Property Hunter Issue 52 - March 2014 by Sam Lee

/// COVER STORY

Projects Lined Up for 2014 in Sabah /// HOT TOPIC Positive Growth Recorded in Property Sector for Sabah’s Capital

MAR 2014

ISSUE 52 RM5.90

/// EXCLUSIVE INTERVIEW Special Focus on the Future Direction of the Town Planning and Infrastructures in Kota Kinabalu /// EXCLUSIVE INTERVIEW Tomorrow’s Tycoon Is Property Investment a Gamble or a Calculated Risk?

The Worst Places to Invest in 2013 • Goods & Services Tax and The Property Investors Year of Change for Property • East Malaysia Growth Corridors: KK and the Rest Inside this Issue: Over 480 Properties for Sale & Over 190 Properties for Rent

06  07 | Cover Story /// Contents

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What’s inside... 14

Cover Story Projects Lined Up for 2014 in Sabah

Exclusive Interview Tomorrow’s Tycoon - Is Property Investment a Gamble or a Calculated Risk?

Feature Property Event : New Development by Green Field : Upcoming Jesselton View Condo Offers Luxury at Hilltop, Sabah

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

Hot Topic Positive Growth Recorded in Property Sector for Sabah’s Capital

Hot Topic The Worst Places to Invest in 2013

Hot Topic Year of Change for Property

Feature Property Event Chinese New Year Celebrations

Hot Topic Office to Hotel Conversion on the Rise in Malaysia

Hot Topic More Cooling Measures Will Dampen Property Market

Hot Topic Cautiously Optimistic Outlook with Property Developers in Iskandar Expecting Tough 2014

Hot Topic The Latest Luxury Condo Project Launch

Hot Topic Boom for Penang Hotels as Higher Demand for Rooms Expected

Hot Topic Healthy Growth in Residential Market

100

Hot Topic Top 5 Most Expensive New Condominiums in Kuala Lumpur

102

Hot Topic Lending Curbs Hurting Genuine Buyers

106

Hot Topic Delay in RM1 Million Floor Price for Foreigners

14 Projects Lined Up for 2014 in Sabah

The property market in Kota Kinabalu remained on-track for steady growth following the uptrend in the last two years.

50 The Worst Places to Invest in 2013

All of its selections of the worst property markets for 2013 were in Europe, with just one making it onto the list for the second year running.

70 More Cooling Measures Will Dampen Property Market

The mid -to high-end residential market in Kuala Lumpur is expected to “self-correct” in the next six to 12 months..

Sneak Peek of April Issue Feature Interview

Inside the Minds of Sandakan Business Personalities

Hot Topic

Discovering the Hot Spots In and Around Sandakan

Hot Topic

Why is Sandakan the Golden Cash Crop Town Sabah? Who are the Main Players in the Market that Drives the Property Sector?

Hot Topic

In-depth Look Into Affordable Housing in Sabah

/// Cover Story

Projects Lined Up for 2014 in Sabah

Photo by Rustam Razali aka Ankol Tom

efore Kota Kinabalu became a property hot spot, shop houses block along Jalan Gaya or formerly known as Bond Steet were selling at around RM1.2 million and have shot up to figures in excess of RM7 million. The property market in Kota Kinabalu remained on-track for steady growth following the uptrend in the last two years. And real estate situated at prime locations continues to command high prices. Demand for purpose-built office space has been encroached by supply from signature office developments in fringe locations and suburban centres. And there has been some appreciation in the market value of these properties. The cityâ&#x20AC;&#x2122;s retail sector will also remain stable with established retail malls. Due to limited new supply and hikes in land and building prices, new housing developments are getting more expensive. Landed homes with high prices are also beyond the range of most first-time home buyers. Hence, a lot of developers are switching gears and focusing more on developing affordable homes instead.

/// COVER STORY

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The Kota Kinabalu City Hall (DBKK) is also expecting to complete the final draft of its Kota Kinabalu Local Plan 2020 with the aim to transform KK City into a world class Nature Resort City. The rapid pace of development taking place the city also shows there is a clear need for planning approval processes and procedures to be more efficient and effective. The announcement of the Budget 2014 has caused the property industry a slight setback. But the market is expected to bounce back in the second half of the year with more property launches. Local giants like Kinsabina Group of Companies will be launching their Royal Kinabalu, Titanium Techonology Park, Riverside Residence, and City Point Shopping Mall & Hotel; Mah Sing Group which recently launched Sutera Avenue (The Residences), and the highly anticipated Kota Kinabalu Convention City has started construction work; and Wah Mie Group launching Setia Walk, located in Sandakan. High rise residential buildings are the current trend. Developers such as Jesselton Group, behind Jesselton Twin Towers and Jesselton Heights;

Remajaya, the maker of Bay 21 TOO; and Pacific Sanctuary Holdings of Pacific Heights (Phase 2) are also in the scene. Other residential properties that are up and coming in Greater KK this year include condominiums in Bundusan by Fine Landmark, SC Land and Sara Timur Realty, a high end condominium in Sutera Harbour by Xing Asia Impel, and condominiums in Luyang and Kepayan by Wow Property. Mixed developments will also be a popular feature this year. Bestmart Development will soon have a mix development in Bundusan and Topwira Corporation will also have a new mix development in Damai. Other properties this year is Desa Heights in Putatan by CST Realty, Harrington Suites a premium condominium by Interland Properties, Greenfield Residences by Greenfield City, Jesselton Quay by SBC Corporation, Ria Jesselton by SBJ Corporation and Ashton Tower a condominium project in Kelombong by SCP Property. Furthermore T1@Bundusan; T2@ Tawau by TBMC Development, Park

Avenue by Eco Evergreen; Jesselton View, 8 Avenue, and One Jesselton by Bina Puri; 360 Boulevard, Sky City in Karamunsing by Homesign Network; and C Park, Eco Park, and Business Suite in Labuan by Chang Cheng Realty. Many of the mention developers will be showcasing in the third edition of the Property Hunter Expo (PH Expo) held on March 7 to 9, 2014 (10:00am to 8:00pm) at the Sabah Trade Centre will showcase just that. With 10 new project launches and 60 developers will be featuring their latest projects around Malaysia, Singapore and Australia. PH Expo strives to educate the public by presenting a variety of property investment opportunities available in the market, as well as to educate keen property investors and homebuyers with the latest information on industry movement. The Expo also aims to bring investors and home buyers to property developers with the ever growing demand in premium property.

Harrington Suites

Jesselton Twin Towers

Ashton Tower

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/// Cover Story

Importance of Preserving Our Local Heritage Text and Photos by Richard Nelson Sokial

Hill. Visibility of the Atkinson Clock Tower is important to Kota Kinabalu as this is now the only distinguishable feature that links back to the early origins of this city.

