced above RM500,000. As a result many of the recently launched projects

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Projects launched in Iskandar and take-up rate PROJECTS

PRICING RM P SF

LAUNCH DATE

DEVELOPER/PARENT COMPANY

Setia Sky 88 Maya Heights - Stella

First 2 towers-1,000 (average) 100% 80%

TAKE-UP RATE

Launched in Sept 2012 Launched in Oct 2012

SP Seti UM Land

Encorp Marina

1,300 (average)

Launched in Nov 2012

Encorp Bhd

Teega

750 (average) for first 2 towers 93% based on SPA and between 820 and 850 for signed, bookings at Tower 3 close to 100%

Launched in Dec 2012

UEM Sunrise

Pinetree Residences

1,500 (average)

100%

80%

Launched in Dec 2012

Tiong Nam

The Wetlands

90%

Launched in Jan 2013

JV between Gamuda Land and UEM Sunrise

Bandar Uda Utama

40%

Launched in Jan 2013

UDA

Paragon Suite

90%

Launched in Jan 2013

Amprojek Construction

Raffles Suite

70%

Launched in March 2013 BMAH Properties

Brunsfield Iskandar Waterfront

80% (registration)

Preview in March 2013

JV Between Ekovest and Brunsfield

May Heights - Solar GranView 360

50% (bookings) 60%

Launched in April 2013 Launched in April 2013

UM Land Northstar Frontier

Straits View Residences

90%

Launched in May 2013

Bandaraya Development

57%

Launched in May 2013

Tropicana

Soft launch in May 2013

Gromutual

Preview in May 2013 Preview in May 2013

Mah Sing

Bora Residences

1,200 (average)

Austin 18 Meridin @ Medini

Tower A -695(average) Tower C -724(average) Retail Tower B -798(average)

80%

Afiniti Medini

850-1000

100%

Launched in June 2013

Pulau Indah Ventures (a50:50 JV between Khazanah Nasional and Temasek Holdings)

Medini Signature

Tower 1 -650(average) Tower 2 -680

80% 20%

Launched in July 2013 Launched in Aug 2013

WCT

Country Garden @ Danga Bay

Phase 1-750

80%

Launched in Aug 2013

Country Garden

Overall, 9,400 units

60%

Puteri Cove Residences - 1st Phase

1,400

Launched in Nov 2013

Pacific Star Group

Almas (CS-1)

800

15% (bookings)

Launched in Dec 2013

UEM Sunrise

83% 33%

Launched in July 2013

or those planned to be launched have a large proportion of units priced just above the RM500,00 mark.

least one developer is selling some of its units either as a “buy 1 free 1” complimentary package or in facilitating fund transfers.

Country Garden’s project in Danga Bay as sold less than 6,000 units out of a total of 9,400 mostly priced in this region. As a result, the developer was in a rush to sell as many of the remaining units before 2014.

When a buyer is given an apartment in IM as a free gift for another he or she buyers overseas, the brand value and perceived value of IM is severely damaged. There will also be a flood of supply in the market from these foreign buyers as they unload their perceived “free” units in IM.

Many other developers were in a similar bind. And one can argue that with the new restrictions, developers will soon plan new products and developments that are larger and cost above RM1 million to cater for the Singapore and foreign market. However, one has to question if this is viable. For Singaporeans looking for a small weekend, holiday or retirement home in IM or a property investment, a RM500,000 home translates into less than S$200,000, which is still affordable. Double up that amount and it accounts for a chunk of one’s savings, which an investor would prefer not to risk investing in a different country with different and often changing rules. Another new risk to IM are the marketing strategies of some developers. At

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This trend unfortunately will likely accelerate given the recent land purchases by foreign developers associated with these types of schemes. The various authorities and agencies involved, from the federal level to the state, must act fast to rein in the excesses, especially in the release of land and approval of new projects. They should pop over to Singapore to learn how this can be done. The IMG story is still fundamentally sound and economically justifiable. What is desperately needed is for discipline to be imposed.

Sabah Towns to Be ‘Liveable’ Cities Says, Musa responsibility not only in preparing the guideline to be used but also assessing their practicality.

Brunei and East Malaysia Connectivity Boosted With New Bridge

The department, he suggested, should also study and learn from the standards and approaches that have been adopted by advanced cities in other countries.

Kota Kinabalu, Sabah The State Government is committed to turn all towns in Sabah into “liveable cities” that are comfortable and welcoming to the dwellers, said Chief Minister Datuk Seri Musa Aman. Liveable city is the people’s dream and making it a reality is not just a vision but a responsibility of the government, he said. He noted that the Federal Government had in its 2014 National Budget also emphasized on living quality of the people, including by incorporating green technologies in its future development plans. An allocation of RM15 million in initial funding was provided to encourage green and environmental friendly development. “For us in the State Government, we fully support and welcome the initiative and commitment by Prime Minister Datuk Seri Najib Razak,” Musa said in his speech at a Planning Seminar held in conjunction with World Town Planning 2013 here, yesterday. The text of his speech was delivered by Local

Government and Housing Minister Datuk Hajiji Noor. Musa said the Government’s seriousness in creating a comfortable living environment for the people could be seen in many of its development projects, including the recently completed Sabah Art Gallery (SAG). The SAG was the first certified Green Building in Sabah, setting a new standard to be emulated by developers for their future projects. “Apart from that, we have also launched the EcoDevelopment Project in Tanjung Aru, which was launched personally by the Prime Minister himself,” he said. The Chief Minister also said the local authorities (PBT) play a vital role and should lead in the government’s effort to create liveable cities, by adopting a clear standard and preparing a detailed development planning for their respective towns. The Urban and Regional Planning Department, he added, has a huge

“The Urban and Regional Planning Department is in the process of reviewing the planning standard, as part of its effort to ensure today’s planning meets the needs and taste of the people,” he said, commending the department for its commitment towards the Liveable City vision. He also called on all parties, including developers, to form strategic joint ventures for a more coordinated and effective development. He said this was important to ensure that every development project would contribute towards achieving liveable city, to create conducive, safe and rich living environment for the people.

The long wait to cross the Pandaruan river finally came to an end with the opening of a new bridge connecting both ends of two neighbouring countries, Brunei Darussalam and Malaysia, this morning. Aptly named as the Jambatan Persahabatan (Friendship Bridge), the RM20.8 million bridge which connects the Borneo and Sarawak border at Pandaruan, was jointly officiated by Brunei Sultan Haji Hassanal Bolkiah and Malaysian Prime Minister Datuk Seri Mohd Najib Abdul Razak. With the construction of the189 meter bridge, motorists need not wait for four to five hours during peak hours just to cross the Pandaruan river with the ferry. With the new bridge, Malaysia and Brunei hope to foster closer relationship and see increase in economic activities such as tourism and business. The bride also marks a historical point as it is the last stretch to connect the PanBorneo highway which runs for more than 2000km from Kuching

in Sarawak , through Brunei Darussalam to Tawau, Sabah. Brunei and Malaysia signed the agreement to construct the bridge on 12th September 2011 and it was completed by a Malaysian contractor , Perkerjaan Piasau Konkerit Sdn Bhd in 15 months. The cost of the bridge was jointly shared by both countries and the construction of the roads on each side were borne by individual countries. The event was also attended by Sarawak Chief Minister Pehin Sri Haji Abdul Taib Mahmud, Sabah Chief Minister Datuk Seri Musa Haji Aman, Foreign Minister Datuk Seri Haniffah Aman, Home Minister Datuk Seri Zahid Hamidi, Works Minister Datuk Hj Fadillah Yusof and other invited dignitaries from both countries

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Where There is a Will, Iskandar Malaysia Shows You the Way Chris Tan

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

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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ith the celebrative fireworks filling the air over Malaysia territory marking the arrival of 2014, we are also looking into the implementation of the new yearly rates of the Real Property Gains Tax (RPGT) and new purchasing threshold for foreigners pursuant to our National Budget 2014. Coupled with the stopping of the Developer’s Interest Bearing Scheme (DIBS) as well as the Bank’s financing of only the net selling price cutting off the “frills” in any discount, rebate, as well as all value attached to the “complimentary” transactional fees and expenses, furniture and furnishing etc, these cooling off measures have surely raised some eyebrows among real estate investors in Malaysia especially on the forefront of all the actions in Iskandar Malaysia (IM) taking over the limelight away from the usual suspects in the Greater Kuala Lumpur. IM, being the hottest development in the state of Johor, lies at the heart of Southeast Asia, strategically located at the southern tip of Peninsular Malaysia and merely separated by the narrow Straits of Johore from its developed neighbor of Singapore, has actually emerged strongly now from all the challenges and difficulties in its the initial years of establishment. Being the single biggest economic zone in the region, IM is obviously the darling of all major developers in Malaysia. With state owned interest’s strong presence from both sides of the causeway, there is now a glut of Chinese interests flowing in from the already established Country Garden in Danga Bay, the recently launched Paradiso Nouva in Medini to the future in t he RM4.5Billion worth of land bank acquired by the listed R&F Group. IM has certainly announced its arrival in the radar of international investment communities tapping the ready window to the world in Singapore particularly in attracting the Chinese that had surpassed the pioneering IM investors from the Middle East. Here are a few tipping points for IM so far:

•

The fruition of the ground work by the Iskandar Regional Development Authority (IRDA): IRDA was purposively formed in 2007 to achieve its main objective of developing IM into the main economic corridor for the southern region. Five (5) “flagship zones” are identified in IM with different focus and the success in its education, healthcare as well as the entertainment elements in theme parks and film production have all been well publicized and endorsed. IRDA has worked wonders within the gaps of the intrinsic challenges between the Federal Government of Malaysia the State Government of Johor as well as the buy in from the Government of Singapore.

•

The gradual completion of infrastructure in IM starting with the already in use expressway that links the east and west of IM with a traveling time of not more than half an hour to the mass transport rail link directly with Singapore towards the end of this decade to look forward to.

•

The buy in from the Singapore Government

•

The emergence of Asian investors and the shift of investment focus to the East after the Global Financial Crisis of 2008.

•

Most importantly, the clear message of political will in the Malaysian authorities to ensure IM a success. This is best illustrated in the creation of Medini, the crown jewel within the Nusajaya Flagship Zone.

Medini Iskandar As action speaks louder than words, the authorities have taken the extra mile to come up with an unprecedented first of its kind and still remain the only one of its kind in Malaysia with a unique land usage tenure commonly known today as the Medini’s Lease Right Model and this is the strongest evidence of the authorities’ commitment in ensuring IM a sustainable success. The lease right model is a pioneer model in Malaysia, adopted and adapted from the land practices in Australia and Canada. For example, New South Wales utilizes its Strata Schemes (Leasehold Development) Act 1986 to allow original owners to retain a fee simple interest while subsequent owners obtain a leasehold interest of the same land. The common feature of these models are that owner of freehold land can now assign a sizable lease hold tenure for his own land with an additional “title document” that made it more “bankable” with the conventional financial institutions. The interest of the leasehold owner shall cease at the end of the lease hold tenure with all rights reverting to the freehold owner. The concept is similar to a subsidiary title arrangement that is commonly used and practiced in the issuance of strata titles and its undivided links with the underlying master title. The following table illustrates a useful comparison between the conventional leasehold tenure and the Medini’s Lease Right Model in the context of property development. Conventional Leasehold Property

Medini’s Lease Right Model

State leases land title to developer. The developer will be the first owner under the leasehold titles before the same is transferred to the individual end purchaser at the completion of the property development.

Iskandar Investment Berhad (IIB) is the registered freehold owner of land recognised by the State and has appointed Master Concessionaire Lease Developer (MCLD) to sell the leases to end purchaser.

Leasehold title lasting 99 years maximum. (s.76(a) National Land Code 1965 referred)

Leasehold title lasting 99 years and sometimes with an option to extend further by 30 years granted by IIB as the freehold owner.

Expiry of leasehold title -> ownership reverts to the State.

Expiry of leasehold title -> ownership reverts back to I IB.

Sale and purchase of residential property is governed by Schedule G and H according to the Housing Development (Control and Licensing) Regulations 1989

Not governed by Schedule G and H as it does not account for transacting rights under any lease arrangement. Developers in Medini have to apply for an exemption from the Minister of Urban Wellbeing, Housing and Local Government to cater for this variation.

Under the National Land Code, all purchase of land in Malaysia by foreigner is subject to State Authority’s Approval, whether it is of freehold title or leasehold title. This is consistent with the Federal Constitution that land matter is within the exclusive discretion of the respective State.

There are guidelines to facilitate the transfer of such lease right to foreign purchasers. State authorities via the Land and Mines Department (PTG) does provide several concessions: (a) Foreign purchasers of such lease right do not need to obtain state approval; and (b) Blanket approval is granted by state to PTG, subject to its foreign ownership guideline.

From 1 January 2010, it is the Federal Policy that the Economic Planning Unit allows foreigners to purchase property with the minimum value of RM500,000.00 subject to the land rules of the respective state authority. Pursuant to Budget 2014, the threshold has been increased to RM1,000,000.00 starting 2014.

As it is distinguished from the conventional property ownership, there is no minimum value imposed on the lease right model offered in Medini.

Approximately 3 months to facilitate leasehold title issues.

Approximately 2 weeks to facilitate tenancy agreement (expedited approval process)

Pursuant to the Budget 2014, the RPGT has been increased to a maximum of 30% for the first 3 years starting from 1 January 2014.

Remains the only section of the Iskandar Development Region to get an exemption from the 30% RPGT.

From the above, it is clear that the uniqueness of this model indicates the Malaysia government’s willingness to adopt a liberal interpretation of the law and to experiment new conditions in Medini that may assist in IM’s success. This is done in addition to the friendly tax regime in Medini. The authorities have shown us that there is always a way when the will is strong. While the cooling off measures mentioned are of concerns but it should not be deterrence to the seasoned and serious long term investors. In fact, cooling off measures are common in all the real estate investment hot spots in the world and it is certainly not truly Malaysia only or even uniquely Singapore. The introduction of these measures in Malaysia only endorsed the fact that our real estate has indeed attracts the imagination of investors.

IMpossible? As for the case of IM, the will and the way shown have been clear, the rest is up to the homebuyers and investors. Real estate is more than just selling houses or properties, along with it are also the ticker down commercial benefits that eventually enrich the entire local community. The signs from the stakeholders are that they are taking every possible way to make IM special as it was first created. It was like an impossible dream in 2007 but now, it is everything IM possible.

Being the single biggest economic zone in the region, IM is obviously the darling of all major developers in Malaysia.

In a way, this is consistent with the National Land Code as there is a distinction between transfer of ownership of the land and the acquisition of certain land use right for a fixed tenure.

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/// East Malaysia Property News

Another RM100 Million Private Hospital in KK Soon

China Firm Keen on RM2.5 Billion Sipadan Project

“JMC is dedicated to providing patients with consistent quality healthcare services of international standards. It also aims to improve the quality of life through health-related activities. “All this is in line with our commitment to becoming a one-stop centre of excellence in the provision of quality medical care in Sabah and the BIMP-EAGA region,” said the sources.

A proposed 7 storey hotel and medical centre next to Metro Town in Kota Kinabalu Sabah which is already a choice tourism destination may well also become the leading medical tourism State with at least three private medical centres slated for completion next year. The latest private medical facility is Jesselton Medical Centre (JMC) in the upcoming Metro New Town expected to be ready early next year.

of private hospitals in the State capital. Asked whether there is a demand for a private hospital in the Metro New Town area and its surroundings in Kolombong, sources close to the builder said:

It borrows its name from the original name of the State Capital when it was under colonial administration.

“It is good to have hospitals spread out in different areas to serve the needs of the respective communities.” According to the sources, JMC will start operations by early 2014 to meet the increasing demand for private healthcare services.