Preserving our local heritage is becoming extremely crucial not only for aesthetic and historical purposes, but also to preserve our identity and way of life as Sabahans. Sabah’s heritage is unique because it is a result of more than a century of interaction between British colonists, the Chinese immigrants, the Sikh and Punjabi peacekeepers, inland native people and seafaring communities such as the Bajaus and the Iranun. Preservation of heritage in Sabah consists of two main components. We need a better policy protection and guidelines supported and implemented by the Sabah government. Plus, we also need to promote heritage appreciation and understanding among the local community and business owners, followed up with basic

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guidelines and rules on how to maintain heritage sites and building within their own capacity. This two components must go hand-in-hand otherwise neither one can be truly effective to protect and preserve heritage aspects on its own. It was a shame that when Jesselton was built after the war, there was no attempt to reconcile the town’s subsequent planning with the surviving public buildings and landmarks such as the Atkinson Clock Tower and the Old Post Office. As such, now historical buildings such as the Old Post Office can hardly be seen from a panoramic angle which is a lost opportunity for tourists visiting the city. The Atkinson Clock Tower itself is the only visible landmark left due to its location on the slope of Atkinson

The greenery of the Signal Hill ridgeline is a natural heritage that also goes back to the early days of Jesselton. Maintaining the historical importance of Prince Phillip Park in Tanjung Aru is important. The park is currently run down and needs subtle upgrades that do not alter the appearance and original landscape of the park entirely. Having some infrastructural improvements at the beachfront is good as long public access is guaranteed. The raw sewerage problem currently flowing out onto the beachfront and eminent traffic congestion must be solved. No matter what KK city planning does in the future, this green sideline – unbroken by high rise development should be maintained. Heritage tourism is still an untapped resource in Sabah’s local industry. It can be one of the sustainable tourism products which will also help rejuvenate the local craft and small businesses in heritage zoned areas. However, the government must be willing to learn the intrinsic values of heritage preservation – and be open to implementing suggestions, new ideas and recommendations by NGOs such as Heritage Sabah in order to make

sure that the heritage sites continue to be protected and presented in a respectable way for tourists and locals alike. Infrastructure such as better road access, better lighting, appropriate signage and supporting public amenities are a must in order to make the experience of visiting heritage sites more meaningful and value-for-money. For any business to succeed, it depends on continued demand for a brand or product. The same case for tourism in Sabah, if there is no concise long term planning that balances between the need for commercial profit versus an authentic culture, environment and hospitality, tourists will only come once but will never return. The business will die and affect the livelihood of all those who depend on it. A lot of jobs in Sabah depend on the tourism industry, therefore it is of utmost importance to Sabah that the tourism industry introduces and implements sustainable policies for the benefit of everyone concerned. Architectural and Cultural Heritage Society of Sabah, otherwise known as Heritage Sabah advocates for the protection and preservation of cultural and historical buildings and sites in Sabah, to create public awareness and appreciation.

/// 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

Labuan to Have New Landmark Building

Oceanus Waterfront Mall to Open on 17 May Developers of Oceanus Mall here has given its assurance to keep a tight deadline as it plans to open for business this May. Waterfront Urban Development Sdn Bhd claimed its hotel zone, designer suites condominium and commercial lots are now fully completed. “The internal tiling, floor screening, internal plastering to brick wall, external ceiling and all related internal works have hit 100% completion.

Aerial view of Labuan in 2013 An 18-storey shopping mall and hotel will be built around the compound of Billion Waterfront Hotel in Labuan. Chief executive officer of the hotel, Shamsul Sahari, said the billion ringgit project would occupy six acres of land. “There will be a convention hall in the new building as the demand for convention hall usage here in Labuan is high. The current convention hall in the Labuan Financial Park is no longer sufficient to meet all the demands for function, meeting and others. “An exhibition hall will also be set up in the new building,” he said, adding

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that the plan would be finalised within three years before it could be implemented. Shamsul added that the new building would be a landmark for Labuan. He also disclosed that they are now renovating another 80 rooms in the hotel which are expected to be finished by June or July this year. Billion Waterfront Hotel currently has 95 rooms. When asked about the occupancy rate in the hotel, Shamsul said that the rooms are almost 95% booked each day due to the booming oil and gas industry.

“Fine tuning for all the minute works are in progress before handing over to owners for renovation works,” it said in a statement following a followup visit by Mayor Datuk Abidin Madingkir to the mall. Madingkir was also given the assurance that Waterfront Urban Development will take measures to ensure cleanliness and that traffic flow will be controlled once the mall opens. “We also request the public to bear with the traffic along the

Ocenus Waterfront Mall, Kota Kinabalu, Sabah waterfront project for a few more months,” it appealed. The integrated complex is expected to house various famous brands such as the Hard Rock Cafe, the J.W. Marriot, Nandos, Sushi-Tei & Yuzu, Jelly Bunny, Dorothy Perkins, Bonia and Selangor Pewter. Among those present during the mayor’s visit to the mall was Waterfront Urban Development Executive Director, Johnson Koh, and senior officers from both City Hall and the developer.

The Residences: Sales Launch of RM502 Million

RM2.5 Billion Project: Now YB Says SEDIA Wrong Again Diving Training Centre in Sanya City of the Hainan Province. The collaboration between Diving Best and SMR is the result of successfully matching the China investors with a local business partner after their first meeting with SEDIA.

Chan Foong Hin, Sri Tanjong Assemblyman

The Residences actual show unit by Mah Sing Group Mah Sing Properties, a wholly-owned subsidiary of Mah Sing Group, held a sales launch for The Residences, Sutera Avenue at KK Times Square from the 11th to 12th January. The first day of the event featured a talk by property expert Ho Chin Soon.

three towers, namely Tower 1 (100 units), Tower 2 120 units) and Tower 3 (100 units).

the ground floor, and wide frontage units served by escalator access to each floor.

“We are launching Tower 2 in the upcoming sales launch. Towers 1 and 3 have yet to be launched,” she said.

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.

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.

Ho informed that construction of the three serviced apartment towers had commenced, and development was slated to be completed in 36 months.

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

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-ofits-kind street mall retail concept with a 50-feet wide pedestrian boulevard on

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 two-storey retail shops had been sold.

Reports of a company from China which will develop a RM2.5 billion project in Sipadan was a mistake. According to Chan Foong Hin, Sri Tanjong Assemblyman, the project will be developed in Tawau. Chan clarified the statement made by Sabah Economic Development and Investment Authority (SEDIA), saying that the actual location is alongside Kalumpang River in Balung, Tawau. Tawau has the best potential to be developed as a tourism hub, he said adding that the strategic location of the Sipadan Mangrove Resort (SMR) has caught the eye of Dving Best, a China company which wants to further expand and develop Tawau as the new gateway to Sipadan Island. It was in fact an expansion of the existing SMR, an entry point project listed under the Regional Cities and Corridors programme with an estimated investment value of RM491 million, and set to generate RM114.9 million in Gross National Income in 2020.

The location of the proposed project was decided on private land belonging to SMP, with a land size of 280 acres and was chosen for its close proximity to Sipadan Island, 35 minutes by speedboat. The proposed project envisages development into five ones, namely residential area, commercial development, high-end resort, diving school and administrative centre. The estimated RM2.5 billion project is expected to welcome one million tourists annually while providing 4,000 jobs. “From an initial local investment of RM491 million (SMR) and now expanded to a RM2.5 billion China investment project, I hope the local authorities can upgrade the infrastructures of Tawau in line with proposed development and reduce any unnecessary red tape to the project which can bring economical betterment to the district. Besides, Esscoms establishment is vital to ensure security of the tourism zone,” he said.

Diving Best in known for running the Sanya

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/// East Malaysia Property News

Young Working Adults Deterred From Buying Houses in Sarawak

Draft KK Local Plan: Second Public Consultation in April needs to be determined accordingly.

adult in the face of increasing market price. Married couples, however, could bear the loan installment together.