The other two are the KPJ Sabah Specialist Hospital in Damai which is nearing completion and the Gleneagles Medical Centre (next to Sutera Harbour Resort) slated for completion early next year.

Housed in a seven-storey purposely-designed building at the Metro New Town along the Lintas Ring Road, the centre is designed to be a provider of tertiary healthcare services.

(The other existing medical centres are Sabah Medical Centre (SMC) and Rafflesia Medical Centre.

Towards this end, the builder has made a bold leap by acquiring top range equipment which are the first of its kind in East Malaysia. It will also be investing in Smart Patient terminals, which will be the first of its kind in South East Asia.

The builder of 72-bed JMC estimated to cost RM100 million is confident that its emergence will not contribute to a sudden glut

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When completed, the centre’s comprehensive modern facilities will include 24 hours Accident and Emergency Services, sophisticated and state-ofthe-art Imaging equipment, professional medical and surgical services in an aesthetic environment. Its three operating theatres will be equipped with ultraclean ventilation by utilising the latest innovation in operating theatre ventilation. TripAdvisor recently rated Kota Kinabalu as the sixth best place to visit in Asia.

Sipadan Island Acompany from China is interested to develop a large-scale tourism project in Sipadan area. The RM2.5 billion project will comprise a tourismbased resort, commercial and high-end residential areas with a focus on marine activities. It will be developed into five zones, listed as residential area, commercial development, high-end resort, diving school and administrative centre. The project is expected to receive one million tourists annually; provide 4,000 employment opportunities; house a population of 12,000 people; and have a construction scale of 700,000 square metres. This was disclosed at a meeting between the Sabah Economic Development and Investment Authority (SEDIA) and a delegation from China’s Diving Best, headed by Chief Executive Datuk Dr Mohd Yaakub Johari. The delegation from China presented a proposal for the tourism project at the meeting which was also attended by officers from the Tawau Municipal Council, Sabah Tourism Board and Immigration Department. Having first met with SEDIA in June 2013,

the group from China now expressed strong interest in developing the project. The meeting served as a means for SEDIA to answer key enquiries from the foreign investors, including fiscal incentives; immigration policies; real estate and land policies; available resources; advantages of investment in Sabah; and project construction management policies. Diving Best is best known for running the Sanya Diving Training Centre in Sanya City of China’s Hainan Province and has been certified by the Confédération Mondiale des Activités Subaquatiques (CMAS), Professional Association of Diving Instructors (PADI) and International Scuba diving school (SSI), with qualified professional divers engaged in diving tourism and leisure sport. The company is also known for working with various international hotelier brands such as the Ritz Carlton, Hilton, Sheraton, Marriott, and also China’s Horizon Resort and Spa group in opening several sea tourism-based hotels and resorts in China. Sabah is well-known in China as an eco- and marine-based tourism destination, thereby piquing the group’s interest in entering Sabah’s tourism industry.

Body Calls for Review in Sarawak Housing Policy mitigation programme for this city and Kota Samarahan. “According to the ministry, an estimated cost of RM584mil is needed for Phase Two covering Sungai Kuap, Batu Kitang, Jalan Kuching-Serian and Kota Samarahan. I reminded that in 2008, the Prime Minister allocated a special funding of RM1bil to Sarawak for projects deemed important to its development and these projects must be completed in two years. “Much of the funds were not used as planned,” he said.

Kuching, Sarawak, Photo by: www.facebook. comstuartrango A call has made for the state government to review its policies on housing for fear that the younger generation will not be able to own a home of their own given the escalating property prices. The state DAP Socialist Youth Sarawak (DAPSY) chairman Wong King Wei said a recent media report on rising house prices in the state showed that it was now a matter of policies rather than global market influence. “Part of the reasons is the rise in land cost and higher conversion of premium paid to the Land and Survey Department, like for conversion of agriculture land to mixed zone,” he said. On land cost alone, Wong said Sarawak had the lowest density in Malaysia consisting of only 17 to 20 persons per square kilometre, unlike

in Selangor which had 1,000 persons per square kilometre. As such, he said with the state’s vast area, the government could allocate land for housing development easily instead of alienating it to benefit only a certain group of companies. Wong suggested that the state government could do a joint venture in which it would provide the land space while the private companies would build the houses. In a separate issue, Stampin MP Julian Tan called for an upgrade on the drainage systems in Kampung Stampin Baru and Jalan Stakan here. Having brought up the matter in Parliament, he was unsatisfied with the answer given by the respective ministry that it was awaiting additional money to begin Phase Two of the flood

As such, Tan said the remaining amount should go to upgrading the drainage systems. “We have seen many delays and this should not happen. Residents are not asking for a major upgrade. Like in Kampung Stampin Baru, all they want is for the dirt drains to be upgraded into concrete ones. As taxpayers, they are entitled to it,” he added.

21% Increase in Tourist Arrivals in Sabah

Kota Kinabalu International Airport Terminal 1 Sabah recorded a 21% increase in tourist arrivals in January to October this year, as compared to the corresponding period last year. Tourism, Culture and Environment Minister Datuk Seri Masidi Manjun said official figure for November and December was not available yet but the encouraging figure for the first 10 months lend confidence that the State will well exceed the targeted three million visitors by year-end. Speaking at the Visit Malaysia Year 2014 Countdown, Masidi said the sharp increase was contributed mainly by domestic tourists.

supported by several new direct flights to Kota Kinabalu, including from Hangzhou, Shen Zhen and Shanghai in China, Kota Baharu in Kelantan, and Cebu in The Philippines. He noted flight frequency from Tokyo and Perth has also been increased to three and two times a week, bringing the total number of non-stop flights from international destinations to Kota Kinabalu to 18. Additionally, Kota Kinabalu is also now a homeport for Star Cruises Aquarius. “We have also recorded several notable success at international level for the private sector.

He noted over 1.82 million from the 2.55 million tourists that visited Sabah as of October were Malaysians from Peninsular Malaysia and Sarawak. This represents an increase of 17% for domestic arrivals as compared to the previous year. A sharp increase of 307,325 people or 84.7% was also recorded for international tourists segment, with China and Hong Kong as main contributor. Masidi noted Sabah also recieved 237 specially chartered flights during the period, the highest in the country to date.

“For the first time this year, we recieved TripAdvisor Certificate of Excellence and the Agoda Golden Circle Award through Bunga Raya Resort. “Also, Mabul Water Bungalows won Dive Resort of the Year while other fivestar resorts such as ShangriLa’s Tanjung Aru Resort and Shangri-La’s Rasa Ria Resort, Hibiscus Villa Kudat also won excellence awards, including Best of Malaysia Awards from Expatriate Lifestyle,” said Masidi. He added Kota Kinabalu was listed as “Top 10 Rising Asian Destinations” by TripAdvisor, following consistent positive feedback from visitors every year.

The increase was also

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Boosting Sarawak’s Tourism Industry in 2014

s one of the most lucrative industries in Malaysia, the tourism industry is expected to garner total receipts of RM168 billion by 2020. According to Tourism and Culture Minister Datuk Seri Mohamed Nazri Abdul Aziz, Malaysia is expected to earn that amount from the targeted 36 million tourist arrivals by 2020 under the Malaysia Tourism Transformation Plan (MTTP). Looking at Sarawak, if the current trend continues, total tourism receipts could breach the double digit RM10 billion revenue figure during Visit Malaysia Year 2014 (VMY2014), spurred by higher spending from more tourist arrivals and participations in various events and conferences. According to data from the Ministry of Tourism Sarawak, the state recorded RM6.62 billion in total tourism receipts in 2010, RM7.91 billion in 2011 and RM8.57 billion in 2012. Given such an upward trend, total tourism receipts fetched more than RM9 billion in 2013 and could potentially increased to more than RM10 billion in 2014. Meanwhile, Sarawak will showcase

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its own activities and promotional events to attract more tourists to visit the state in conjunction with VMY2014. These events are envisaged to draw more tourists besides lifting the economy by encouraging more spending and travels. Some of the top annual events and highlights include Rainforest World Music Festival, Borneo International Yachting Challenge, Sarawak Regatta, Borneo Jazz, Mukah Kaul Festival, World Harvest Festival, Borneo International Kite Festival, Borneo Cultural Festival and Tidal Bore Carnival. Sarawak Tourism Minister Datuk Amar Abang Johari Tun Openg said, “The Ministry of Tourism Sarawak will highlight 13 major tourism events in conjunction with VMY 2014. These 13 major events will create excitement and provide value added activities for tourists to see and do while visiting Sarawak.” He added: “In preparation for VMY 2014, the Ministry of Tourism Sarawak will launch our very own Visit Sarawak Year campaign. This will prepare the State tourism

industry on the anticipated influx of tourists. At the end of 2014, we hope to achieve increased arrivals and increased revenue for the tourism sector. We want to increase tourism contribution towards our Gross Domestic Product’s (GDP) growth to second place from third place currently.” Openg pointed out that the ministry is eyeing 4.2 million of tourist arrivals in 2014, a progressive increase from an estimated figure of 4.1 million in 2013.He revealed that there were four million of tourist arrivals in 2012. Out of the four million visitors, 2.63 million people were foreign visitors and 1.4 million people were domestic travellers. From the 2.63 million foreign tourist arrivals, 1.73 million were from Brunei, followed by 417,072 people from Indonesia, 113,174 people from The Philippines, 55,674 people from Singapore and 43,326 people from China. The top three biggest percentages increased of foreign arrivals into Sarawak last year were from the Middle East (87%); Thailand (78.3%) and Bangladesh (67.2%). Openg said, ““Sarawak has always

been consistent in offering our unique selling point (USP) of culture, adventure and nature (CAN). We will still be offering those specialties and will target the meetings, incentives, conferences and exhibitions (MICE) market sector apart from the overall leisure sector. The CAN selling points will be the pillars of attraction to all the market segments.” He also explained that for the leisure segment, tourist who prefers to move around will certainly look for authentic experiences of culture and adventure. Travellers who like eco-tourism, will spend more time with the local community and visit the national parks. On the other hand, Openg said for certain educational exchange programme, the strong appeal for foreign parents to send their children to Sarawak to study is due to the authentic living experiences which they could get from locals besides the reasonable tuition fees offered by public and private institutions of higher learning.

MEDICAL TOURISM CONTINUES TO GROW Apart from eco-tourism, medical tourism is also on the rise as people strive to seek better medical treatment and healthcare services in big cities. Normah Medical Specialist Centre (NMSC) managing director and chief executive officer Dato Dr. Au Yong Kien Hoe foresees that medical tourism will grow as time passes on. This is because people, especially those living in suburban, rural areas and from neighbouring Indonesia, travel to big cities such as Kuching to seek better medical treatment and healthcare services due to advancement in medical technology and more medical specialists here. Yong believes that the private

healthcare industry in Sarawak will continue to receive higher demand in the future. He notes that there would be more than 20,000 Indonesians coming to Sarawak to seek medical treatment annually. “The private healthcare services will continue to grow as population expands and it will be good for a private foreign hospital to operate here. This is because it is important that we will be exposed to international competition and make sure that we can compete with the same standard with other private healthcare providers,” he said. He explains: “It will benefit the local people so they have more choices of hospitals to seek. Sometimes they are not aware of the quality and standard of our local hospitals.

Plus, they lack confidence in local hospitals and it is our duty to continue to develop in terms of quality and standard.”

standard and best practices. Standard of care in NMSC is as good as or even higher than hospital in overseas.”

Yong noted that NMSC has been accredited by the Malaysian Society for Quality in Health (MSQH) – an independent organisation responsible for the development and application of Malaysian Heatlhcare Accreditation Standards, in the last nine years and the Joint Commission International (JCI) which is an American accreditation in the last three years.

The Malaysia Healthcare Travel has granted the outstanding achievement award to NMSC as a result of higher number of healthcare travellers and highest revenue for healthcare travellers for East Malaysia in 2012. The Ministry of Health’s outstanding achievement award is to recognise the contributions of healthcare provider in Malasysia from the perspective of medical tourism. NMSC pointed out that it is the first time ever the awards are being given to all the healthcare providers in Malaysia.

He said, “Only a few hospitals in Malaysia have achieved the JCI accreditation. NMSC will continue to move forward in terms of Continuous Quality Improvement (CQI) with regards to patient safety

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MICE The tourism industry would not be complete without hosting some major international conferences and exhibitions to attract high level delegates and personalities to woo the crowd over to the state. Sarawak Convention Bureau (SCB), the tourism marketing arm of Sarawak has been actively promoting Sarawak to various delegates and meeting planners around the world using the meetings, incentives, conferences and exhibitions (MICE) approach. SCB chief executive officer Mike Cannon said, “SCB organises familiarisation trips for the media and to prospective clients to Sarawak. This is to showcase the destination and the type of activities they can expect to see when they bring their event here. Those trips really provide an indepth look on the destination and its offerings. At the same time, it enables the opportunity to meet the local suppliers, check out the venues and familiarise themselves with other industry members that will assist them throughout their stay here.” He said, “We also work closely with the Sarawak Tourism Board (STB) and the Malaysia Convention and Exhibition Bureau (MyCEB) to promote Sarawak as a business events destination,” adding that other promotional events SCB is conducting include attending international business events, trade shows in Frankfurt, Germany; Barcelona; Spain, the US and Australia. “By leveraging on the Borneo Brand, Sarawak represents the land of charm and romance, of history and culture, unsullied by modern trappings yet able to marry the best of technology with its wild soul. Here, in Sarawak, the Old World charm is complemented by modern technology and corporate culture. Nowhere else on earth offers such extraordinary and efficient business capabilities coupled with the natural wonder of orang utans and 130 millionyear old rainforests,” Cannon said. He added: “The state government has a special 10-year RM42.5 million convention sponsorship fund from 2006 to 2016 from which meeting hosts can apply

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for additional funding support. Where the event is international, this support is in addition to the Federal support provided by MyCEB.Our focus is yield beyond the economics and we are very interested in supporting events that will bring in greater opportunities for additional research, education and trade opportunities.” “We want to win more convention bids and further promote Sarawak as a globally competitive destination for business events. Currently, we have yet to really crack the national market that traditionally accounts for the majority of business in second tier cities. Besides, there is also still a lack of knowledge of the great venues and facilities here in Sarawak among our national organisers,” he said. He noted that for large corporate meetings where one company is covering the entire cost of the whole delegation, the cost of airfares and transit times can be a hurdle to overcome. Therefore, SCB focuses on smaller groups of 500 people and below for corporate meetings and incentives. This will ensure that the delegates will be able to enjoy an authentic experience on the ground as Sarawak’s attractions are best experienced in small groups. “To round off 2013, we partnered with the Sarawak Chamber of Commerce and Industries (SCCI) on a joint business mission to Shanghai, China. The objective of this mission is to expose investment opportunities that, in turn will generate personal contacts and new leads for business events. This mission runs in conjunction with the International Congress and Convention Association’s (ICCA) Annual Congress in which we shall also be participating,” said Cannon. In 2014, Cannon notes that Sarawak can expect to welcome a few international events among others include ASEAN Tourism Forum (ATF), Routes Asia, Asia Pacific Orthodontic Congress (APOC) and Asia Pacific Regional Conference of the World Organisation of Family Doctors (WONCA).

HOSPITALITY INDUSTRY TO BENEFIT Aside from that, the hospitality industry which is one of the subsectors supporting the tourism industry in Sarawak is also expected to gain from VMY 2014. For instance, Pullman Kuching, one of the hotels in Sarawak believes that VMY 2014 will lift the occupancy rate of hotels besides showcasing Sarawak’s multi-cultural races and unique culture to more tourists and business delegates. Its general manager Eric Tan said, “We foresee bright prospects ahead for the hospitality industry in VMY 2014 as there are 16 international events to be held throughout Sarawak. For 2014, we expect to achieve 65% occupancy rate for the hotel rooms, a marginal increase from 62% year-to-date this year. Currently, 60% of guests are made up of business travellers while the remaining 40% are leisure travellers.” Tan said the company is also promoting Sarawak and Kuching as a unique destination to foreigners by taking advantage of its regional

presence in Shanghai, Singapore, Jakarta and Vietnam offices by cross-selling its services to foreign tourists. Moreover, Tan foresees an increase for online bookings of hotel rooms due to aggressive marketing by the company’s personnel besides leveraging on its strong brand name as an affiliate of the famous Accor Hotels. He revealed that online booking of hotel rooms from visitors staying at Pullman Kuching has increased from 22% in 2011 to 38% as of year-todate in 2013. He believes that there will be more visitors using online booking in the future and observed that more tourist arrivals will be coming from Indonesia and Brunei as well as from Australia, United Kingdom and France. He noted that some of the annual events such as the Rainforest World Music Festival has been able to pull in the tourists with most of them are regular arrivals. Overall, Tan is upbeat about the tourism industry outlook for next year and expects to welcome more travellers with open arms to Sarawak.

JW Marriott and Hilton Soon Joining KK Hotel Scene

CMS Subsidiary May Raise RM21 Million From Land Sale and Arif Enigma Sdn Bhd (20%).

JW Marriot located on top of the completing Oceanus Waterfront Mall in Kota Kinabalu State Tourism, Culture and Environment Minister Datuk Seri Panglima Masidi Manjun hopes the emergence of new hotels this year and next will help solve the room shortage faced by the tourism sector in Sabah. He said while the influx of tourists has been an encouraging development, “unfortunately the continuous increase of tourists created a problem for us due to insufficient number of hotel rooms to accommodate all of them. “We hope more hotels will be built. I hope the JW Marriott will open this year. I was informed the KK Hilton will also be ready by the first quarter of next year,” he said. Commenting on the state government’s target of 3.4 million tourists visiting Sabah this year, Masidi said the Ministry would be revising the target from time to time. “For example, last year we targeted three million tourists but I believe we have surpassed that number. I would prefer to put a lower target in accordance with our capabilities. It is better to aim low and get a higher mark,” he said. Meanwhile, the Sabah Tourism contingent visited Japan last month in its bid to ensure the reestablished direct flight from Narita to KK would bring in more tourism receipts. “One of the reasons the route

was cancelled by Malaysia Airlines a few years back was due to low passenger load. Therefore, we want to keep the route open by attracting more tourists from Japan. “Last year, the number of Japanese coming into the state rose by 26% despite no direct connection between Japan and KK. We hope with the reestablishment of the route, the number will continue to rise,” he said. Masidi also said last year there were 273 chartered flights from China to Sabah, the highest number in the country. The number did not include scheduled flights from five Chinese cities. The Sabah Tourism Board will also be part of the Ministry’s entourage to Berlin ITB in March. “We have been receiving good response from Europeans who would like to visit Sabah especially from countries with low temperature all year round,” he said. Deputy Chairman of Tourism Malaysia Senator Dato’ Maznah Mazlan said Sabah is one of the most important tourism destinations in the country. “We are confident that the industry will benefit not only the country’s GDP but also to Sabahans including those in the rural areas through programmes such as Inap Desa. Locals can also take advantage of the industry by becoming trained tourist guides,” she said.

Land clearing by industries at Samalaju Industrial Park in Sarawak Samalaju Industries Sdn Bhd (SISB) could expect a net gain of RM21 million from the sale of some 350 acres (142h) of land in Samalaju Industrial Park to Malaysian Phosphate Additives (Sarawak ) Sdn Bhd (MPA). The land will be sold for RM25 million under a sale and purchase agreement sealed last week. MPA will, in addition, reimburse SISB — a whollyowned subsidiary of Cahya Mata Sarawak Bhd (CMS) — RM34.4 million being the land premium and costs related to land alienation. “The total sale consideration plus the cost of property amount to RM59.4 million, which is approximately RM170,000 per acre. “This is lower than, but not inconsistent with, the average of approximately RM220,000 per acre for undeveloped industrial land in Bintulu area, being the nearest to Samalaju with industrial land transactions,” CMS said in response to queries from Bursa Malaysia on the proposed land sale.

The land, slated for the construction of an integrated phosphate project by MPA, is located in a green field industrial area that is right next to Samalaju Port that is currently being developed. CMS said the land was originally earmarked for a proposed joint venture (JV) aluminium smelter project between Rio Tinto Aluminium (Malaysia) Sdn Bhd (RTA) and SISB, which was aborted after the termination of heads of agreement between RTA and SISB in March 2012. The state government later approved the application by SISB to retain the land for the phosphate project.

The development cost of the integrated phosphate project has been revised upwards to RM1.04 billion from the initial RM850 million due to increased capacity of phos- phoric acid, ammonia and fertilizer phosphate plant as feedstock to a proposed nitrogenphosphorus-potassium plant to be built next to the phosphate complex, as well as raised capacity of coke plant to cater to captive use and for export market.. The proposed plant will be South-East Asia’s first integrated phosphate complex. It is expected to have an annual production capacity of 500,000 tonnes of phosphate and related products. Construction is expected to start in first quarter this year, and it would commence operation in phases beginning the first quarter of 2016.

SISB will utilise the proceeds from the land disposal to finance its general office and administrative expenses and supplement its working capital for current and future business operations. According to CMS, SISB would eventually own 40% equity interest in JV firm MPA, which other shareholders are Malaysian Phosphate Venture Sdn Bhd (40%)

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/// Feature Property Event

Free Passes to Talk by Top Experts at the 2014 Property Hunter Expo

Ahyat Ishak

Faizul Ridzuan

Chris Tan

roperty Hunter will be back in Kota Kinabalu for the third year! The expo will be held from March 7th to 9th at the Sabah Trade Centre in Likas. This year, visitors will be able to gain more knowledge about the industry during the Property Talk Sessions which will feature top experts from across the country. The Property Talk Sessions titled 2014 Property Market: Opportunities and Challenges will be held on March 8th and 9th from 1:30pm to 5:30pm. The first day of the talk will feature four speakers include Ahyat Ishak, the bestselling author of ‘The Strategic Property Investor’ who is the founder of the Strategic Property Investor program, which has helped many Malaysians create wealth through property investment; Ho Chin Soon, the founder and Director of Ho Chin Soon Research, a property information company that specialises in land use and ownership maps; Enoch Khoo, the Head of Research for IQI Group, a leading property and investment company operating and advising in Malaysia, Singapore, Hong Kong, UK, US and Dubai; and Richard Oon, the National Tax Director of TY Teoh International who has more than 20 years experience in the taxation industry. The second day of the talk will feature talks by three other experts such as Faizul Ridzuan, the author of the best-seller ‘WTF? 23 Properties by 30’and co-owner of Malaysia’s leading online property discussion forum, called PropertyWTF.com.my; Chris Tan, the founder of CHUR ASSOCIATES®, a boutique legal service provider that has a niche positioning from Corporate Advisory to “Everything Real Estate” and author of ‘Turning GreenTM’ and ‘The Most Wanted Series: Write A Will’; and Michael Yeoh, who has over 15 years of experience in the mortgage and investment industry. The talks are valued at RM300 per person per day, but those who are keen to attend can get free passes by sending a SMS to 017898 8899 with your name (as per NIRC), valid email address, mobile contact number and specification of preferred day of talk to attend (Day 1, Day 2 or both). Limited seats available so enthusiasts are encouraged to sign up as soon as possible!

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Richard Oon

Enoch Khoo

Ho Chin Soon

/// FEATURE PROPERTY EVENT

Michael Yeoh

Property Talk Sessions 2014 Property Market:Opportunities and Challenges Day 1: Saturday 8th March 2014 1pm - 2pm

Ahyat Ishak Topic: “6 Secret To Selecting Your Investment Grade Assets”

2pm - 3pm

Ho Chin Soon Topic: “Peninsular And Sabah Growth Patterns and Future Hot Spots“ BREAK

3:30pm - 4:30pm

Enoch Khoo Topic: “Cock & Bull of Malaysia Properties”

4:30pm - 5:30pm

Richard Oon Topic: “Tax Strategies that Property Investors Need to Know for 2014”

Day 2: Sunday 9th March 2014 1pm - 2pm

Faizul Ridzuan Topic: “Highrise Investment – Doomsday or Boomday?”

2pm - 3pm

Chris Tan Topic: “Tips To Smooth Sail The Sea Of Legalities in Buying Real Property” BREAK

3:30pm - 4:30pm

Michael Yeoh Topic: “How To Make The Banks Say “YES” to You”

4:45pm - 6pm

FORUM Moderated by Enoch Khoo Title: 2014 Property Market: Opportunities and Challenges

Using of Housing Road by Developers

Electricty Hike Burden KK Malls to Cut Power Usage mall might feel cooler or warmer due to the weather outside. Nonetheless, the management would make adjustments to the temperature depending on the weather, whilst still ensuring the comfort of shoppers, Tan said, adding that keeping the temperature at 23 to 24 degrees Celsius should be fine.

Moyog Assemblyman Terrence Siambun wants the Penampang District Council to enforce an order which forbids two housing developers’ heavy machinery from using the access road to Taman Kasigui 3. He said there was an official letter issued by the Council in August 2013 after many complaints by Taman Kasigui Phase 3 residents, instructing the two housing developers (from a condominium and semi-detached housing project) to stop using their residential access road. “But it seems that the Council’s directive has been ignored as the developers have continued to use the road until now,” he said adding that the two developers have been using the residential access road and a nearby village road to get to their construction sites day and night, including on weekends, for almost a year now. When asked whether the Council was aware of the situation, Siambun said they were informed but he was not sure if they have actually sent representatives to see the situation for themselves. “So it seems there is a lack of enforcement action on their part. They should take action as soon as possible.

The developers have never taken into account the inconvenience caused and danger posed to the residents of Taman Kasigui 3,” he said. He also mentioned that the cooperation from the Village Security and Development Committee for the area on the matter also seemed to be nonconsistent. Siambun said cracks have now started to form on the residential road surface, which is under the jurisdiction of the District Council, and the road was covered in mud and dust left behind by the heavy construction vehicles. “Some of the residents’ houses are also affected as there are some cracks occurring on walls and ceilings inside their homes,” he said. Likas Assemblyman Junz Wong agreed that there is a need for the District Council to enforce the directive. “There have been cases where we received complaints against developers using housing roads,” he said. Citing a case in Jalan Bundusan, he said the residents refused to let a developer use their road.

Centre Point Sabah on the distance right Major shopping malls in the city will follow their counterparts in the peninsula to cut down on their electricity usage by raising the air-conditioning temperature. Centre Point Sabah (CPS) commercial management manager Linda Wong said the mall would raise the temperature of airconditioning to 23 degrees Celsius. Previously, the temperature of the mall was maintained at around 20 degrees Celsius.

set their air-conditioning at 23 or 24 degrees Celsius to offset electricity tariff hike. Air conditioning, according to the association, takes up the largest share of energy – about 65 per cent – in commercial buildings. Its president, H.C. Chan, said most malls in Malaysia are now too cold, with temperatures ranging from 21 to 23 degrees Celsius.

Wong said CPS paid between RM500,000 and RM600,000 in electricity bill each month, and air-conditioning made up around 70 per cent of the mall’s electricity bill.

Suria Sabah leasing manager Tan King Way said the management would also make adjustments to reduce electricity usage in view of the hike in electricity tariff.

“We are the mall paying the highest electricity bill in Kota Kinabalu because we have many shops and offices.”

He said air-conditioning, escalators and lights made up the bulk of the mall’s expenditure.

Besides readjusting the temperature of airconditioning, CPS has also changed all lighting to light emitting diodes (LED) to save energy upon completing its renovation last year. The Malaysian Association for Shopping and Highrise Complex Management is advising its 400-odd members nationwide to

As electricity is costing more now, the expenditures will sum up to a larger amount, he said. The mall is also reportedly paying over RM500,000 in electricity bill monthly.

Meanwhile, 1Borneo Hypermall director Raymond Fang said the management maintained the hypermall at 25 degrees Celsius all the while, which was well above the temperature advised by The Malaysian Association for Shopping and Highrise Complex Management. “We have no problem complying with that (23 or 24 degrees Celsius advised by The Malaysian Association for Shopping and Highrise Complex Management). “The lowest (temperature) we can go is 24 degrees Celsius,” he said when contacted yesterday. In addition, Fang said the hypermall had moved into LED lighting as well as using timers at remote locations. “We are targeting to reduce (electricity usage) by 15 to 20 per cent in the next calendar year.” He added that the electricity tariff hike was a huge cost and burden to the mall.

Tan said the current temperature at the mall is maintained at around 22 degrees Celsius, but shoppers entering the

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/// West Malaysia Property News

WEST MALAYSIA PROPERTY NEWS

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

Penang’s New Housing Rules to Start in February

Wide Support for Revised RPGT a rate of 30% within three years followed by 20% and 15% in the fourth and fifth year respectively. No tax is imposed if a property is sold after six years.

The increase in the real property gains tax (RPGT) to discourage speculative buying has come in for wide support, and not just among people looking to own homes.

Centre for Public Policy Studies chairman Tan Sri Ramon Navaratnam said the RPGT was a good way to dampen speculation and even prevent a possible property bubble. On the impact it might have on ordinary people who are not speculators but wish to sell their property within five years, Navaratnam said: “It is not even a reasonable proposition. For most people, buying property is one of the biggest life decisions.

FOMCA secretary-general Datuk Paul Selvaraj said he backed the Budget 2014 proposal of almost doubling the RPGT to 30% as it was essential to curb speculation.

“So, if one is planning to rid oneself of a property in under six years, one must either be a really bad investor or already has speculative motives.”

“We feel the government did listen to consumers, and owning a house has now become a higher possibility. However, the hike in RPGT must be accompanied by an increase in affordable housing projects,” he said.

MCA president Datuk Seri Dr Chua Soi Lek hoped that increasing the RPGT would dampen property speculation, but said the Government had to build more affordable houses in the long run.

The RPGT is imposed on the profit made on properties sold off within a set period of time, with

“Houses with grossly inflated prices are beyond the reach of many Malaysians,” he added.

FOMCA secretary-general Datuk Paul Selvaraj

View of Penang from Kek Lok Tzi Temple The new housing rules that will be implemented by Penang next February are definite, even as discussions are being held with the various stakeholders, said Chief Minister Lim Guan Eng.

cost (up to RM72,500) houses cannot be resold for up to 10 years from the date of the sale and purchase agreement (SPA). This 10-year rule covers all past and future purchases.

He said briefings were being conducted for the Bar Council, banks, property developers both in and outside of Penang and other stakeholders to update them on the new housing rules.

In addition, houses that were initially purchased at a cost below RM400,000 on the island as well as below RM250,000 on the mainland cannot be resold for five years if the SPA is signed on or after 1st of February 2014.

Under the new rules, all low-cost (up to RM42,000) and low-medium

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New Housing Project Targets Younger Generation

Dusk of Johor Bahru overlooking into Singapore

The Paloma development comprises two serviced residential towers TROPICANA Corporation Bhd unveiled yet another phase for its ongoing Tropicana Metropark mixeddevelopment in Subang Jaya recently.

The Paloma comprises two serviced residential towers with 323 units in Tower A and 248 units in Tower B, as well as 16 duplex units.

The new Paloma Serviced Residences and Courtyard Villas will be joining Pandora Serviced Residences which was launch earlier in 2013. Both projects will be part of the Tropicana Metropark’s 35.6ha of land in Subang Jaya, with a gross development value of RM6.3 billion spanning over 12 years.