Eager youth wanting to buy property during an exhibition The significant rise in cost of living this year has deterred many young working adults from buying their first house. A survey of 20 young working adults between 25 and 35 years old yesterday, found a mixed response to buying a house this year. Many expressed their concern about the rising cost of living as the stumbling block to acquire a suitable home, citing income sustainability in monthly expenses as the main worry. The respondents ranging from executives, bankers, teachers to doctors and engineers all agreed that purchasing a property was considered an investment. However, 80 per cent of them said they would hold back their decision to buy a house amid the rising cost of living and property prices. “I think many young adults will find it challenging to purchase a property because it is just too expensive. The cheaper ones would be located far in the city outskirt which may lack convenience in terms of workplace distant. “I expanded my search to

Kota Samarahan which is closer to my work place. I found a housing project there and it took me roughly three months to take the plunge. The price of the particular unit that I wanted went up by RM10,000 in a span of two weeks after I first found it. I could barely afford the price tag but I jumped on the purchase for fear it may go up even more,” university lecturer Chai Shin Yi said. Advising young working adults to make their own judgment whether they could afford their dream home, the 31-year-old said she was paying about RM1,700 monthly on a 30-year loan for a house costing RM375,000. She said a similar housing unit in her area had risen to over RM400,000. “If you can afford it, why not but I am already feeling the pinch when it comes to day-to-day expenses. I’m a bit worried about the implementation of the GST (Goods and Services Tax) in April next year and how it will affect my expenses,” she lamented. Dr Deburra Peak Ngadan, 33, currently pursuing her PhD in Public Health, said that 2014 would not be a good year for purchasing a house for a single working

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“Many of my colleagues are concerned. The clash between the need to invest against the high prices can be depressing to many young working adults compared to their more established peers. I hope to see more beneficial housing schemes for the lower and middle class young working adults. When she bought her semi-detached single storey house in 2011, Deburra acknowledged that her house was already expensive when compared to similar units in previous years. Industrial Hygiene (1) engineer Harold Wilson advised those who could afford a house to consider buying one as a long term investment. He also urged the lower middle income group to make enquiries with the government on various low-cost housing schemes. “In bigger cities, especially Kuala Lumpur, it is almost impossible to acquire a property this year due to the rising cost of living. Most of the under 30s working adults are either burdened to pay their study loans or still struggling to find a good paying stable jobs (due to lack of experience),” he said. The 33-year-old recently bought an intermediate corner single-storey house priced for RM308,000 in Miri.

Satelite imaging of Kota Kinabalu in 2001 The 2nd Public Consultation for the final Draft Kota Kinabalu (KK) Local Plan 2010 is expected to be held in April this year. Mayor Datuk Abidin Madingkir said the comprehensive review and update of the existing Draft KK Local Plan 2020, which has gone through the processes of the 1st Public Consultation and Public Hearing last year, is expected to be completed in March. “City Hall was not able to proceed with the second Public Consultation of the Draft KK Local Plan 2020 as planned in November last year as there were some planning elements that needed to be added and resolved. “These were also done following the requests from professional bodies, NGOs and government agencies to include clear Planning Policies and Guidelines for Ridge Conservation, Special Residential, Heritage Site and Mixed Use Development, road and transportation,” he said. Madingkir added that the Specific Land use zoning to replace the lands which have been earmarked as ‘are under investigation’ in the Draft KK Local Plan 2020 and the Development Setback Guidelines also

He further said a special committee has been formed by City Hall that includes representatives from professional bodies (PAM, IEM, AKIM, MIP, ISM), Sabah Heritage, Sabah Tourism Board, Shareda and from the State and Federal government agencies to resolve these additional planning matters. According to Madangkir, City Hall is expecting to complete all amendments before end of March this year to enable them to conduct the 2nd Public Consultation for the Final Draft KK Local Plan 2020 in April. He also said the planning evolution and accumulation due to the rapid pace of development taking place the city also shows there is a clear need for these planning approval processes and procedures to be re-looked creatively. “This is to enable them to make bold changes to facilities the processing of development proposals in a more efficient and effective manner in order to keep pace with the expectations of the people. “As for the current planning approval process, it is sometimes quite a complex web of statutory and administrative challenges which require a comprehensive assessment of environmental, physical, traffic, accessibility, basic infrastructures and utilities, especially when it involves a high-rise development and also development on the hillside area,” he said.

Retailers Rush to Expand in Kota Kinabalu “Dubai and Singapore have opened their waters and attracted the best talents to develop their countries. They managed to reel in many investments worldwide,” he said.

Property Sector Will Continue to Grow Positively

Comparing Kota Kinabalu to Iskandar Malaysia, Najmuddin said the latter is a greenfield venture which will take years to prove itself, while Kota Kinabalu is already a city with its own attractions. The soon to complete KK Times Square II which consist of IMAGO Mall and The Loft Suites Retailers are rushing to expand their presence in Kota Kinabalu as the retail sector in Sabah’s capital is set to grow 5% to 10% in the next few years. “Parkson has been in Kota Kinabalu since the 1980s. The market there is good. Currently, we have two stores — one in Karamunsing and another in One Borneo Mall,” Parkson Holdings Bhd general manager Loh Chai Hoon told The Edge Financial Daily. Parkson is slated to open its third store in the soonto-be launched Imago Mall, which is owned by Asian Pac Holdings Bhd. The Imago Mall, to be completed in the fourth quarter of this year, has attracted international and local retailers, some of which are making their debut in Kota Kinabalu. “This will be our largest store in Kota Kinabalu. The opening of our third store in Sabah demonstrates our commitment to grow our presence there,” said Loh. The country’s largest department store operator does not rule out the possibility of opening another store in the city. “We will look at various factors before we plan on expanding and bringing in one more outlet into Kota Kinabalu, but we are open to it if the opportunity arises,” said Loh.

Making its first entry into Kota Kinabalu is Aeon Fantasy (M) Sdn Bhd, which will be opening its store in the Imago Mall. “This will be our first project in Sabah. Our concept is very new and it will bring a different experience to the local community,” managing director Chong Swee Ying told The Edge Financial Daily. She said opening an outlet in Sabah is in line with the company’s strategy of expanding in Malaysia. “We plan to open at least three outlets there,” she said. Bonia Group and Mcat Box Office Sdn Bhd are also making their first foray into Sabah through their brands Sembonia and MBO Cinemas. Valiram Group’s Charles and Keith, Victoria’s Secret and DNP Clothing Sdn Bhd’s Dorothy Perkins, Miss Selfridges and Topshop are among the retailers that are bringing local and international brands into Kota Kinabalu. Other retailers include Swarovski (M) Trading and Padini Group. On Kota Kinabalu’s development as a port and commercial hub, Asian Pac chairman Tan Sri Megat Najmuddin said Sabah should further develop itself as a commercial hub.

Najmuddin is bullish that the annual retail spending in Kota Kinabalu will exceed RM1.4 billion. “The Kota Kinabalu International Airport is the second busiest airport in Malaysia with about three million tourists a year,” he said. Najmuddin said tourists from South Korea, Japan, Taiwan, Brunei and Hong Kong visit the city that provides investment opportunities and growth for the whole state.

WSG Group Managing Director, Datuk Susan Wong Property development may have to cope with escalating price of construction material but overall the sector is expected to continue to grow positively in the coming year of the Horse, said a leading property developer. Mega Sunwise Sdn Bhd Managing Director, Datuk Susan Wong said, “Despite increasing cost due to costlier material, it does not mean it is the end of the world for the sector.” “It would be prudent to say that implementation of cost saving measures would be a priority for developers apart from having to work extra hard in marketing the products. “We have to be selective and more efficient in handling cost. It is important to avoid wastage that will add to the cost,” she said on her expectation for the coming Chinese New Year. Wong said that to simply increase the price of houses would only disturb the market as it makes it difficult for people to own house, adding that commercial banks are also stringent in processing and approving housing loans. Financial institutions had to adopt such measures to avoid people from being overburdened with loans or over investing. “It is good for the people although it may affect our marketing. Therefore, we need to make sure the price is affordable and work hard to find buyers now,” she said adding that change must also be made on those little things such as to the marketing brochures in order to attract buyers. “However, overall the situation of the housing development industry in the state will remain positive. Furthermore, it is said that whenever the year of the Horse comes, there will be success,” she concluded.