There are five different layouts to choose from. The smaller units start with the studio unit (type A) with a built up area of 609 sq ft, followed by two-bedroom units (type B) with a built up area of 916 sq ft. Those with larger families can opt for the three bedroom designs which comes in either the Type C of 1,259 sq ft, 1,309 sq ft (Type C1) or the 1,306sq ft (Type C2).

“The younger generation of homeowners have become more discerning about new design concepts and the type of lifestyles they want to provide for their family,” said the group’s managing director Datuk Dickson Tan. Current trends he said seemed to point towards features such as the creation of the green open park spaces, mix development concepts, multi-tiered security as well as easy accessibility to transportation and amenities. The company will also be forking out RM150 million for the construction of a new flyover to allow residents and road user near the development to gain direct access into the Federal Highway. Tropicana Metropark he added had created a “resort gateway” for city dwellers. The exclusive development is built to capitalise on the shift in mindsets among new homeowners who now prefer green spaces where families could utilise it.

Paloma will not be short of facilities as it plans to offer its residents with a sophisticated lifestyle amenities. Some of its key facilities planned include a half-sunken basketball court, bicycle park, floating pavilion, games room, stone garden, sanctuary pool, wading pool, children’s playground, social terrace, jacuzzi. At the heart of Paloma is the 3.72ha Central Park. While at Level 30, residents can look forward to staying fit at their sky gymnasium, soak up the sun in the rooftop’s bubble tub or have a cup of tea at the sky lounge area. For the convenience of the residents, Tropicana Metropark has also invested RM150 million in constructing a flyover next year that will directly link the development project to the Federal Highway. Besides that, residents can also access the development through the Batu Tiga and Subang Jaya KTM stations located just five to ten minutes away.

Malaysia’s Tallest Condo to Be Ready by 2017 in Johor Baru In just seven months, 50% of the Astaka @ 1 Bukit Senyum, the tallest high-end residential tower development project in the region, has been snapped up by buyers. The project, which has a total ofv438 freehold units, commenced in early July this year and is expected to be ready by 2017. Located at Bukit Senyum, Johor Bahru, Johor Malaysia, the site is only 2 mins away from customs border of Malaysia and Singapore sitting on 440,000 square feet plot of prime land consisting 2 tower blocks (64 and 70 floors with seaview) housing 1030 lots (3 Basement carparks + 5 above ground levels), 2 lots per residential units. Its developer Astaka Padu Sdn Bhd is selling each unit between RM2 million and RM8.45 million.

A2 (2217 sqft), 4 Bedrooms Type B (2659 sqft), Duplex PH (5408 sqft) all units come furnished with Gaggenau & Bosch Appliances and Hans Grohe bathroom fittings. “The projected gross development value of The Astaka will be more than RM1bil and will be the forerunner in the Johor Baru city transformation plan,” he said.

Astaka Padu chief executive officer Datuk Zamani Kassim said another 20% of the units have been booked while waiting for the sales and purchase agreements to be signed. “The Astaka, which means ‘royal pavilion’ in English, is already on its way to becoming a new landmark. “Once completed, the Astaka, standing proudly at 304m above sea level, will be the tallest residential tower not only in the country but throughout the region,” he said during the official launch of the Astaka by Sultan of Johor Sultan Ibrahim Ibni Almarhum Sultan Iskandar.

The project will have a first phase of mixed development, which includes two condominium towers. Zamani added that the contractor appointed, Penta Ocean Construction Company Ltd of Japan, is well-known in the construction industry, especially in Singapore, with projects including the ION Orchard, the Esplanade Theatre Bay and Marina Promenade.

He said the Astaka is being developed on the site of the former Hockey Stadium and Johor Baru Indoor Stadium. “The towers will house 438 luxury suites, including penthouse duplexes. The units will have a built-up area ranging from 2,207 sq ft to 5,408 sq ft. Each floor will house four units. 3 Bedrooms Type A1 (2207 sqft) and Type

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/// West Malaysia Property News

Official Groundbreaking of Penang WorldCity International Airport. Since the special preview of Tropicana Bay Residences, the first phase of Penang WorldCity has recorded a take-up rate of 85%, amounting to a GDV of over RM540 million.

(From left) Dr Arif Bahardin, Tuan Lim Hock Seng, Datuk Yau Kok Seng, Datuk Dickson Tan, Tan Sri Datuk Danny Tan, Jagdeep Singh Deo, Datuk Low Eng Hock and Datuk Andy Khoo Tropicana Corporation Berhad together with its joint venture partner, Ivory Properties Group Berhad held the official groundbreaking ceremony of the Penang WorldCity development at Bayan Mutiara, Penang recently. Penang WorldCity, an integrated waterfront development worth a gross development value (GDV) of RM10 billion is being developed by Tropicana Ivory Sdn Bhd, which is a joint venture company between Tropicana Corporation Berhad and Ivory Properties Group Berhad. Held at the Penang WorldCity sales gallery, the groundbreaking was officiated by Penang state executive councillor for Town and Country Planning and Housing, Jagdeep Singh Deo; Tropicana founder and group executive vice chairman Tan Sri Datuk Danny Tan Chee Sing and Ivory chief executive officer Datuk Low Eng Hock. The event was also witnessed by Tropicana group chief executive officer Datuk Yau Kok Seng, Tropicana group managing director

Datuk Dickson Tan and Tropicana Ivory managing director Datuk Andy Khoo. Speaking on behalf of Tropicana, Tan Sri Datuk Danny Tan, said, “Penang WorldCity is developed on a prime 102.6 acres of freehold land and has been conceptualised to represent the quiet charm of island living with the convenience of a vibrant city life. Since the special preview of Tropicana Bay Residences, representing the first phase of this development, we are pleased that it has recorded an 85% take-up rate. We believe this integrated development will add vibrance to Penang’s economic landscape.” Strategically located within Bayan Mutiara, Penang WorldCity is an integrated waterfront city located at the gateway of Penang Island, right off the Penang bridge. It is located in the eastern part of the Tun Dr Lim Chong Eu Expressway (formerly known as Bayan Lepas Expressway) within the vicinity of Sungai Nibong. It can be easily accessed from Komtar and the Penang

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Penang WorldCity will be developed over an eight to ten-year period and will comprise residential towers, office blocks, recreational and retail offerings, a wellness centre, an international hotel as well as an international school. Facilities provided will include a pool, children’s playground, tennis, squash and badminton courts, multipurpose halls, a gym as well as a foot reflexology and jogging path. Construction of the first phase is expected to begin in 2013 and is slated for completion in 2017.

KLIA2 Cost Not to Exceed RM4 Billion

KLIA2 Skybridge artist impression Transport Minister Datuk Seri Hishammuddin Hussein assured that KLIA2 is on track for its 2 May opening, while its total cost is not expected to go beyond RM4 billion. Notably, the opening of the hybrid airport has been delayed five times from its original target in September 2011, and its initial RM1.6 billion budget skyrocketed to RM4 billion. While the final cost will be unveiled only after the project is completed, it does not expect it to exceed RM4 billion, he said during a site visit. Hishammuddin also revealed that the certificate of completion and compliance will likely be completed by the end of this this month, and the operational readiness and airport transfer (ORAT) by early February. He further noted that although the project experienced some hiccups, it is now 98% complete.

“I acknowledged that there are some delays and problems but I’ve been given assurance that if they work together, that can be overcomed. I believe individually, the different sections of the development of KLIA2 is 98 percent ready but the biggest test is the integration and coordination of the operations and that requires third parties,” said Hishammuddin. In fact, the committee headed by Deputy Transport Minister Datuk Abdul Aziz Kaprawi had drafted certain timelines as well as bigger concerns which may require him to step in to resolve. “But those are deadlines that I will let them follow through until such time that I’m needed,” he said, adding that he is cautiously confident that the contractors will be able to meet the timelines, while acknowledging that there is still a lot of work to be done.

Penang WorldCity is developed on a prime 102.6 acres of freehold land and has been conceptualised to represent the quiet charm of island living with the convenience of a vibrant city life.

Johor Sultan Buying Stake for RM250m Cash in Berjaya Times Square 22.26ha in Danga Bay for RM376 per sq ft from another developer.

Second Penang Bridge Expected to Open in February

It is said the estimated sellable floor area of about 3.5 million sq m for the R&F deal worked out to a plot ratio of 7.5 times and that is seen as high, given that the land is worth about RM891 per sq ft. In comparison the Danga Bay plot ratio is 5.22 times.

Berjaya Times Square, Kuala Lumpur Fresh from selling six plots of land in Johor Baru for a whopping RM4.5 billion, the Johor Sultan has entered into an agreement to buy a 20% stake in Berjaya Times Square Sdn Bhd (BTS), which among others, owns the Berjaya Times Square Mall in Jalan Imbi, for RM250 million cash according to Star. This is not the first investment the ruler of Johor has made in recent months, as he is seen to be picking up assets and emerging as shareholder in companies. Berjaya Assets Bhd told Bursa Malaysia that it had inked an agreement to dispose of 150 million shares of RM1 each, or a 20% equity stake, in BTS to Sultan Ibrahim Sultan Iskandar. A unit of Berjaya Assets, BTS owns and manages Berjaya Times Square Mall which has a gross built-up area of 7.5 million sq ft on 4.05ha in Jalan Imbi, Kuala Lumpur. The building comprises a 12-level shopping mall, two 46-storey towers of serviced suites and hotel, five levels

of basement and 10 floors of annexed carparks. Besides that, BTS is also involved in the operations of carparks and theme park, and its other subsidiary owns and manages Berjaya Waterfront, Johor Baru (formerly known as The Zon in Johor) with properties spreading over 7.28ha of prime land in Johor. Berjaya Assets said the sale allowed it to raise immediate cash and that the Sultan’s entry into BTS would enable him to participate more actively in the future direction and developments of the BTS Group. Berjaya Assets intends to use the proceeds for working capital and future investments. China-based developer Guangzhou R&F Properties Co Ltd bought six plots of land totalling 47ha in Johor Baru from the Sultan for a whopping RM4.5 billion or RM891 per sq ft. It is a record deal as just months earlier another developer from China, Country Garden Holdings Co Ltd, had bought

That aside, Berjaya Assets is part of Berjaya Group which is ultimately majority owned by Tan Sri Vincent Tan. He is a long time investor in REDtone International Bhd and in July bought more shares to raise his stake to 13.86%, making him the second largest shareholder in the telco and WiFi infrastructure builder. Earlier in May, the Johor Sultan ended with a 51% equity stake in REDtone Network Sdn Bhd (RN) via a transaction with REDtone International, whose stake in RN has been reduced to 49% from 70%. RN is one of the three companies that was shortlisted by the Malaysian Communications and Multimedia Commission in November last year for the digital terrestrial television broadcast (DTTB) infrastructure contract.

An entourage from the Works Ministry on the second Penang bridge The second Penang bridge, which is now 99.9% completed, is expected to be opened to the public in February, said Works Minister Datuk Fadillah Yusof. “Only the construction of two toll plazas in Batu Kawan – one at the Bandar Cassia interchange and the other at the interchange connecting to the NorthSouth Expressway (NSE) – is yet to be completed. “Upon completion, the 28-booth toll plaza in Bandar Cassia will be the largest in the country,” he told a press conference at the China Harbour Engineering Co Ltd (M) Sdn Bhd office in Batu Maung. Currently, the Sungai Besi toll plaza is the largest one in the country with over 18 lanes. The Bandar Cassia toll plaza (PB2X Toll Plaza) will be managed by Jambatan Kedua Sdn Bhd. NSE operator PLUS Expressway Bhd will operate the other one (PLUS Toll Plaza). “The PB2X Toll Plaza is meant for motorists who are not using the NSE, especially the locals who want to commute to the island from the

Batu Kawan area. After the construction is done, we have to integrate the system with other highways such as the NSE,” Fadillah said. He added that the bridge would be opened to the public only after it met requirements set by the Malaysian Highway Authority. On talk that toll rates would be increased next year, he said they were subject to review every three to five years and added that the toll rates for the bridge were still at the negotiation stage,. “We have a total of 29 tolled highways in the country and the concession agreements vary. “For example, the NSE is due to be reviewed in 2016,” he said, adding that a few highway tolls would be reviewed next year and the incremental rate would depend on the Federal Government, which would take into account its financial position and the people’s economic situation. The second Penang bridge, spanning 24km with 16.9km over the sea, is expected to ease at least 25% of traffic congestion on Penang Bridge.

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/// Feature Property Launch

/// FEATURE PROPERTY LAUNCH

Mah Sing Group Hosted a Carnival to Launch its KK Project One of Malaysia’s top 10 property developer, Mah Sing Group hosted a fun filled carnival to launch the sales of its inaugural project in Kota Kinabalu - “The Residence at Sutera Avenue”

he first of its kind sales launch event was held in the centre atrium of KK Time Square here in the capital of Sabah, featuring a series of exciting activities that is poised to keep the entire family entertained. Present at the launch was Mr Andy Chua, Chief Operating Officer of Mah Sing Group, and Michelle Ho, Senior Sales Manager of Mah Sing Group. The carnival like event featured a series of game booths such as arcade games, golf putting clown and magicians. There was also lion dance performance as well as Chinese folk dance by the local school. One of the highlights of the event was a property talk given by Malaysia’s renowned speaker and map author Mr Ho Chin Soon, Founder of Ho Chin Soon Research Sdn Bhd.

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In Ho’s session, he highlighted the immense growth that KK has experienced in the past decade, recording an astonishing growth as the nation’s No. 1 capital appreciation in property, followed by Kuala Lumpur and Penang. Among these, the highest property appreciation rate recorded is in the agriculture town of LahadDatu and Tawau, which he believed was fuelled by the oil palm industry.

one in Kimanis, as well as visionary developments located southwards of the city in TanjungAru area.

Ho further justified that the growth of KK was indeed strategic due to several macro factors. One of it is the excellent flight connection domestically as well as internationally, putting KK as the second most comprehensive aviation hub after Kuala Lumpur.

Mah Sing Properties marketing and sales senior manager in Kota Kinabalu, Michelle Ho, said the response for The Residences was very encouraging.

The progress of KK is expected to continue with the setting up of oil & gas terminals such as the

The Residences, with a gross development value (GDV) of RM502 million, is part of the mixed integrated development, Sutera Avenue, located on the coastal highway. Sutera Avenue includes 18 blocks of two-storey retail shops and three towers of 11-storey serviced apartments.

“Upon obtaining the developer’s license and advertising permit, we decided to do a sales launch in conjunction with the upcoming Chinese New Year,” she said.

The Residences is Mah Sing’s first residential project in Kota Kinabalu. The development has a total of 320 units of serviced apartments in three towers, namely Tower 1 (100 units), Tower 2 120 units) and Tower 3 (100 units). “We are launching Tower 2 in the upcoming sales launch. Towers 1 and 3 have yet to be launched,” she said.

The progress of KK is expected to continue with the setting up of oil & gas terminals such as the one in Kimanis, as well as visionary developments located southwards of the city in TanjungAru area.

The Residences offers 1+1, 2 and 2+1 room layouts with built-up areas ranging from 726 to 1,220 sq ft. Prices of the serviced apartments start from RM605,000 onwards. It also comes with built-in wardrobe and modern cabinets. Residents can enjoy the facility floor with infinity pool, sky garden and playground with their families. The landmark development boasts an unrivalled infinity pool on the rooftop and one of the most comprehensive clubhouse facilities in town. Right beneath the residence is a mixture of retail shoplots and modern offices. Security is one of the priorities too, with 24-hour security, card access to car park, closed circuit television (CCTV) at lift lobby and card access to lifts and secured reception lobby. In addition, residents of the serviced apartments enjoy shopping for their daily needs right at their doorstop as The Residences sits atop of the two-storey festive retail mall. The mall offers a one-of-its-kind street mall retail concept with a 50-feet wide pedestrian boulevard on the ground floor, and wide frontage units served by escalator access to each floor. Ho informed that construction of the three serviced apartment towers had commenced, and development was slated to be completed in 36 months. She added that The Residences would be built in accordance with Construction Quality Assessment System (CONQUAS) Singapore standard. She also urged the public to come to the sales launch of The Residences, as well as check out the showroom at the sales gallery at the KK Times Square. Buyers who purchased The Residences during the sales launch enjoyed low down payment, waived legal fees for loan documentation and stamp duty, free one year maintenance fee and 5% plus 2% launching rebate. On the other hand, Ho said the 18 blocks of en-bloc shop offices were sold out, while 80% of the 16 blocks of twostorey retail shops had been sold.

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/// Contributor

Dr. Daniele Gambero

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

Visit Malaysia 2014 Budget 2014 Giving a Special Attention to Tourists Flow to Malaysia

hy tourism is so important for the complete development of a country, someone may ask. It depends on where you look at it from or, in other words, from which kind of perspective but one thing is for sure, tourists are normally arriving with deep pocket filled up with currency and they are on holiday to have fun. At the end of the day, for once, they will not be so concerned about how much these shoes will cost or if the bill for yesterday night dinner was on the high side. Tourist means holiday and holiday means relax and “take it easy” mind set. Malaysia as at August 2013 welcomed something like 24 million tourists and the Government, with Budget 2014, has been putting a particular attention into this very important industry by launching 2014 as the “Visit Malaysia” year and 2015 as “The Year of Festival” with the precise target to hit by this year end at least 30 million visitors. How all this can affect the Malaysian economy and, above all, the Property Market? Several are the possible approaches to thisquestion; let’s see the blatant ones first while the hidden ones will be unveiled at the end.

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The first thing that a tourist needs upon arriving is accommodation. Hotels are directly impacted by the positive outlook and in the last few years we have seen hotels, from the 6 glowing stars ones down to budget accommodation, being launched and constructed almost everywhere in Malaysia. Property investors are normally attracted towards the first one with interesting packages inclusive of medium term guaranteed return: buy a hotel room and collect your fixed monthly cheque for the next three to five years. Interesting proposition but, as smart investor, one should analyze it properly. Location of course is the first important factor, developer follows right after it and the crucial one is to know who will be the operator of the hotel. Without a renowned operator there might be issues on the punctual delivery of the monthly return and the whole project might result in a very bad and un-lucrative nightmare. Advice is: always do a proper due diligence on these three important issues before deciding to purchase and ask opinion from experts in case of uncertainties.

...one thing is for sure, tourists are normally arriving with deep pocket filled up with currency and they are on holiday to have fun. The second basic need of a tourist is food and we can surely add in “shopping” as, somehow, once a normal person dresses up as a tourist immediately gets the “shopcoholic virus” and is ready to melt all his or her credit cards during these few days off. These two “tourist’s addictions” are also directly impacting the property market and, possibly, good and profitable property investment choices by smart investors. F&B and retail shops are normally located in three different type of buildings: shopping complexes, the nowadays commonly offered “street markets” and the super classic shop-office/shop-lot. The recommendation to investors in this case is, besides checking again and again location and developer, to think twice before buying a retail space in a newly launched shopping mall. Why I’m saying this? Successful shopping complexes are only the ones strictly managed by one entity while the ones where individual lots are sold to investors take much longer time to raise to the attention of the public and will remain forever in the “middle attention” of the public. Managing a shopping mall is not business for everybody and many are the actions to be taken and rules to be applied. If you want a good example of what I’m saying you can compare Mid Valley, Pavilion and Suria KLCC with Time Square, Leisure Mall and Jaya One in PJ. While the first are commanding sky-high rental rates and there are plenty of standing by tenants the second ones are offering average or even below average returns with issues in filling up all the offered spaces. The worst case is that one day you might find that beside your lot hardly rented to a branded fashion retailer there will be the grand opening of…..an internet café or a copycat fashion shop. Not to mention cleaning, security and marketing of the whole building.Street markets and classic shop-lots are safer type of product where to invest as they always offer a safe “second option” to be recycled as normal office or shop space which are both widely requested almost everywhere in Malaysia.

An interesting trend that started in Penang back few years ago and is now picking up in almost all the touristic destinations is the “rehabilitation cum conversion” of old shop-lots into either budget hotels and boutique hotels. Penang has offered during the last few years very successful examples of the second category all around the old city center in Georgetown.

A totally new trend, started in 2011/2012 in Kuala Lumpur first and now spread all over Klang Valley is the conversion of “residential properties” in the US and UK very common and highly successful “bed & breakfast” accommodation to be leased to tourists for short-term staying. In KL and Klang Valley there has been a flourishing of specialized agencies that, in exchange of reasonable booking fees/charges, are supplying a properly done oversea marketing service inclusive of booking services, collection, cleaning (only few agencies are offering this very practical plus) and management. With the positive outlook that the touristic industry has for the next few years it is surely wise to have a good look into this new trend and profit from the much higher return that it offers.

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/// West Malaysia Property News

SP Setia CEO to Step Down in 2014?

Plan Includes RM1 Billion Theme Park at Resorts World Genting Region (ECER), Genting Malaysia has also signed an memorandum of understanding (MoU) with the East Coast Economic Region Development Council for smoother implementation of the plan.

The world’s first Twentieth Century Fox World theme park to open in 2016 at Resorts World Genting

SP Setia president and chief executive officer Tan Sri Liew Kee Sin SP Setia president and chief executive officer Tan Sri Liew Kee Sin has hinted at leaving the company earlier than stipulated in his contract, which expires in May 2015, reported Business Times. Speaking after a media briefing, Liew revealed that he intends to step down soon, without waiting for his contract to expire in 2015. “SP Setia has been around for 25 years. It is the biggest property developer in Malaysia by net profit and sales. Five years ago, we expanded overseas and the projects are all bearing fruit... We have a great team, and this has led S P Setia to become what it is today. I have decided to move on. It has been a good journey for me,” said Liew.

the rights to redevelop London’s Battersea Power Station project, along with Sime Darby Bhd and Employees Provident Fund. Notably, the company has 27 ongoing projects, including 15 set for launch from next year and a combined value of RM102 billion. Rumour has it that Liew will have keen interest in Eco World Development Sdn Bhd, which has his eldest son Liew Tian Xiong as a director. Listed by Forbes as Malaysia’s 38th wealthiest man, Liew owns 67.79 million S P Setia shares, or 2.76 percent. This translates to RM209 million based on yesterday’s closing price of RM3.09.

There is speculation that Liew, who has been with S P Setia for 17 years, will leave the company around the Chinese New Year period in 2014. With Liew at the helm, S P Setia achieved global fame after it clinched

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Genting Malaysia Bhd is embarking on a 10year master plan for the development, expansion, enhancement and refurbishment of hotels, infrastructure and a new RM1 billion Twentieth Century Fox World theme park at Resorts World Genting. The Genting Integrated Tourism Plan (GITP) plan, totalling RM5 billion, also includes a hilltop development of a threestar hotel with about 1,300 rooms next to First World Hotel and a show arena that can seat 10,000 people. Chairman and chief executive Tan Sri Lim Kok Thay said that the group was embarking on change for both the tourism and integrated resort industry in Malaysia. “We cannot be contented with (our achievement) and need to preserve our crosscultural appeal and maintain repeat visitation,” he said in his speech. Prime Minister Datuk Seri Najib Tun Razak officiated the unveiling of the GITP and Twentieth Century Fox World theme park. All the works excluding the theme park would be carried out under the first phase costing RM4 billion.

Asked on the investment by Twentieth Century Fox, Lim said it would invest via its intellectual property (IP). “Its commitment is important as it has the marketing appeal,” he said. Lim said the theme park, which is scheduled to open in 2016, was expected to boost the number of tourists to the resort. The first-of-its-kind in the world theme park, which banks on the idea of the growing demand for theme parks with a movie-fantasy appeal, was formalised with an initial investment of RM400 million in June this year. It will replace the outdoor theme park which ceased operations in September this year. Once completed, the revamped 10.12ha theme park will feature more than 25 rides and attractions of a cinematic nature, with brands from films including Ice Age, Rio, Alien and Night at the Museum. “The figure may change again as we review to make it better. We want it to be a world-class theme park that is unique from other theme parks (in operation today),” he said. As the resort is located in the East Coast Economic

“GITP will help fulfil ECER’s target of attracting RM110 billion of investments and create 560,000 jobs in the east coast region,” he said. Najib said the tourism industry was the second largest foreign exchange earner after manufactured goods and the seventh largest to Malaysia’s economy, contributing RM47.2 billion to gross national income last year. He added that the growth of China, India, Brazil and the Middle East would fuel international tourism. “With an estimated two billion new middle-class consumers coming into the market from emerging markets, Genting’s transformation plan is a prime example of private sector participation under the Economic Transformation Programme,” he said. During the launch, Lim also announced the plan to establish Genting Premium Outlets to further attract shoppers to the theme park. It will offer a wide range of designer labels, similar to the Johor Premium Outlets which was launched in December 2011.

It’s Back to Basics for the Real Estate Sector

China Developers Will Fuel Competition in Iskandar Raising Eyebrows Among Local Developers space,” it added. Meanwhile, Maybank has maintained an “underweight” on the property sector and expects the property market to be hit hard by the new property cooling measures of Budget 2014 as well as by some state governments. In addition, it said stricter mortgage lending by the banks would also slow new transactions.

The real estate sector maintain neutral: Notwithstanding the current undemanding valuations, the real estate sector still lacks positive catalysts over the near term that could lead to a sustainable rerating. Most of the regulatory measures have taken effect from Jan 1 and, as such, we believe investors will need time to monitor the severity of the combined measures. Without the interest absorption scheme, developers will have to go back to basics, that is location. Properties in good locations with amenities and mature areas will continue to be in demand. Given the affordability issue, mid-level housing and townships will fare better than high-rise and luxury products. In 2014, we expect property price growth to be flattish, while overall transaction volumes will likely decline by 5% to 10%. Although prices will remain resilient — as land, construction and compliance costs continue to hold up — developers will find it difficult to raise selling prices further amid weak sentiment and demand.

As a result, profit margins will be under pressure. Infrastructure projects are the potential catalysts in the medium term. These include the MRT Lines 2 and 3, and the high speed rail (HSR) projects. The spillover to the property market is expected to be similar to that of MRT Line 1, while the HSR development will be a big boost to the property market in the Kuala Lumpur-Iskandar Malaysia corridor. We maintain our bullish stance on the Penang market. News flow is expected to be strong this year. Apart from the opening of the Second Penang Bridge in the first quarter of this year, Batu Kawan Bhd will see more investments that will have an overall positive impact on the property market on the mainland. Landbank owners such as Tambun Indah Land Bhd (“buy”, target price: RM2.08), Global Oriental Bhd and Malton Bhd will be the key beneficiaries of the aggressive landbanking by the big players.

An under construction condominium at Danga Bay in Johor Bahru bordering Singapore. Construction cranes are sprouting across Johor state as investment flows into “Iskandar”, a development zone that aims to draw Singaporean Chinese and other capital to its larger neighbour’s cheaper land and labour costs The entry of developers from China into Iskandar Malaysia is increasingly being felt and will intensify the competition in the region, according to Maybank Investment Bank Research. The research house expressed its concern that the developers could flood the market with massive supply of high-rise mixed development projects, inducing price volatility. It said this could happen if there were no synchronised planning and control by the authorities. A local analyst reckoned that competition would heat up in the Iskandar region owing to the presence of not just these developers but also most of the major property players. He said he expected property prices at Iskandar Malaysia to be sustained by the proposed transportation system such as the Singapore-Kuala Lumpur high-speed rail link. China-based developer Guangzhou R&F Properties

Co Ltd bought six plots of land in Johor Baru for a whopping RM4.5 billion from the Johor Sultan, making it a record deal.

“Developers have already expressed caution on the property market outlook over the next six months and are switching their product focus to affordable housing, where demand is still resilient and supported by a young demographic,” Maybank said, adding that its only pick in the sector was Glomac Bhd.

Then another developer from China, Country Garden Holdings Co Ltd, bought 22.26ha in Danga Bay for RM376 per sq ft. This was followed by news of Singapore-based company Hao Yuan Investment Pte Ltd (which is believed to be a China-linked company registered in Singapore) entering into a joint venture with Iskandar Waterfront Holdings (IWH) to jointly develop 15ha in Danga Bay. Maybank said in 2013, Country Garden’s “all in one go-style” of selling its 9,000 apartments at Danga Bay (in less than a year since land acquisition) had raised eyebrows of local developers. “Our ongoing discussions with local developers reveal that many have turned cautious on the short-term outlook of the Johor property market, especially in the overcrowded mixed use and high-rise residential project

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/// West Malaysia Property News

Injection of Landbank by Liew Possible, Says Eco World

Liew Tian Xiong Eco World Development Group Bhd (EWD) is undertaking a review of its business plans, which includes possible injection of viable landbank or property development projects by its major shareholder, it said in a reply to Bursa Malaysia, which had queried the unusual market activity of its stock recently. “Following the close of the mandatory takeover offer of the company by Eco World Development Holdings Sdn Bhd (formerly known as Maple Quay Sdn Bhd) and Liew Tian Xiong, the management is currently undertaking a review of the business, operations and future plans of EWD and its subsidiaries.

“Such review includes possible acquisition of additional viable landbank and/or property developments from third parties and/or from the major shareholders or persons connected to them, which may include any of those companies/assets held under Eco World Development,” said EWD in the reply. Tian Xiong is the son of Tan Sri Liew Kee Sin, president and chief executive officer of S P Setia Bhd. The Liew family is now a major shareholder of EWD, formerly Focal Aims Holdings Bhd. According to EWD, any such acquisitions will be announced accordingly. To date, no decision on any corporate proposal has been made by its board of directors. It said that among the reasons why its share price has been hiking of late is due to positive speculation by the media on the business and affairs of the group EWD’s share price rose from RM2.70 on Dec 10 to close at RM4.36. “Pursuant to the

announcement of the offer, there have been numerous articles and reports published by the media speculating on the business and affairs of the group. As highlighted, the company has not decided on any corporate proposal at this stage and is not aware of any corporate development relating to the group’s business and affairs that have not been previously announced,” it said. Speculation in the market was largely positive and included possible share placements or asset injections into the company. Recent news reports also noted that EWD may be a stock to watch in 2014 due to its potential growth prospects. “It is speculated that Liew Kee Sin will leave S P Setia much earlier than the contractual date in March 2015. That he will be injecting assets into EWD is one reason why the stock has been going up,” an analyst with Public Invest Research told The Edge Financial Daily.

KLIA2 Builders Promise to Complete in Time operational efficiency of the new airport would not be compromised.

Artist’s impression of KLIA2 UEM Construction Sdn Bhd and its joint venture partner Bina Puri Sdn Bhd issued a statement Tuesday saying they were on track to complete their KLIA2 work package – comprising main terminal building, satellite building, sky bridge and piers – in time. Managing director, Mohd

Razin Ghazali, of UEM Builders Berhad, the parent company of UEM Construction, said they were striving to ensure the physical completion of works and to obtain the Certificate of Completion and Compliance (CCC) for its portion by Jan 31, 2014. He assured that while meeting the deadline was the objective, the safety and

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The main terminal building, satellite building, sky bridge and piers package awarded to the JV partners is worth RM997 million. The package is one of 32 initial packages that was awarded by MAHB to various companies at the start of the project. Matthew Tee, group executive director of Bina Puri Holdings Berhad, said despite the many challenges faced, the JV partners were working hard to ensure the Operational Readiness & Airport Transfer (ORAT) process could commence on Feb 1, 2014.