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/// East Malaysia Property News

SALES GALLERY

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

8am - 6.30pm 8am - 12.30pm

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/// EXCLUSIVE INTERVIEW

Tomorrowâ&#x20AC;&#x2122;s Tycoon - Is Property Investment a Gamble or a Calculated Risk? Find out how property entrepreneurs in their 30s are building wealth fast and how you can too!

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/// Exclusive Interview

From a Room Tenant to a Landlord for Many Jacky Liaw, age 31, discusses the benefits of letting your properties

xecutive Director of Airworld Travel and Tours, Jacky Liaw was previously a student at Monash University in Bandar Sunway. He never had much interest in property and real estate, but he noticed how a lot of students (including himself) rented a room at nearby housing estates. He soon realized the business potential of buying and renting houses in the area. And in 2007, at the tender age of 25 years old, he bought his first property in Bandar Sunway. He said, “People always tell us to never put all our eggs into one basket, when it comes to buying properties. But I believe that you should so that you will be able to earn more money at a faster rate. When I purchase properties I always make sure that I am familiar with the area and Bandar Sunway was my home for many years. I know the market well and I was confident that I could create a business out of it.” He adds: “After I bought my first house, I realized that if I could purchase two more houses around the area I could make enough rent to cover my bank loans. So that’s what I did. And I ended up buying six properties in Bandar Sunway.” Many landlords think that renting to students is risky business and not worth the headache. But for Jacky, they are the perfect tenant because he sees an opportunity to make more money. He has a strict penalty system whereby he will deduct money from their deposit if they cause any damage to his property. And it works. According to Jacky, even though he targets students, he is actually in business with the parents. And he takes the effort to foster relationships with the parents and keep in touch with them on a regular basis. That way he gains their trust and they become long-term clients.

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Besides purchasing residential properties to rent, Jacky has also invested in six other properties which include commercial properties. However, he refuses to purchase retail properties as he finds it very unpredictable. He explains: “We already have an oversupply of retail properties in Kota Kinabalu and it’s hard because

Chinese investors as well. He said, “More developers from China have joint ventures with local developers and I foresee this trend to continue in the near future. Property prices in China are sky high and it is much cheaper for the Chinese to invest in properties here. Plus, Sabah has so much more to offer like our pristine islands and mountain views.”

You have to be brave and you also have to be smart. Plan, but don’t plan too much until it scares you. The market is going strong and properties will appreciate in value.

our people just don’t have the buying power. We have a lot of tourist coming in but that’s not enough. Sabah is not a shopping paradise and that’s the simple fact.” Other than letting his properties to students, Jacky also sees the potential in renting his properties to tourists especially in Kota Kinabalu where there is still a lack of hotel rooms. A lot of tourists also prefer to travel in bigger groups and rent apartments as it is cheaper then booking hotel rooms particularly if they are staying for a longer period of time. And with the increase of flight connectivity and Malaysia My Second Home, Sabah is also becoming a popular destination for expats to relocate. Being in the travel industry, Jacky knows that more and more people from China are gaining interest in Sabah. The state is now a top travel choice and he predicts that we will see an increase in

He continues, “There are also a lot of other factors why foreign buyers find Malaysia an attractive country to invest in. Firstly, our property value is still considered very reasonable compared to many other countries. And compared to neighbouring countries, we are stable politically, we have good natural resources and we are not affected by major natural disasters.” As more foreign investors are taking interest in Sabah, Jacky is also taking interest in investing overseas. He currently has two properties in Macau that he purchased with a partner. The rapid growth of the region dubbed the Las Vegas of Asia shows a lot of potential and Jacky aims to take advantage of it. When it comes to giving advice to potential property investors, Jacky says they just have to not over think it and follow their intuition. And if people have difficulties raising the initial funds to make the down

payment, Jacky thinks that the best way to go about this is to find a partner (or more) who has good credit and who can share the financial burden with you. He says, “I can frankly tell you that most people who are successful in property investment and other areas in life think less and do more. You have to trust your gut feeling. But definitely do your research on the property developers and invest in location especially in properties at the central business district.” He goes on saying that there is no right or wrong time to buy or sell. But he does admit that the new restrictions by Bank Negara which makes it harder to get a loan will definitely affect the property market. Plus, the property prices in Sabah especially is increasing and surpassing the purchasing power of the locals. This will be the main challenge to come. Jacky however does encourage those who are seeking financial freedom to venture into property investment. He says, “You have to be brave and you also have to be smart. Plan, but don’t plan too much until it scares you. The market is going strong and properties will appreciate in value. And you don’t have to worry because the market in Malaysia is quite stable and prices don’t fluctuate quickly like other countries.” As for his future plans, Jacky is hoping to be able to combine both his businesses together: travel and property. He dreams that one day he can include property tours into the travel itinerary that he offers and allow tourists to visit different property showrooms in between visiting tourist sites and shopping malls.

PHOTO: LOUIS PANG STUDIO

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The Retail Juggernaut Living the Dream Dato Louis Tan, age 37, on turning canâ&#x20AC;&#x2122;ts into cans and turning dreams into plans

PHOTO: LOUIS PANG STUDIO

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small town boy originally from Johor, Dato Louis Tan had big city dreams to grow a business empire similar to his idol Sam Walton, the founder of Walmart. In 2001 he left his hometown with very little in his

if they wanted the property back. That’s when I realized how important it was to buy these shoplots in order to continue operation,” he explained. In 2007, Dato Tan invested in a

...getting adequate information before buying a property is important and buyers have to known ahead the reason they are making the purchase.

pocket and decided to move to Brunei and started a small bicycle shop. He was only 23 years old. He noticed the sudden popularity of discount stores in West Malaysia and realized the potential of growing a business that will benefit the local community even when the economy becomes bad. He opened his first Dollar One Store and expanded to four outlets in the period of one year. And then he decided to take another risk and move to Sabah. He said, “I came to Sabah with nothing and no one. My father is just an owner of a tuck shop in a small village in Johor. I had no financial backup, and times were tough. I had to face a lot of obstacles but I had a dream and I was determined to make it a reality.” In 2002 he started his first Kedai Dua Ringgit (which has been rebranded to One Stop Superstore) in Sinsuran and to date has outlets in Sabah, Sarawak and Johor. He also owns Century Supermarkets in Sabah and Sarawak, plus Orange Convenient Stores and Laundrymart in Kota Kinabalu which he integrated together by providing laundry services at selected Orange outlets for the convenience of tourists and locals. And he believes that working hard, being focused and having confidence is what got him to where he is today. “When I first came to Sabah, I had little cash flow so I had to rent shoplots to operate my business and rent started increasing every year, and I always had a fear that I would be kicked out by the owner

warehouse in KKIP (Kota Kinabalu Industrial Park), where his headquarters is now located. From there onwards he realized the benefits of investing in properties and slowly purchased shoplots and retail outlets to operate his business. He said, “I felt more secure and it’s definitely better than paying rent to someone else every month. I bought five warehouse lots in KKIP. And now the market value has gone up three folds. I started investing in shoplots in Sandakan, Tawau and Lahad Datu too.” Three years ago, Dato Tan purchased Menara Jubilee which he now rents out to F&B outlets and offices. The building was purchased at RM7.2 million and about RM500,000 was spent on renovation. Currently his monthly return is about 13% and that has given him more confidence in investing in more properties and land. “When it comes to investing, location is important. I only invest in town areas or hotspot areas where demand is high. This way I can sell or rent easily. 70% of the property I own is used to run my business and the remaining 30% is invested to sell or rent. But renting out a property can sometimes be tricky. I am very choosy with my tenants and make sure that can not only deliver payment, but also can increase the value of the property by bringing in more crowd.” According to Dato Tan, getting adequate information before buying

a property is important and buyers have to known ahead the reason they are making the purchase. Buyers looking to rent out their property should get a minimum Return of Investment (ROI) of 7%, and investors looking to sell a property should make sure that they can get a return of 30% in a period of one year. He said, “Malaysia is a good place to invest in and when it comes to ROI, Sabah is still the best. If you have a solid cash flow, I would advise you to keep the property and rent it out, but if you need the money, sell it off. This is for commercial properties. For residential properties however, it’s better to buy and sell.” He adds: “I invest in very few residential properties but when I do, I make sure that it is located close to town and that it is nearby schools. That way, it is easy for me to keep or sell the property. But personally, I rather buy and sell residential properties. If there are any problems with the property, the tenant will always call you and you have to deal with it, but if it is a commercial lot, the management of the building will take care of the problem which makes it easier for me.” However, Dato Tan thinks that investing in outlets located in shopping malls is more risky because the local population does not have strong spending power. He finds the standard rate of RM2,000 per square feet a little overpriced and is concerned with the quality of management in a lot of the local shopping malls. And he only advises people to purchase an outlet in a shopping mall if they are confident with the management and if they already have a good tenant lined up. Dato Tan has also invested in Iskandar Malaysia, Johor and is looking towards making future investments in the main cities in China such as Beijing, Shanghai and Guangzhou. According to him, China will be a good country to invest in properties because it is not only where the world’s factory is located, it’s Gross Domestic Product (GDP) has increased by 12% in the past 10 years. He explains, “The Malaysian Ringgit is going down, whereas the Renminbi (RMB) has increased by 38% in the last three years. Even if the value of the property itself (in

China) doesn’t increase, the value of the currency will and that to me is good investment. After two years, if the Renminbi increases by 20%, I will be very happy.” Due to the increase of the RMB, Dato Tan believes that it will also spark more interest in Chinese investors purchasing properties in Malaysia. In the major cities in China, one family is only allowed to own one residential property. Thus, those who have surplus cash flow will most likely opt to invest in properties overseas. Malaysia will be the preferred choice because properties here are fairly cheaper than other countries. Our country is politically stable, plus Chinese people find is easier to adapt here due to the familiarity with the local food and language. According to Dato Tan, the challenge this year when it comes to property investment in Malaysia is the restrictions by Bank Negara. People will have a harder time getting a loan from the bank, and buyers will have to cough out a larger down payment. However, he does believe that the property market in Sabah will continue to boom in the future. He feels that compared to other states in Malaysia, Sabah is the best place to invest in. And that is why there are more developers from West Malaysia and foreign countries such as China that are embarking on projects in the state. Dato Tan also says that Sabahans have better holding power and this will ensure that the property market remains stable without fluctuating prices. He also considers Sabah an ideal due to strategic location, a booming island economy (similar to Penang) and good flight connectivity to major international cities. In 2013 our tourism receipt was 3.4 million and the forecast for 2014 is 3.8 million visitors for both domestic and international travelers. “Sabah is my home now and the state has given me so much to be thankful for. And I believe that as both a businessman and investor, you have to give if you get. That’s also my advice to people out there. Corporate social responsibility is important and I believe that if you give back to the community, you will also be blessed with more in return.”

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Developing Our City After Kota Kinabalu was upgraded to a city in 2000, the Kota Kinabalu Municipal Council was also rebranded as the Kota Kinabalu City Hall (DBKK). A new department called City Planning Department was set up. And Stanley Chong was appointed as the Assistant Director of that department in 2001.

PHOTO: LOUIS PANG STUDIO

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fter 13 years of serving in DBKK, Chong knows the city like the back of his hands. He has witnessed the city developed from a ghost town into the vibrant tourism hub that it is today. Areas such as Gaya Street have transformed into a hotspot, and the construction of The Waterfront KK in 2006 has made the city come life at night. For Chong, city planning is about developing Kota Kinabalu into a more livable city for the locals that is also friendly and accessible to tourists. He said, “Previously, we had no residential areas in the city and after working hours people go home and the city is empty. But with more hotels and new residential developments coming up, we had to improve and add pedestrian walkways and make sure that the city is lit well at night and safe for people to walk home or back to their hotel.” Another main project that DBKK is working on to make the city more people friendly is to develop the cycle way, which will also encourage more people to cycle and hence improve congestion by reducing the number of cars on the road. The cycle way which is under construction in stages will be the longest cycle way in Malaysia, from Tanjung Aru right to One Borneo Hypermall. The first phase is finished the second phase is expected to be completed by the end of this year. The entire project is estimated to cost about RM38 million including the building of infrastructures along the way such as public toilets, parking areas, and playgrounds. Chong is also passionate about rehabilitating the Sembulan River. The notoriously polluted river was transformed in 2012 when DBKK initiated the Sembulan Riverpark. DBKK aimed to not only beautify the area, but to also clean up the river and educate the public about the importance of preserving our natural environment.

He said, “I am glad that we managed to get funding for this project as I can see that it has positively impacted the public especially those who are living and working in the surrounding area. It’s not a one night job, and we face a lot of challenges in terms of maintenance and enforcement against vandalism. It took Singapore 30 years to fully develop and improve the condition of the Singapore River to what is it today. We hope for a similar future for the Sembulan River.” The Sembulan Riverpark is a three-phase project costing RM45 million. The first phase involved the construction of the boardwalk and the installation of facilities such as a police kiosk, public benches and lavatories, plus landscaping. The construction of the second phase will extend the existing park by another 700 metres to bring its total length to 1.5 kilometers. The whole project is scheduled for full completion by the end of this year. In 2006, DBKK also started drawing up the Draft KK Plan 2020 and the KK Structure Plan 2030. The plan was last updated in 1984, so it was about time to review and upgrade both these statutory and strategic plan. The Draft KK Plan 2020 has a memorandum and is gazetted under Section 6 of the Town and Country Planning Ordinance, Sabah Cap. 141. Under this ordinance, the Draft KK Local Plan 2020 adopted by the Central Board will officially supersede the old draft schemes, which include the Draft Greater Kota Kinabalu Scheme (1978), Draft Kota Kinabalu Comprehensive Development Plan, and the series of Draft Kota Kinabalu Local Plans. Once the Draft KK Local Plan 2020 is adopted by the Central Board, any development plan submissions to DBKK shall be aligned with the new land use and zoning as shown in the draft. The first mandatory public exhibition and objection of

the Draft KK Local Plan 2020 was held in September 2011 and since then DBKK has received 350 written objections involving about 500 pieces of land titles. According to Chong, DBKK analyzed all the public objections and found that these objections ranged from minor technical inconsistencies in the plan, to the request for changes of land use zones, and the most complicated ones which involved compulsory acquisition of lands. City Hall had also analyzed objections involving detention ponds, special residential (ridge conservation) and zoning. DBKK received feedback and comments from professional bodies and non-government organizations (NGOs) to strengthen the planning policies and standard of the Draft KK Local Plan 2020. DBKK aims to adopt the statutory plan and utilize it to achieve its vision of transforming Kota Kinabalu into a world class nature resort and maritime city by 2020. Chong said, “The written statement also consists of strategic policies for residential. By year 2030 we aim to have 100,000 new residential properties to cope with the expected increase of population, plus replace transition houses or squatters and houses that are dilapidated and not fit for living.” He continues: “Prime areas that are located within five kilometer of the city centre are very limited and a lot of these areas have to be redeveloped and upgraded as high density residential zones or mixed used zone. To fulfill the housing requirement and demand, we want to increase the population within the prime area. It’s a chicken and egg situation, but once we have an increase in population, we hope to implement a transportation system like the monorail, tramway, or bus rapid transit in the next five year.”