E&O to Benefit From RPGT Exemption in Medini

Eastern & Oriental Bhd (Jan 6, RM1.91) Maintain buy at RM1.86 with a fair value of RM3: We reaffirm our “buy” recommendation on E&O with an unchanged fair value of RM3.00 per share, based on a 35% discount to our net asset value (NAV) of RM4.61 per share, including the signification accretion to its asset value from the Seri Tanjung Pinang 2 (STP2) project in Penang. Excluding STP2, our NAV stands at RM1.36 per share. Based on our channel checks, there are plans to exempt property developments in the Medini zone in Iskandar Malaysia from the real property gains tax (RPGT), given its strategic importance to the overall development of the region in Johor, which is still at the embryonic stage of its life cycle. If this materialises, it will provide a significant boost to E&O’s Avira Wellness development there (with gross development value of more than RM3 billion). We believe that Avira should attract positive demand due to the expected strong

reception for Phase 1, which comprises landed homes (208 terraced units). This is the first landed residential property development within Medini. Avira’s other landed homes in the pipeline include semi-detached and bungalow units. Medini also has the ability to draw strong interest from Singaporean investors due to Temasek Holdings Pte Ltd and E&O’s strong branding. Demand will be underpinned by the rising number of Singaporeans relocating to Johor given: (i) the affordable property prices compared to Singapore; and (ii) enhanced connectivity between Johor and Singapore via the Rapid Transit System (completion in 2018). All in all, the key catalyst to E&O’s share price lies with the regulatory approval for the commencement of the reclamation of STP2 (307.6ha), which is expected to be obtained after the Chinese New Year. The significant boost from the crystallisation of STP2 will result in a tripling of its NAV.

Seven New Malls for the Klang Valley This Year with VMY 2014, albeit at a moderate 6% pace in 2014, after the relatively strong 7.2% expansion projected for 2013.

Construction Contracts to Drop 16% This Year

“We expect to see consumers spend prudently, as they keep consumption within their budgets amid high household debt and the 14.9% increase in power tariff effective Jan 1.”

Artist impression of linkage between Nu Sentral and Kl Sentral monorail station The Klang Valley will see the entry of new shopping malls this year while others will go through a makeover that will add more space to the the retail property segment. Property consultant CH Williams Talhar & Wong Sdn Bhd managing director Foo Gee Jen, in a report, noted that this segment of the market could expect steady growth, as seven new malls and five refurbishments, with a total estimated net lettable area of five million sq ft, were completed by this year in the Klang Valley. “Should these malls be completed as scheduled, the total cumulative supply as of 2014 will register at about 49 million sq ft of net lettable area. “As most of the malls have preleased their retail space, it is envisaged that the overall retail sector will continue to remain strong in terms of occupancy and take-up, whilst rental levels are expected to remain the same,” he said. Foo pointed out that consumer spending in the country remained strong. “Shopping is a past-time for Malaysians,” he said. Citing a survey, Foo claimed that at least 20% of the urban population in Malaysia spent their weekends in shopping malls. “Going forward, I think people may be a bit more cautious, in light of the rising cost of living. However, demand for essential goods will continue to remain steady,” he said.

The air of caution over private consumption stems from expectations that consumers may start to feel the squeeze as subsidy rationalisation, electricity tariff hikes and a rise in property taxes kick in. However, Foo remained confident of consumer spending based on the Visit Malaysia Year (VMY) 2014 campaign, back-to-school period, New Year sale and the Chinese New Year season, with retail sales to grow moderately in the current quarter compared with the fourth quarter ended Dec 31 despite the rising cost of living. The retail property sector is still expected to see steady growth in 2014 despite the supply of new malls into the market and the rising cost of living, which is unlikely to deter consumer spending. According to him, the malls coming onstream this year include The Strand, D’Pulze, Nu Sentral (formerly known as Lot G, KL Sentral), Main Place (formerly Taipan Square/Newgate 21), Jaya Shopping Centre, Quill City Mall (formerly Vision City), Sunway Pyramid Phase 3, M Square, The Atria, Sunway Velocity Lifestyle Mall, Sunway Putra Mall (formerly known as The Mall) and CapSquare Mall (refurbishment). IOI City Mall is expected to come in next year. Artist impression of linkage between Nu Sentral and Kl Sentral monorail station. RHB Research expected consumer spending to continue to grow due to high savings, low unemployment and higher tourist arrivals in conjunction

Alliance Research chief economist Manokaran Mottain expected a rise in inflation in the first quarter of the year due to the increase in spending during the Chinese New Year period. “During the festive season, there is often more demand than supply and inflation will spike,” he said, adding that the full impact of the VMY 2014 campaign would only be felt towards the middle of the year. “This is because most tourists tend to come during the summer period, which is from the middle of the year onwards.” Malaysian Association for Shopping and Highrise Complex Management past president Richard Chan said there was still good demand for shopping mall space, adding that rental rates were “not going down”. “Shopping malls in city centres especially are charging threefigure-per-sq-ft rental rates. Why? Because the demand is there! But the important question is whether the supply is meeting the right demand. “For the mall managers, if you’ve done your research, then it should be no problem. But some developers don’t do this and the whole thing fails! Today, managing a mall is not just about managing property – it’s about managing a business.” Chan added that consumers are likely to be a bit more frugal with their spending habits due to the rising cost of living. “People might scale back on big-ticket items such as cars and property. But even then, some apartments are still selling well. Why? Because people still need them.”

Domestic construction contracts are expected to shrink by 16 percent to RM13 billion this year, on the back of the fiscal tightening and property cooling measures introduced by the government, according to Alliance Research Sdn Bhd analyst Jeremy Goh. “With fiscal tightening setting in, we believe that a slowdown in government related projects is inevitable as a more prudent spending stance is taken,” he noted in his report. On average, government related projects account for 72 percent of all the contract awards over the last five years. To address the narrowing current account surplus in the balance of payments, the government now carefully considers public sector projects – giving priority to low import content as well as high multiplier projects while those with high import content will be “sequenced”. “As for private sector contracts, we reckon that there is risk of a slowdown as well,” said Goh. “This follows from the various property cooling measures that will take effect this year such as higher Real Property Gains Tax (RPGT), higher minimum property price for foreigners, lower margin of finance as banks are required to use net selling price, and prohibition of Developer Interest Bearing Scheme (DIBS).” With the expected decline in construction activities, construction players will likely look for contracts overseas, he said. Meanwhile, Alliance Research has rated the sector neutral from overweight. “Our top large cap pick is Gamuda Bhd as its earnings growth is supported by the MRT and potential enhancement from the recent acquisition of Kesas. For the small caps, we like Ahmad Zaki Resources Bhd which is a beneficiary from the rollout of Bumi-projects,” added Goh.

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/// Contributor

Michael Yeoh The Mortgage Expert

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

2014

Property Strategies

f we were to look back in the year 2013, a lot has happen and many changes took place in the property industry. From the introduction of Bank Negaraâ&#x20AC;&#x2122;s Responsible Lending Policies to Property curbs such abolishment of DIBS and increase in RPGT, buying and investing in properties going forward will never going to be the same anymore. Looking at macro economics stand point the reduction of petrol subsidy, abolishment of sugar subsidy, implementation of GST and the latest but not confirm yet at the point of writing which are toll heights will definitely have negative impact on the property industry. As we embrace the year 2014, we need to establish a set of new strategies as property investors. It will be more challenging this year. Gone are the days where you just buy buy buy and sell sell sell as this might not work anymore. Planning and execution of the right type of property investment strategies is paramount important today. There will still be changes and new policies which will be implemented in 2014, we must be ready to adapt and move forward.

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Looking at the current scenario, I would say property investors will be switching their strategy instead of flipping to holding their purchase from mid to long term. This is good for retirement planning. I have always stressed that, learning from the right people or so call gurus who are expert in their respective industry is a must.

There are 4 important aspects that a property investor needs to learn before going into Property Investment in which I call â&#x20AC;&#x153; The Four Pillars of Property Investmentâ&#x20AC;? which is:-

1. 2. 3. 4.

Property Expert Mortgage Expert Taxation Expert Legal Expert

Learning from the right people or so call gurus who are expert in their respective industry is a must. For those of you who are especially new in Property Investment I encourage you to start the new year and learn from the 4 experts above before buying your properties.

Property Expert

If you want to know What, Where, When and How to buy? learn for a property expert. You must select the right Property Expert. The experience of the expert, the knowledge that he/she has in the subject matter and ultimately the person should have a healthy portfolio of properties

Mortgage Expert

Your purchase of property will never be complete if you could not borrow from the bank to fund your purchase. Here is where the mortgage expert will come in handy as he will be able to assist you and increase your chance in loan approval as getting a loan from the bank is getting more and more difficult by the day. As I always mention in my seminar, you need to plan for your mortgage approval. It is still possible to borrow from the banks but you must learn how the banks approve a loan to have a better chance. You will need to plan properly before submitting your loans to the banks.

Taxation Expert

Well, one of the ways to maximize your profit in property investment is through savings from Property Gains Tax. There are many ways that you can use effectively to maximize your profit and minimize your tax payable. In 2014, the property taxation landscape will change as the there will be increment since Jan 1st 2014 onwards. As such your strategy will also have to change.

Legal Expert

The last and also as important as the first 3 will be a lawyer. You will need this person to ensure that the documents that you sign are all in proper and protecting your interest. If you want to be a savvy property investor, instead of only depending on your lawyerâ&#x20AC;&#x2122;s advice it is also good to learn the legal aspects and also your rights as a property purchaser.

These 4 pillars are the most important elements in property investment. You must learn from the experts and prepare yourself before embarking into property investment in order to minimize your risks and maximize your returns.

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/// West Malaysia Property News

First Breakthrough for MRT Project

More Propeties for Auction extent, first time house buyers will be able to buy into properties,” he said. The announcements on the new real property gains tax (RPGT) rates and banning of the Developer Interest Bearing Scheme (DIBS) came during Budget 2014.

First breakthrough for MRT project The ongoing construction for the Sungai Buloh-Kajang Line within the Klang Valley Mass Rapid Transit (MRT) network marked an important milestone today after the first of nine Tunnel Boring Machines (TBM) made the MRT project’s first breakthrough at the underground KL Sentral Station worksite. The machine involved is an Earth Pressure Balance TBM named Semantan 1, which was launched earlier at the Semantan North Portal on June 13. The breakthrough follows an excavation of about 1.4km, boring a 6m diameter tunnel for trains that will head north towards Sungai Buloh. The machine will now undergo maintenance works at the KL Sentral Station worksite before being relaunched for tunnelling through to the Pasar Seni worksite next year.

They consist of four Earth Pressure Balance TBMs, which will be used for the Kenny Hills geological formation and five Variable Density TBMs for the Kuala Lumpur Limestone geological formation. The underground works contractor is MMC Gamuda KVMRT (T) Sdn Bhd. Currently, seven TBMs are operational for the MRT Project at various stages of tunnelling. They are monitored by personnel who are stationed directly above where the TBMs excavate. The first TBM was launched by Prime Minister Datuk Seri Najib Tun Razak at the Cochrane Launch Shaft on May 30, indicating the start of excavation works.

A total of nine TBMs will be used to bore the tunnel for the 9.5km underground alignment of the Sungai BulohKajang MRT Line with seven underground stations.

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The ban on Developer Interest Bearing Scheme (DIBS) and the hike in real property gains tax (RPGT) rates is likely to result in more property auctions in 2014, said National House Buyers Association (HBA) secretary-general Chang Kim Loong. “I will not be surprised if there will be a lot of properties for auction in 2014. A lot of people who bought properties for investment are now caught out with RPGT and DIBS,” he said. “So it now depends on your holding power. How long can you hold on to the property with the bank interest when the developer won’t be paying installments for you anymore? By 2014 there should be a lot of foreclosure cases,” he added. Chang said if there is a slow down in the property market, if buyers who bought properties with DIBS are not able to service their loans and end up in foreclosure, they would not even be able to repay their debts after the property is auctioned off and banks would not be able to recover the full loan amount. “Assuming there is a slow

down in the market, do you think the bank will finance 100% of DIBS at RM600,000 for a unit that is actually priced at RM500,000 without DIBS? The banks will also not be able to recover the RM600,000 (after the property is auctioned off) because they hiked it up in such a way for interest purpose,” he said. “If the property’s real price is at RM500,000 but was purchased at RM600,000, even after it is auctioned off, the buyer would not be able to clear his debt. He won’t have enough to pay off the debt because the actual price is RM500,000. The valuations are off already,” he added. Chang said the banning of DIBS and any permutation of DIBS should stabilise the property market and bring speculation to a more realistic level, as property prices would be more reflective of the market value. “From the last discussion I had with the Valuation and Property Services Department, they said the market has slowed down to a more moderate level and they expect that there will be a saturation point next year. I hope it becomes a reality and to a certain

The ban on DIBS was to prevent developers from incorporating interest rates on loans in house prices during the construction period. This means financial institutions are now prohibited from providing final funding for projects involved in DIBS. Meanwhile, RPGT rate is now 30% for gains on properties disposed within the first three years, while disposals in the fourth and fifth years are increased to 20% and 15% each, respectively. No RPGT is imposed on Malaysians selling their properties in the sixth year, though companies will be taxed at 5%. For foreigners, RPGT would be imposed at 30% on the gains from properties disposed of within five years, and 5% for disposals in the sixth and subsequent years.

Firms Eyeing KL-Singapore Rail Project

Several international firms, including Japanese ones, are eyeing the 330km Kuala LumpurSingapore high speed rail link project. Prime Minister Datuk Seri Najib Tun Razak said that during his discussions with leading Japanese corporations – three namely Hitachi Ltd, Sumitomo Corporation and Mitsui & Co – had voiced their interest in the project. He added the Government was still conducting a project feasibility study. Once completed, the international bidding process would be carried out. “The companies, including Japanese firms, could then take part in the process,” he told the Malaysian media. Najib said there were also Chinese and European companies that were interested in the high speed rail link project. Earlier this year, Malaysia and Singapore announced the rail link, which is expected to cut land travelling time between the two countries to just 90 minutes. Targeted to be completed by 2020, it is reported to cost about RM40 billion. Japanese Prime Minister Shinzo Abe, who held a bilateral meeting with Najib earlier, urged for Japanese technology to be considered in the rail link construction. “This is something which Malaysia should consider adopting as

Japan has the Shinkansen high speed railway system,” he said. Najib said there were opportunities for Japanese companies to take part in the development of Malaysia’s infrastructure through the process of open bidding. On the second wave of the Look East Policy, Malaysia is eyeing high value investments from the Land of the Rising Sun and those that are up in the value chain, the Prime Minister said.. This comes after the positive effect of the first wave of the policy which started in 1982 where Malaysians learned skills, values and the good work ethics practised by the Japanese. “I told Prime Minister Abe that we are not interested in getting labour intensive investments but are eyeing those that are high tech and that would create a high supply chain.. The Prime Minister also held discussions with Tokuyama Corporation which confirmed a RM5 billion investment for the second phase of its polysilicon plant in Malaysia. The company had already spent RM3 billion and invited Najib to launch the second phase some time next year. Japanese firm Toshiba has also confirmed its partnership with 1MDB to set up a high-tech cancer treatment centre, the Prime Minister added.