mixed used developments to help reduce the movement of traffic. We have identified areas such as Menggatal and Tepilok that is considered adequate in size for such developments. High rise developments are also going to be increasing and our biggest challenge is to ensure that we improve our infrastructures such as the roads, sewerage system, plus water and electricity supply,” he said. 2014 is Visit Malaysia Year and the DBKK has a strategic 5K Plan which aims to tackle issues related to cleanliness, safety, livability, and beautification of the city. The development of more railings of pedestrian walkways and other facilities such as street lights and closed-circuit television (CCTV) will be improved to ensure the safety of the city. According to Chong, the crime rate in the city has reduced since the first phase of the implementation has started, and DBKK aims to continue upgrading these facilities until year 2020. With the tourist influx that Kota Kinabalu is expected to see this year and in future years to come, Chong says that the government and private sectors must work hand in hand to upgrade the city. Hence, the development of projects such as the upcoming Tanjung Aru Eco Development which is set to transform Tanjung Aru and infrastructures such as the heritage Prince Phillip Park which will be still accessible to the public. Chong said, “The beauty of greater KK is that we have everything from the mountain to the sea. The combination of eco tourism, culture tourism and MICE will differentiate us from neighbouring countries that are also tourist attractions. We want to make Kota Kinabalu the main tourism hub and we have to work together to make it a win-win situation for everyone.”

“We also want to encourage

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/// Contributor

Ishmael Ho

Director, Ho Chin Soon Research Ishmael Ho attained his LLB from the UK. Backed by his legal background, he entered the property industry from the legal angle. His widening involvement in the property industry includes joining an estate agency firm as well as being part of the research house in a development company before joining Ho Chin Soon Research.

East Malaysia Growth Corridors: KK and the Rest

ow many of us really operate based on information as oppose to gut-feel and instinct. Part of my public presentation I would usually ask my audience to rank these 3 states in terms of the best performer to the weakest in terms of Residential property capital appreciation within the last 13 years. How would you rank Melaka, Selangor and Perak? Now take a moment to mentally rank them from first to third. If your ranking is Selangor, Melaka and then Perak, you have just answered the way every single crowd of mine answers. A quick check to the department of Valuation and Property Services (Jabatan Penilaian dan Perkhidmatan Harta) will show you that the best performing state between the 3 is actually Perak. Followed by a close second would be Selangor while Melaka lags behind. In this article, I want to cut out the noise, go straight to facts and data to formulate analysis of growth patterns for ease Malaysia. When we compare say Sabah and Sarawak in terms of real estate prices, Sabah is ahead in terms of capital appreciation. And when we zoom in to compare between Kota Kinabalu and Kuching we again see the disparity in terms of price movements. 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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One of the reasons why Kota Kinabalu is superior to Kuching can be seen from â&#x20AC;&#x153;air connectivityâ&#x20AC;?. When we look at direct flights using the Air Asia and Malaysian Airlines websites we would see that Kota Kinabalu has roughly double the number of direct flights to foreign cities than Kuching. Existing data for example gives 18 Air Asia direct flights from Kota Kinabalu compared to 9 direct flights from Kuching. For Malaysian Airlines it is 12 direct routes for Kota Kinabalu and 8 for Kuching.

For each state, different weightage has been given to different house types in accordance to their existing stocks within the state. Sabah having vast amount of land makes it no surprise that landed property makes up 86% for the index with the bulk of it 53.5% for terraced houses. Now the question is, on average, who would have made more money in terms of capital appreciation. An individual who bought a landed property (where stocks are plenty) or a high rise property? Measuring from the past 5 years, terraced houses appreciates by 48% but high rise property saw an increase of 74%. We can interpret the trend as high rise properties are in demand. Now that we know the “what”, let us figure out the “where” in Sabah. One of the best indicator to gauge the potential of all 25 different Sabah district is by its population growth data. To have a sense of space and size, let us compare some figures. Greater KL (Selangor + Wilayah Persekutuan) holds a population of 7million people whereas Sabah has approximately 3million and Sarawak has around 2.4million people. Of the 25 states, only Tawau, Sandakan and Kota Kinabalu has a population on more than 400,000. Although the highest in population, at 453,000 people, Kota Kinabalu is actually smaller than Seremban which has 540,000 in population. It is interesting to note that out of the 3 major states, Sandakan’s population growth rate is actually half compared to Tawau and Kota Kinabalu. That leaves us to compare between the West Coast division and Tawau Division. Kunak is in the middle of nowhere with a weak population of 60,000 people. While Lahad Datu is on par with Kota Kinabalu in population growth rate (2.46%), it currently only has 200,000 people (half of Kota Kinabalu). On raw data alone Tawau seems to be a little bit better compared to Kota Kinabalu. However, if we consider Kota Kinabalu, Penampang and Papar as one economic activity area, we are looking at a population of 750,000 with high growth rate of 2.42%, 3.90% and 3.32%. Making West Coast division a better bet for property investment purposes.

Looking at the growth pattern in Kota Kinabalu, development locational centre of gravity is moving down south-westtowards Tanjung Aru. The sea depth of waters off Kota Kinabalu in the northern part is much deeper whereas the direction towards Tanjung Aru is much easier to reclaim and cost less. Recently a China party has invested and took over Sutera Harbour. There are plans to reclaim from the sea from Sutera Harbour all the way to Tanjung Aru. It is only a matter of time that this will happen. Imagine the economic activity in that area, and its effect on the property prices within the vicinity. Another strong factor of the popularity of Sabah over Penang and Malacca when it comes to natural beauty of the land and water, Sabah wins hands down. When it comes to water quality the islands just off Kota Kinabalu via a quick speed boat gives a superb refreshing welcome to clear tropical waters unlike Penang, Morib, Port Dickson and Malacca. The Straits of Malacca is very shallow and the mass of water not sufficient to clear the silt and mud that flows from the rivers of Peninsular Malaysia. Having covered “what” and “where” in this article, I will leave it to the readers to decide the product concept and which developer to buy from. Happy Investing in the year of the Horse! After all, Horse is only one letter away from House.

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/// FEATURE PROPERTY EVENT

New Development by Green Field

reen Field City Sdn Bhd recently opened their latest project, Green Field Residence, for registration. Spreading across 24.6 acres of prime land in Menggatal, Greenfield Residence is like a breath of fresh air in the bustling area. This modern living concept residential is nestled within a landscaped area where serenity and modernity unite. Featured facilities include the 30-metre swimming pool, gymnasium and outdoor fitness centre, maze garden with barbeque pits, gathering plaza and community pavilion. Residents will also be able to enjoy the kids garden, linear garden, shaded garden and zen garden. Greenfield Residence provides a perfect canvas on which you can design your own haven on a practical layout, making it ideal for family living. There are six types of two to three bedroom units ranging from 821 square feet to 1,084 square feet.

Upcoming Jesselton View Condo Offers Luxury at Hilltop, Sabah

ith prime residential locations in Kota Kinabalu and its environs rapidly depleting, Jesselton View condominium offers a refreshing, exclusive, luxurious lifestyle so near the city centre. Set amidst Nature on elevated ground in the leafy suburb of Hilltop, it is strategically located, a couple of minutes hop to all conveniences. Just 4km from the CBD, Jesselton View is in close proximity to the commercial centres of City Mall, Foh Sang, Damai, Lintas Square and Lintas Plaza as well as a stone’s throw from Luyang Clinic and near Sabah Golf & Country Club.