New Resort Proof of Iskandar Malaysia’s Growing Importance

Najib (fourth right) along with Mohamed Khaled (front, fourth left), Husni (front, third left) and Yakcop (third right) posing for a photo with the Legoland Malaysia Resort replica during the opening of Hotel Traders and Hotel Legoland here yesterday. Also present are Azman (second right), IRDA chief executive officer Ismail Ibrahim (front left) and Taman Tema dan Resort Sdn Bhd general manager Tunku Datuk Ahmad Burhanuddin (right) The opening of Hotel Traders, Puteri Harbour and Legoland Resort Malaysia bears testament to the government’s success in developing the Iskandar Malaysia economic corridor as a tourism and business destination, Prime Minister Datuk Seri Najib Tun Razak said. Since opening its doors to the public, the two attractions and the Puteri harbour Indoor Theme Park have received many visitors, both from within and outside the country. “Since its opening in June, Hotel Traders and Puteri Harbour Indoor Theme Park have received 90,000 visitors, while the Legoland Malaysia Theme Park, since its opening more than a year ago, has played host to about two million visitors,” he said when opening Hotel Traders and Hotel Legoland.

Nasional Bhd. Najib, who is also Khazanah Nasional chairman, expressed his confidence that the 249-room diverse theme Hotel Legoland would be an attraction to Iskandar Malaysia. Earlier, Najib, who arrived in Johor Baharu this morning, chaired the 69th Khazanah Nasional Board of Directors’ meeting at Hotel Traders. Also present were Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah, Menteri Besar Datuk Seri Mohamed Khaled Nordin, Khazanah Nasional deputy chairman Tan Sri Nor Mohamed Yakcop and managing director Tan Sri Azman Mokhtar.

Najib said Hotel Traders has been built on a 648-acre strategic location fronting the Tebrau Straits. Najib, who is also Finance Minister, expressed confidence in Hotel Legoland, located adjacent to the Legoland Theme Park, to woo many visitors. The 283-room Hotel Traders is owned and developed by Destination Resorts and Hotel Sdn Bhd, a subsidiary of Khazanah

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/// International Property News

INTERNATIONAL PROPERTY NEWS

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

New Airport Terminal by 2017

Tycoon, Offering HK$500m to Future Son in Law market with Parkview serviced apartments in Kuala Lumpur, which was developed jointly with Mayland Bhd.

Artist’s impression of Changi Airport’s Terminal 4, which will be ready in 2017 Changi Airport’s Terminal 4 ,which will be ready in 2017, will cost S$985 million (RM2.5 billion). “The work being undertaken by Takenaka Corporation includes building a new passenger facility to handle up to 16 million travellers a year and other related works,” Changi Airport Group said. T4 will have parking room for 17 narrow-body aircraft and four big planes. The parking stands will come with aerobridges for travellers to move from the terminal straight to the aircraft. If space runs out, travellers will be ferried by bus to the parking area across Airport Boulevard Road.

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A new multi-storey carpark and another open-air car park will cater for up to 1,500 vehicles. There will also be a double-storey holding area for taxis waiting to pick up arriving passengers. To improve access to and from the new terminal, a new road will be built to funnel traffic directly from T4 to the East Coast Parkway. A new bridge across Airport Boulevard Road will enable buses and other airside vehicles to move from T4 to new aircraft stands being constructed at a land plot near T3. According to Changi Airport Group, Takenaka Corporation also built Changi’s T1 and upgraded T2. It was one of five firms that had bid for the project.

Known unofficially as Cecil Chao Centre, the 1.8 acre (0.728ha) freehold project will now comprise four towers of luxury residences instead of serviced apartments, offices and a hotel as planned previously. Playboy property magnate Cecil In 2009, Kuala Lumpur City Hall Chao of Cheuk Nang (Holdings) Ltd granted development approval for three 50-storey blocks and Playboy property magnate Cecil a 36-storey block of luxury Chao of Cheuk Nang (Holdings) residences with a total of 879 Ltd — better known for his units. audacious HK$500 million (RM211.51 million) “prize” that Units in the three 50-storey awaits the man who wins his blocks will range from 600 sq ft lesbian daughter’s heart — is to 2,300 sq ft , with preliminary back in town for business and prices at RM1,500 psf. pleasure. He recently attended the Miss Tourism International The first phase, comprising two pageant in Putrajaya, while 50-storey towers, is scheduled attending meetings for a luxury to be launched in June, while residential project in the heart the third tower will be launched of the capital. about six months later. The project comes eight years after he began his foray into Malaysia’s real estate

Melbourne Shaping Up as Australia’s Biggest City Liveability Survey – the third consecutive year that the Victorian capital has been at the top of the influential index, since taking the title from Vancouver. Melbourne consistently scores highly in all of the EIU’s criteria and achieves perfect scores in the areas of healthcare, education and infrastructure. Ongoing investment in Melbourne’s worldclass infrastructure was highlighted in the report for keeping Melbourne at the top of the index. Melbourne is wellknown for its high quality of life, with its vibrant multicultural community, renowned arts scene and world famous food and wine, as well as Australia’s best shopping and leisure opportunities.

The Australian Bureau of Statistics (ABS) has projected that Melbourne will overtake Sydney as Australia’s most populous city by 2053. However, due to high migration and birth rates, this may occur as early as 2030. Victoria has a population of 5.6 million (2012). The ABS has included a number of alternative population assumptions for Melbourne around fertility rates, net overseas migration and life expectancy. The Victorian Government has acknowledged the growth forecasts by opening up housing opportunities in urban renewal precincts, growth areas and in rural and regional Victoria. The Government’s Melbourne Plan outlines action that is designed to create a

State of Cities, not just a city-state. “The State’s skilled and innovative workforce and competitive business environment each combine to make Melbourne one of the most dynamic cities in the world. Victoria contributes to almost a quarter of Australia’s GDP (Gross Domestic Product) despite occupying just 3% of its land mass and has maintained positive economic growth for 20 years. It is also currently the only state in Australia to hold a AAA credit rating with a stable outlook,” said Victorian Commissioner to South East Asia Tim Dillon. Melbourne was also recently named as the best city in the world to live in, according to the latest Economist Intelligence Unit’s (EIU) Global

Melbourne-Based Property Developer Sets Up Malaysian Office

Melbourne, Australia Melbourne-based SPEC Property has opened an office in Malaysia, to mark its maiden foray into the Asean region. Robert Evans, its International Business Manager, noted that the opening of the Pan-Asean SPEC Property office was timely considering the growing number of customers from this region that are residing in Melbourne. “We hugely value our share of buyers and we felt the time is right to open a Pan-Asean office to better serve our customers in Malaysia and the region,” he said. “Instead of being represented by agents, where possible we prefer to personally engage with our buyers.

The property developer said it targets to tap Malaysia’s rising demand for Australian properties as the increasingly wealthy populace scour for potential investment opportunities in quality homes in Melbourne – which is popular among Malaysians for its lifestyle and education. “Melbourne currently hosts the largest diaspora of Malaysians in Australia,” it noted. According to Brandon Ho, who is responsible for Malaysian operations, the company’s local office is located at The Curve in Mutiara Damansara, offering property management services, in which future and current homeowners will be able to remotely manage their acquisitions.

Melbourne was also recently named as the best city in the world to live in, according to the latest Economist Intelligence Unit’s (EIU) Global Liveability Survey – the third consecutive year that the Victorian capital has been at the top of the influential index, since taking the title from Vancouver.

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/// International Property News

Iskandar Waterfront Sells 15ha to Singapore Firm Property Consultants Sdn Bhd executive director V. Sivadas told StarBiz.

HK Property Sales Fall to 17Year Low as Tax Hike Bites

“There are only a few blocks of shoplots currently. It is good to have new and foreign developers entering the market and providing new ideas and products.

Hao Yuan director Du Jia Nam (2nd from left) exchanging documents with IWH chairman Datuk Mohd Othman Yusof. With them are Hao Yuan president Du Zhen Zeng (left) and IWH managing director Tan Sri Lim Kang Hoo Iskandar Waterfront Holdings Sdn Bhd (IWH) has sold 15ha of seafront land in Danga Bay for RM1.6 billion to a Singaporean firm, which is planning an RM8 billion development featuring, among others, Peninsular Malaysia’s tallest tower. The master planner for Danga Bay said in a statement yesterday that it had signed the sale and purchase agreement with Hao Yuan Investment Pte Ltd for six parcels of land, which would be developed by Pristine Sun Properties Sdn Bhd, a 60:40 jointventure (JV) between Hao Yuan and IWH. The price tag of RM1.6 billion works out to a land cost of 20% of the RM8 billion gross development value, within the range of 15% to 20% typically paid to a landowner in Malaysia. At some RM998 per sq ft (psf), the sale set a new benchmark for commercial land transactions in Johor Baru, besting even the landmark RM4.5 billion deal between the Johor Sultan and China’s Guangzhou R&F Properties Co Ltd, which was agreed at RM891 psf. Hao Yuan has drawn up plans for several high-end residential, commercial and retail properties for its project, including the tallest

tower in Peninsular Malaysia and a “landmark tower”. Hao Yuan’s portfolio in Singapore includes the Forestville Executive Condominiums, Sea Horizon and the Woodlands New Executive Condominium. The little-known firm is believed to be a Chinalinked company registered in Singapore. This marks yet another JV for IWH’s Danga Bay land-bank, which is undergoing rapid development as part of Iskandar Malaysia. A spokesperson for IWH said he could not disclose details on the plot ratio, gross floor area and net saleable area of the project, but property executives estimate a plot ratio of up to 10 times, allowing its owners to extract maximum value from the prized land along Johor’s coastline. IWH was also expected to ink more property deals in the coming months, as interest picked up in Iskandar Malaysia despite the curbs on speculation announced in recent months, market observers said. “Danga Bay hasn’t seen much development in the past 20 years. Up to now, it’s mostly been reclamation work,” PA International

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“Danga Bay needs to be transformed and developed faster, and this is made possible by new entrants,” he said. But Sivadas also underscored concerns about the pricing, which he felt would likely exceed what most of the local population could afford. “Almost every single development here is targeting the high-income group, which in Iskandar Malaysia isn’t large, as well as foreigners. Whether this is sustainable is a question mark. “A lot of the hype in buying over the past two years is riding on the expectation of the MRT (mass rapid transit) being built, but this is many years down the line,” he said. Johor Baru-based Sivadas added that he was puzzled by the proposed skyscrapers. “It doesn’t make sense, considering that Danga Bay is a low-density township,” he said. IWH, which is developing 1,700ha in Danga Bay, Desaru, Tebrau and Johor Baru, has shelved its US$300 million (RM957 million) listing to the final quarter of next year on worries that measures to rein in property prices could crimp demand from foreigners.

Hong Kong The number of properties sold in Hong Kong fell by more than a third last year to a 17-year low as a drastic increase in tax on home sales, introduced to tackle rising prices, easily outweighed discounts offered by the city’s property developers. The total number of sale and purchase agreements concluded in 2013 was 70,503, down 39% from 2012, according to the Hong Kong Land Registry. The value of deals dropped 30% from a year earlier to HK$456 billion (RM193.8 billion). Forecasters expect the downturn to continue this year. With tycoons like Li Ka-shing warning of the impact on his property business, Deutsche Bank said in November that Hong Kong home prices could drop up to 50% over the following 12 months. Designed to burst the city’s long-term property price bubble, last February’s doubling of stamp duty on residential transactions to as much as 8.5% of the sale value has yet to stop home prices from

creeping up. According to property service firm Centaline Property, overall home prices edged up 3% for the year, and have jumped 120% since 2008. But in a reflection on the scale of last year’s slowdown, tycoon Li, who owns property company Cheung Kong (Holdings) Ltd, said last November that his business had suffered its worst year in more than a decade. Major rival Sun Hung Kais Properties Ltd in September posted a 14% fall in full-year underlying profit for 2013, trailing forecasts and marking its first drop in annual earnings due to slow sales in Hong Kong. Prices in the former British colony are among the highest in the world. While Hong Kong first began taking steps to cool property prices in October 2009, no real impact had been seen until the February increase in stamp duty on residential transactions.

EPF Invests RM842m in UK Real Estate Company which comes with a fixed yield, investing in properties might see appreciation in the future.

High Demand for Luxury Rental in Western Australia

“Generally, the UK is getting out of recession and it is likely that its properties will appreciate in the future,” Ang said. The EPF has bought a 50% stake in a UK property firm which owns three shopping centres with Tesco as anchor tenant The Employees Provident Fund (EPF) has made its latest overseas acquisition by buying a 50% stake in UK-based Arena Trust, which owns three Tesco-anchored retail parks, for £156.5 million (RM842 million) from Aviva Investors. The Arena Trust assets are the 138,000 sq ft Arena Shopping Park, located to the north of Coventry city centre; the 116,000 sq ft Broadstairs Retail Park in Thanet, on the north east coast of Kent; and the Clifton Retail Park, located to the south east of Blackpool town centre. The 711,600 sq ft Arena Trust portfolio has an aggregate annual rent roll of £17.5 million, according to a report by CoStar News dated Jan 7. Arena Trust is anchored by long-dated Tesco leases, reflecting around 60%, or £10.5 million of the annual rent roll, with the balance on varied duration leases let to retailers including Marks & Spencer, Matalan, Curries, PC World and Next. The deal reflects an initial net yield of 5.4%, according to CoStar News, which describes itself as the leading provider of commercial real estate information in the UK and US. EPF general manager for public relations, Nik Affendi Jaafar, told The

Edge Financial Daily yesterday that EPF had conducted a thorough study on the investment and believes that the investment in Arena Trust is highly beneficial as it reflects a core-income play investment. “The EPF is always looking for opportunities to invest in real estate globally, which could provide a steady sustainable income in a low risk environment in the interest of our members’ retirement well-being. “This is in line with the Ministry of Finance’s approval that allows EPF to invest up to 23% of its asset under management in the overseas market. For real estate opportunities, we are focused on the attractiveness risk adjusted returns and strength of the assets’ cash flow,” said Nik Affendi. Fund managers view the EPF acquisition as positive, as diversification to other regions is crucial for the local pension fund. Areca Capital director Danny Wong said that EPF’s tie-up with Tesco is beneficial in the long run as Tesco is a global player. He said investing in retail properties would bring positive yield in the long run. Philip Capital fund manager Ang Kok Heng said that unlike investing in bonds,

EPF’s latest acquisition is its biggest after acquiring a 20% stake in London’s Battersea Power Station, a mammoth project which also involves Malaysia’s two biggest property developers, Sime Darby Property Bhd and S P Setia Bhd. The three parties formed the Battersea Project Holding Co Ltd (BPHCL) after inking a joint venture agreement in July 2012. Sime Darby and S P Setia equally hold a 40% stake in BPHCL. As at third quarter (3Q) 2013, EPF’s total overseas exposure constituted 20.39% of its total investment assets based on book value, a rise from 18.97% in 2Q. During the quarter, EPF made an additional US$2.5 billion in overseas investments, of which US$2.25 billion was channelled into global equity mandates and the balance invested in global bonds, infrastructure and private equities.

Solitude at Lancelin, Western Australia It is right on Lancelin beach and had six huge bedrooms, a heated pool, 500-thread count sheets and fishing gear - and for $21,000 a week it is all yours. Solitude, a $6 million mansion owned by businessman Kim Illman, is the cream of an opulent crop of holiday homes. Despite eye-watering fees, the demand for luxury home accommodation is still strong - in the South West they are booked up to 12 months in advance - and Solitude, which charges a $21,000 weekly rent during Christmas and New Year, is booked out during December and January. “The luxury homes are very exclusive … there are not very many places with the beach of that sort of quality, in terms of value for money and location - it is so pristine and beautiful,” said David Moyes, owner of Private Properties, which manages high-end holiday homes in the South West. Mr Moyes said 30 per cent of his guests came from Hong Kong and Singapore. One of the priciest homes on his books is Jahangir in Eagle Bay. It rents for $14,000 a week at peak season and has five bedrooms, five bathrooms and an infinity pool.

Joe White, of Real Estate Institute of WA South West, said most exclusive holiday homes were renting in areas such as Bunker Bay and Eagle Bay for between $1000 and $10,000 a week. Mr White said executive rentals in the South West were under pressure, with Bali increasingly become a more attractive escape. “For a similar or even cheaper price, people can have a luxury holiday in Bali with the added benefit of exotic food, in-house servants, dutyfree goods and a stronger sense of having actually been away on a holiday,” he said. In Broome, Koolinda by the Bay at Roebuck Bay rents for almost $1200 a night and is fully booked for the festive season. “The Broome holiday scene is dominated by self-contained, resortstyle accommodation, the supply of which has increased by 40 per cent since 2006,” REIWA Broome branch chairman Tony Hutchinson said. “This increase of supply coupled with a fall in tourist numbers has resulted in a very competitive market.”

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Contributor

/// Banking and Investment News

$₤ ¥ € BANKING & INVESTMENT

NEWS

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

Buy Property Now? What if the Demand Crumbles as Interest Rates Rise? he noted that many construction materials and services like architect fees, electrical wiring and plumbing charges could accrue the 6% GST rate. “The developer will not absorb these (GST-related costs) so (these costs) will be passed on to the buyers,” he told theSun. Richard Oon Those interested in going into the property market should do so now before the Goods and Services Tax (GST) starts in 2015, as prices are set to rise by some 4% when the new tax regime commences, said tax consultant Richard Oon. He pointed out that many construction materials under the soon-to-be abolished sales tax scheme are given a special 5% rate. However, under the GST scheme,

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Oon earlier gave a talk to house buyers on the impact of the 2014 Budget during the Penang International Property (PIP) Expo. Some 40 developers were present during the two-day event at the Straits Quay Convention Centre to showcase their properties. Those attending the seventh edition of the PIP Expo were also able to get updates on their registration for state low-cost and low medium-cost housing and register for Penang Development Corporation’s (PDC) affordable housing schemes.

Lock in before GST? What about crumbling demand?

government’s theme of a cleaner, greener, safer and healthier Penang.

In his talk, Oon said the best time to buy property is now, as those purchasing can lock in the prices before GST costs can be factored in.

He also called on developers to ensure top quality properties are built in the state.

He said developers cannot pass on such costs to the buyer prior to the implementation of the new tax. Officiated by Penang Housing and Town and Country Planning Committee chairman Jagdeep Singh Deo, the event saw some 40 developers exhibiting their properties. The expo also featured talks on property fraud, affordable housing for the people and the 2014 Budget, as well as a public auction of properties. In his speech, Jagdeep said that demand for properties in the state has grown, in line with the state

“I would like to commend developers who have ensured the production of top quality properties for they have put Penang on top of the list of the most sought-after properties in the country,” he said. Among those present at the expo were PIP 2013 organising chairman Ong Ban Seang, FIABCI Malaysia central committee member Michael Geh and IJM Land Bhd northern region general manager Toh Chin Leong.

Property Buyers to Return in 1H14, Says CIMB

CAP: Islamic Bank Loans Are a Rip-Off tenure. CAP calls on Bank Negara to protect borrowers by enforcing the following steps: •

While it believes buying appetite will return to the real estate market in the first half of next year (1H14), CIMB Research continues to be cautious on commercial properties given the existing glut in office space. CIMB Research analyst Terence Wong said in a report that occupancy for commercial properties in the Klang Valley stood at around 80%. “The situation can deteriorate if significant new supplies come onstream, particularly with the development of numerous mega projects by the government.” Wong said the harsh measures introduced in Budget 2014 to curb speculation in the property market have caused buyers to take a pause. However, he expects the buying appetite to return in 1H14 on the back of robust demand for residential properties, amid concerns of inflationary pressure from the implementation of the goods and services tax (GST). The impact of the policy changes by the authorities, though negative in the short term, should be positive over the longer term, as they will help remove froth from segments of the market, he said. In July, Bank Negara Malaysia capped the maximum housing loan tenure to 35 years instead of 45 years. Under Budget 2014, the government also raised the real property gains tax and put a stop to the developers’ interest bearing scheme (DIBS). It also increased the minimum purchase price of properties for foreigners from RM500,000 to RM1 million. “We believe that buying interest should progressively return in 1H14 as potential house buyers come to the realisation that property prices are unlikely to fall and that potential

inflationary pressure from the implementation of the GST in April 2015 could push up property prices further.” According to CIMB Research, buying interest should progressively return in 1H14 as potential house buyers come to the realisation that property prices are unlikely to fall. CIMB Research has maintained its “overweight” call on the property sector, picking Mah Sing Group Bhd as its preferred property counter, as well as UEM Sunrise Bhd for having the best exposure to Iskandar Malaysia in Johor. The research firm changed its rating on Mah Sing from “outperform” to “add”. “Mah Sing remains our top pick for the property sector, with its robust earnings growth, strong sales and active land banking being the potential rerating catalysts,” said Wong. He said despite the property cooling measures, Mah Sing’s sales should sustain in the fourth quarter of its financial year 2013 ending Dec 31 as its new flagship township, the RM5.13 billion Southville project in Bangi, has already been launched and is enjoying strong interest. “We believe that Mah Sing will be able to weather any slowdown well as most of its projects do not offer DIBS. Wong added that the company should be able to achieve its financial target as its landbanking efforts in 2013 have been strong. During the year, it acquired five pieces of land (three in the Klang Valley and one each in Johor and Sabah) costing RM841 million, with potential gross development value of RM8.9 billion.

Islamic personal loans offered by banks are a rip-off because the profit rate is much higher than even moneylanders, said CAP president SM Mohamed Idris Consumers Association of Penang (CAP) president SM Mohamed Idris said Islamic personal loans offered by banks are the most exploitative and should not be condoned reported by Free Malaysia Today. Idris slammed banks for profiteering from Islamic personal loans given to unwitting people, by implementing a flat-rate repayment and not using the capital balance reduction method. He said CAP’s study said a bank’s profit rate for Islamic personal loans could be as high as 42% per annum. “An Islamic loan can turn out to be more expensive than from a moneylender. “Bank Negara should not condone this Ah Long-like profit rate,” Idris told newsmen. Also present were CAP vicepresident Mohideen Abdul Kader and research officer Saw Pick Won. Idris said the interest for an Islamic personal loan could be advertised as 2% per month or 24% per annum. He said this would be the same rate charged by pawn brokers and much higher than the interest rate of 12% per annum and 18% per annum charged by licensed moneylenders for secured and unsecured loans respectively. For a 24% rate per annum, Idris said the borrower was actually repaying higher interest between 36.8% and 41.8% per annum depending on the loan

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Direct banks to withdraw loans where the rate of profit or interest is unconscionable; All loans should be calculated on the reducing balance method; and All loans should only advertise the effective rate of profit or effective interest rate so as not to confuse borrowers and for easy comparison.

CAP will be submitting an official letter to Bank Negara. Idris said the discrepancy in the different interest rates – one advertised and the other shown in the product disclosure – was common in hire-purchase and personal loans. But, he said, profit or the interest amount paid by the borrower was still the same. Irrespective of whether it is an Islamic or conventional personal loan, he said the 24% interest rate was actually 41.8% (one-year loan) and 36.8% (fiveyear loan) when the flat rate of calculating profit was being used. Under the flat rate, interest is calculated on the total principal. It does not take into consideration that after each repayment the borrower owes the company less each month. When interest is charged on the original principal, the poor borrower is made to pay interest on money that he has already repaid. Idris argued that the fairer method would be for the bank to charge interest on the balance that the borrower owed at the end of each month after the repayment had been made. “Bank Negara should compel banks to implement this method to protect borrowers, who are now short-changed,” he told newsmen.

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Back to Housing Bubbles - After the Storm In most economies, these macroprudential policies are modest, owing to policymakers’ political constraints: households, real estate developers and elected officials protest loudly when the central bank or the regulatory authority in charge of financial stability tries to take away the punch bowl of liquidity. They complain bitterly about regulators’ “interference” with the free market, property rights and the sacrosanct ideal of home ownership. Thus, the political economy of housing finance limits regulators’ ability to do the right thing.

It is widely agreed that a series of collapsing housing market bubbles triggered the global financial crisis of 2008 / 09, along with the severe recession that followed. While the US is the best-known case, a combination of lax regulation and supervision of banks and low policy interest rates fuelled similar bubbles in the UK, Spain, Ireland, Iceland and Dubai. Now, five years later, signs of frothiness, if not outright bubbles, are reappearing in housing markets in Switzerland, Sweden, Norway, Finland, France, Germany, Canada, Australia, New Zealand and, back for an encore, the UK (well, London). In emerging markets, bubbles are appearing in Hong Kong, Singapore, China and Israel, and in major urban centres in Turkey, India, Indonesia and Brazil.

The situation is more varied in emerging market economies. Some that have high per capita income — for example, Israel, Hong Kong and Singapore —have low inflation and want to maintain low policy interest rates to prevent exchangerate appreciation against major currencies. Others are characterised by high inflation (even above the central bank target, as in Turkey, India, Indonesia and Brazil). In China and India, savings are going into home purchases because financial repression leaves households with few other assets that provide a good hedge against inflation. Rapid urbanisation in many emerging markets has also driven up home prices as demand outstrips supply.

Signs that home prices are entering bubble territory in these economies include fast-rising home prices, high and rising price-to-income ratios, and high levels of mortgage debt as a share of household debt.

With central banks — especially in advanced economies and the high-income emerging economies — wary of using policy rates to fight bubbles, most countries are relying on macro-prudential regulation and supervision of the financial system to address frothy housing markets.

In most advanced economies, bubbles are being inflated by very low short and long-term interest rates. Given anaemic GDP growth, high unemployment and low inflation, the wall of liquidity generated by conventional and unconventional monetary easing is driving up asset prices, starting with home prices.

That means lower loan-tovalue ratios, stricter mortgageunderwriting standards, limits on second-home financing, higher counter-cyclical capital buffers for mortgage lending, higher permanent capital charges for mortgages, and restrictions on the use of pension funds for down payments on home purchases.

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To be clear, macro-prudential restrictions are certainly called for but they have been inadequate to control housing bubbles. With short and long-term interest rates so low, mortgage-credit restrictions seem to have a limited effect on the incentives to borrow and purchase a home. Moreover, the higher the gap between official interest rates and the higher rates on mortgage lending as a result of macroprudential restrictions, the more room there is for regulatory arbitrage. For example, if loan-to-value ratios are reduced and down payments on home purchases are higher, households may have an incentive to borrow from friends and family — or from banks in the form of personal unsecured loans — to finance a down payment. After all, though home-price inflation has slowed modestly in some countries, home prices in general are still rising in economies where macro-prudential restrictions on mortgage lending are being used. So long as official policy rates — and thus long-term mortgage rates — remain low, such restrictions are not as binding as they otherwise would be. But the global economy’s new housing bubbles may not be about to burst just yet because the forces feeding them — especially easy money and the need to hedge against inflation — are still fully operative. Moreover, many banking systems have bigger capital buffers than in

the past, enabling them to absorb losses from a correction in home prices, and, in most countries, households’ equity in their homes is greater than it was in the US subprime mortgage bubble. But the higher home prices rise, the further they will fall — and the greater the collateral economic and financial damage will be — when the bubble deflates. In countries where non-recourse loans allow borrowers to walk away from a mortgage when its value exceeds that of their home, the housing bust may lead to massive defaults and banking crises. In countries (for example, Sweden) where recourse loans allow seizure of household income to enforce payment of mortgage obligations, private consumption may plummet as debt payments (and eventually rising interest rates) crowd out discretionary spending. Either way, the result would be the same: recession and stagnation. What we are witnessing in many countries looks like a slow-motion replay of the last housing market train wreck. And, like last time, the bigger the bubbles become, the nastier the collision with reality will be. — Project Syndicat. Written by Nouriel Roubini who is the chairman of Roubini Global Economics and professor of economics at New York University’s Stern School of Business. This article was published in The Edge Malaysia, Dec 9-15 issue.

What to Expect in 2014 Malaysian consumers, will be directly affected by electricity price hikes.

Economists warn Malaysians to brace themselves for higher costs of living and aggressive price hikes in 2014, as a result of government measures to address a national fiscal deficit. 1.

Budget 2014 The national budget for 2014 is structured toward resolving Malaysia’s growing debt problems. As announced by Prime Minister Datuk Seri Najib Tun Razak, the government will start implementing drastic measures to alleviate investor concerns and promote economic growth and transformation. “The Malaysian economy must remain resilient in order to lay the foundation for future growth and prosperity,” he said. Highlights of this year’s budget plans include the allocation of RM578 million for the construction of lowcost flats consisting of almost 16,500 housing units. The National Housing Department will facilitate the lowcost housing project. A proposal to offer a special tax relief of RM2,000 to taxpayers who earned up to RM 8,000 monthly in 2013.

Subsidies A higher cost of living, brought about by the ‘gradual restructuring’ of the government’s subsidy programme, is something that Malaysians should ultimately prepare for. According to CIMB chief economist Lee Heng Guie, a cutback in fuel subsidies – along with the abolition of sugar subsidies – will result in likely price hikes. What the government is able to save from the restructuring program will be reallocated – in cash – to development projects.

Fuel Prices Fuel prices will keep increasing this year, again as a result of the government’s subsidy rationalisation program meant to address the fiscal deficit. As petroleum products are among the nation’s most heavily subsidised, the restructuring of subsidies is expected to trigger constant fuel price hikes.

Inflation Inflation will spike by up to 2.8% in 2014, parallel to rising prices of consumer goods, according to economists. The increase will mostly impact alcoholic beverages and tobacco goods.

GDP Growth The government is expecting the national GDP growth to reach 5% to 5.5% per cent in 2014. Economists gave a more modest figure in light of Malaysia’s fiscal deficit burdens. They project a GDP growth of roughly 4.5% this year.

Average Salary Workers can relax a bit despite projected price increases because the average salary of Malaysian employees is expected to increase 5.7% this year, higher than the increase of 5.3% in 2013. The growth outlook for local businesses also remains positive.

Housing More Malaysians will be able to afford their own homes, thanks to government housing programmes aimed at the construction of lowcost housing units. For 2014, plans to build an estimated 223,000 new housing units have been set in motion, carried out in cooperation with the private sector. The National Housing Department will be allocated RM578 million for building additional low-cost flats.

3 Real Estate Resolutions for 2014

Every January, people around the world examine the victories and foibles of the previous 12 months and vow to make smarter choices in the year ahead. They assess the numbers on the scale or additional centimeters on their waistlines, the digits in their bank balances, the hours spent with work and with loved ones. Why should your real estate portfolio be exempted from such scrutiny? Here, three real estate resolutions to consider for 2014.. 1.

Search outside your comfort zone for the best investments Everyone loves owning property in splashy global hotspots like London and New York City, but just because you’re the most familiar with these cities doesn’t make them the best buys. Prices are high and new condos in prime locations can be hard to come by. For medium-term investments with high potential for significant capital gains, consider budding metropolises—for example, Atlanta, Georgia in the United States—that are attracting new technology companies and educated young professionals and families.

Look beyond the developer When considering resort properties and branded residences, it’s not just the quality and reputation of the developer that matters. The operator may be a different entity, and a poorly run property could compromise your ability to rent or resell your property.

Go green in 2014 Subsidies that reduce the price of water and electricity in many Asian countries are fading out, so if commitment to the environment isn’t enough to drive you to sustainable developments, commitment to your bottom line should be. More and more developers are designing energy and water efficient buildings at the same price points as conventional ones, so there’s no reason to fund resource-guzzlers.

Electricity costs Effective January 2014, electricity prices are also expected to soar along with those of oil, gas, and coal. The government plans to ration subsidies in line with its goal to become a highincome nation by 2020. Almost 30% of the domestic population, or 1.89 million

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