Connectivity is provided via the main thoroughfare of JalanLintas ensuring rapid link with Kota Kinabalu International Airport, Penampang, Luyang, Bundusan and Likas. “Jesselton View js a low density (80 units only) condo development that offers quality modern lifestyle in a close-knit, serene and secure environment,” said Ms Leong Siew Fun, Sabah manager of Twin Realty which is the project Exclusive Sales & Marketing Agent. “Designed for a highstandard living comfort, it encompasses spacious and functional layout (each unit from 809 sq. ft ~ 2,922 sq ft.), featuring a unique wide façade, complemented

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with 5-star facilities,” she said, touting it as a choice investment. A gated, guarded and welllandscaped community that affords full flexibility to optimise one’s lifestyle with peace of mind with 24-hour CCTV monitoring. There is a full spectrum of healthy recreational activities for all, indoor or outdoors. The 10-storey complex effuses class throughout inclusive of a stylish porch and grand lobby. Key facilities are a rooftop infinity pool, gym and sky garden which serves as the entertainment hub. Construction is in progress and scheduled for completion in early 2016.

/// East Malaysia Property News

Wah Mie to Build Sejati Walk in Sandakan

Waterfront Projects in Miri Draw Investors deck and children’s pool, a private spa with sauna, steam room and jacuzzi, gym and aerobics, food and beverage outlets including a coffee house with a modern open buffet concept and a private lounge on the top floor.

The Wharf booth at Property Hunter Expo Miri edition 2013 Artist’s impression of Sejati Walk The Wah Mie Group, one of the biggest local housing developers, is building Sandakan’s first street life pedestrian mall named Sejati Walk. It is expected to be completed in the next three years. According to Managing Director, Quek Siew Hau, Sejati Walk was designed to connect the surrounding community with its strategic and convenient location for the residents of Sandakan. The two-storey mall will be located only a few minutes’ drive from the Sandakan Airport, Sadakan War Memorial and Crocodile Farm. Residential housing areas, namely Taman Sejati Ujana, Taman Fajar, Taman Khong Lok, Taman Sri Rimba, Taman Megah and Taman Sri Wijaya are also not far away. “This anticipated 22 acres

of total area and a 5.5-acremall will become the ideal location for tourists to relax, recharge and shop. The strategic location and conscientious planning of this new concept mall is posed to propel further growth in Sandakan,” he added. Quek explained that will affordable small-sized 341 units of stores in typical Sandakan street life concept, Sejati Walk is expected to be able to provide holistic hospitality to the community. One of the special features of Sejati Walk is that it will be an open-air mall, designed with a broad walkway of 54 feet with 24 feet diameter big-sized fans providing cool and breezy shopping experience. It will be the first eco-friendly low density pedestrian mall in Sandakan with natural ventilation and lighting.

...Sejati Walk was designed to connect the surrounding community with its strategic and convenient location for the residents of Sandakan.

Miri is primed for one of its largest facelifts of the decade under the landmark Miri Waterfront Transformation Project, which will see the development of a five-star luxury hotel. The modern 18-storey high-rise apartment suites and 10 units of supersized shophouses are slated for completion by 2015, with a gross development value (GDV) of RM450 million. The Miri waterfront commercial centre is surrounded by major corporations consisting of oil and gas as well as plantation companies, banks, governmental offices and restaurants that are easily accessible. It also has high visibility that ensures great returns for investors. The Wharf, a private highrise 18-storey strata-titled suite project is situated on the very heart of Miri city while the integrated part of the waterfront commercial centre is only a 15-minute drive from Miri Airport and mature commercial areas. Unique Harvests Sdn Bhd project director Alice Hu said the mega project would complement the city’s reputation as one of the country’s robust growth areas. “The construction

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work for the entire development will take place concurrently, and both high-rise buildings will go up at the same time. “The entire project is scheduled to be finished within two years, with completion anticipated in the fourth quarter of 2015,” said Hu, adding that the Wharf was among the main components of the “transformation”. “The Wharf is a 99-year leasehold private development encompassing all threebedroom detached and semi-detached units from sixth floor onwards, with modern lifestyle facilities on the fifth floor such as swimming pool, the very first Sky Garden in Miri, gym and aerobics rooms, multipurpose hall, pool deck, BBQ pits and many more.. The suites, ranging from 1,531sq ft to 1,760sq ft, will be semi furnished and are priced from RM926,888 onwards. The luxury hotel, on the other hand, will consist of 328 spacious rooms and suites, and will include facilities such as a ballroom with a seating capacity of up to 1,000 alongside six other function rooms — all with modern meeting facilities, a signature infinity pool with pool

“The design of the hotel is modern and contemporary, whereby the focus is not only on luxury but also comfort for the guests,” Hu said. The Miri Waterfront Transformation sits on an unparalleled piece of five-star land, nestling in the heart of the city. The project’s timing is also impeccable, coinciding with the expansion of the Marina township right at the boundary of the Wharf, as well as capturing the captivating status as a new primary feature of the city skyline. With the opening of the luxury hotel, it is no surprise that the Wharf has become the most sought after address for investors and future home owners alike. Prospective buyers can visit The Wharf Sales Gallery on the ground floor of Wisma Interhill, Miri Waterfront Commercial Centre here from 9am till 6pm. Exclusive packages are available only for limited units. For more information, call Unique Harvests sales personnel via 085-411 188 / 017-270 7388 / 017-820 7388 / 017-850 7388

/// East Malaysia Property News

RM2.5 Billion Tourism Project in Semporna, Not Sipadan stakeholders within the SDC and safeguard the public confidence. Since the start of the second phase of the SDC, SEDIA has accordingly been more aggressive in attracting investments into Sabah. In line with this emphasis, SEDIA has been participating in State-sponsored and MITI/MIDA-led investment and trade missions locally and abroad. The response from these missions has been very encouraging, having stirred significant interest and drawing substantial investment in the sectors promoted under the Halatuju agenda and the SDC, vis in tourism, agriculture and manufacturing, amongst others. The project site is situated alongside Kalumpang River, Tawau and is an estimated 35 minutes away from Sipadan Island, by speedboat The Sabah Economic Development and Investment Authority (SEDIA) clarified that the proposed RM2.5 billion tourism-based integrated development project is to be situated in Semporna and not in Sipadan. SEDIA said yesterday that it had been inadvertently stated that the project is to be sited on Sipadan Island. The meeting last week with the China investors of the project was also attended by an officer from the Ministry of Tourism, Culture and Environment, and not an officer from the Sabah Tourism Board as previously stated, it added. As commented by Tourism, Culture and Environment Minister Datuk Seri Panglima Masidi Manjun, SEDIA said the project with Diving Best is in fact an expansion of the existing Sipadan Mangrove Resort (SMR), an Entry Point Project (EPP) listed under the Regional Cities and Corridors programme with an estimated investment value of RM491 million, and set to generate RM114.9 million in GNI in 2020. The collaboration between Diving Best and SMR is the result of successfully matching the China investors with a local business partner after their first meeting with SEDIA. The location of the proposed project was decided on

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private land belonging to SMR, with a land size of 280 acres and was chosen for its close proximity to Sipadan Island; 35 minutes by speedboat. SEDIA recognises the significance of preserving Sipadan Island in its natural state, and any confusion that had arisen from the previous statement is deeply regretted, it said in a statement. As listed in the Sabah Development Corridor (SDC) blueprint, one of the three key principles underpinning SDC activities is the need to ensure sustainable growth via environmental conservation. The other two principles are capturing higher value economic activities and promoting balanced economic growth with distribution. These three principles continue to guide SEDIA in its role of facilitating investment into Sabah, of which it has managed to capture significant interest. SEDIA last year had its accounts for the year 2012 given a clean bill of health by the Attorney General, for the fourth straight year in fact. This is a clear indication of the good management practices within SEDIA, of which SEDIA has strengthened its management process by achieving the MS ISO9001: 2008 standard to further enhance the quality of these practises. This effort was made to ensure the confidence of all

These measures have begun to show results, as evidenced by the vibrant investment climate and from its launching in 2008, cumulative committed investment in the SDC has reached RM127 billion as at the end of 2013. It was announced at the end of February, 2013 by the Malaysian Investment Development Authority (MIDA) that the Sabah Development Corridor recorded the highest investment garnered in the manufacturing sector for the year 2012, at RM5 billion.

To further increase investor interest in the SDC, the Federal Ministry of Finance had also approved a tax incentives package listed under the SDC. The package will enable SEDIA to further attract investors globally and from other parts of Malaysia, promoting Sabah as an ideal location for conducting business. The investment tax incentive package will cover activities in, among others; tourism, manufacturing, agriculture, and major industries located within the Strategic Development Areas of the SDC. These tax incentives are applicable for applications received by SEDIA up until 31 December 2020. With all the measures being implemented by the State and Federal Governments, Sabah in particular and Malaysia as a whole will continue to prosper. Therefore the undivided support of all Sabahans towards the SDC initiative will enable the enormous task of transforming the state and national economy continue, unhindered.

...one of the three key principles underpinning SDC activities is the need to ensure sustainable growth via environmental conservation. The other two principles are capturing higher value economic activities and promoting balanced economic growth with distribution.

More PPR Units Needed to Resolve Squatter Issue in Sabah

RM115 Billion Eco-City for Kota Belud? long fireworks display at Pekan Nabalu, the same evening. If all goes well, the tendering of the works is expected to be called by April to be up and running by the fifth year of construction.

The town of Kota Belud north of Kota Kinabalu Sembulan along Jalan Coastal Highway Housing units under the People’s Housing Project (PPR) are insufficient to cater to the number of squatters recorded by local authorities. Chief Minister Datuk Seri Musa Aman said an extimated 38,000 squatter families are still occupying state government land and private land. He said this is despite the 23,126 units of PPR built by the end of the 10th Malaysia Plan (10MP). “In line with the federal government objective, the state government through the Sabah Housing and Local Government Ministry has set an objective under the 10MP to reduce and eradicate squatters, and provide homes for all squatter and low-income families. “Sabahans hope that more PPR homes are built to meet demands and reach the national housing objective, which is one family one home,” he said at Lintas Sibuga PPR project hand over ceremony.

Musa received the PPR project on behalf of the state government from Urban Wellbeing, Housing and Local Government Minister Datuk Abdul Rahman Dahlan. He said the state government will submit an application to the federal government to build 10,000 more PPR units to those constructed under 10MP. Musa reminded prospective PPR recipients to maintain safety, cleanliness and beauty of their homes to foster neighbourliness, comaraderie and unity among residents. Government efforts in providing the PPR homes proved the commitment and concern of the BN government in providing comfort for the people.

Believe it or not, Malaysia’s first eco-city (Clean sustainable living on local environment means and conservation) is planned to be located at Kadamaian in the Kota Belud district of Sabah. The proposed eco-city is envisaged to have various facilities, all linked with a cable car system, monorail and integrated transport around a man-made lake with an ambience of Venice, dotted with hotels, housing, hospital and a golf course. Among other facilities are a F1 standard motor race track, three universities, sports city, education hub and business hub, benefiting a targeted population of 100,000 and 15,000 transient visitors and varsity students. Former Kadamaian Assemblyman Datuk Herbert Lagadan is excited about how to realise also Sabah’s first eco-city in his former power base. To be known as Gaur EcoCity, its has an estimated GDV of RM115 billion on more than 5,000 acres of undulating land that will put Sabah on the global eco-city tourism map for fine peaceful living in an intellectual hub with a population growth rate projected at three per cent. “I was in Jakarta, with its multicultural village, which should be a featurein the Gaur Eco-City. I will speak to UiTM management

to base their technology university within the Gaur Eco-City. The villagers all along the area will be involved as Sabah Parks is applying for Sabah’s first Geo Park status for Kinabalu,” he told Daily Express. The other two varsities planned are a medical health science university and an investment financebusiness centric university. Still in the conceptoal stage, the Gaut Eco-City, which will have a 30km cable car gondola system costing RM15 billion covering 20 villages along the foothills of Mount Kinabalu, will be presented to the Kota Belud District Development Committee on January 20 at the Sabah State Assembly on the request of Speaker Datuk Salleh Tun Said. Salleh is an advisor of the Kota Belud District Development Committee and had asked for the presentation to be postponed from the scheduled Jan 13 meeting to Jan 20 as he is overseas. He is expected to launch the start of the project feasibility studies at Pekan Nabalu, which is one of the cable car system terminals of the project, on Feb 18. Sabah Tourism Culture and Environment Minister Datuk Masidi Manjun is expected to close the one-day 10am to 10pm event, with a half-hour

The companies involved are Braxton Group of companies, Blazetron Ltd of UK and HMD Corporation headed by CEO Bernadette Peter and Senior General Manager Boniface Mosios, with venture financing to be arranged by Dr Harrey M. Dauwat, a corporate member of the International Entrepreneurs Association. The Gaur Eco-City concept was drawn up by consultant Herlina Abdul Aziz of Enviro Enhance Sdn Bhd, a firm registered with the Federal Ministry of Finance for environmental consultancy services. According to Dr Harrey M. Dauwat, the cable car gondola system will be a tourism product as well as public transportation that might eventually link up to Kota Marudu in later phases. “It will be the longest in the world and among the best in Asia,” he enthused, promising new housing for poor villagers to improve the scenery for foreign tourists. “No slopes or streams would be cut or disturbed in the construction as the cable car poles follow the topography terrain.” If these interested parties realistically have their ways with readily available viable financing and their plans approved by the authorities, Sabah may get to host Malaysia’s first eco-city at what is deemed as Sabah’s last natural unspoilt mythical ShangriLa-like ambience at the foothill of Kinabalu.

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/// Feature Property Event

/// FEATURE PROPERTY EVENT

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

Ahyat Ishak

Faizul Ridzuan

Ho Chin Soon

Ishmael Ho

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 and his successor Ishmael Ho, 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; Dato Soo Kai Chee, the executive director of MCT Group of Companies; 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 017-898 8899 with 1. 2. 3. 4.

Limited seats available so enthusiasts are encouraged to sign up as soon as possible!

Michael Yeoh

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Dato’ Soo Kai Chee

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 & Ishmael Ho 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 12noon - 1pm

Dato’ Soo Kai Chee Topic: “Iskandar Malaysia; The New Boomtown”

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”

Your name (as per NIRC), Valid email address, Mobile number and Specification of preferred day of talk to attend (Day 1, Day 2 or both)

Successful registration will be replied with a SMS notification.

Richard Oon

Enoch Khoo

BREAK 3:30pm - 4:30pm

Michael Yeoh Topic: “Going Forward – Mortgage Financing For 2014”

4:45pm - 6pm

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

/// Hot Topic

/// HOT TOPIC

Positive Growth Recorded in Property Sector for Sabah’s Capital

Central Kota Kinabalu City. Photo by All 4 One Productions.

Southern Corridor of Kota Kinabalu City. Photo by All 4 One Productions. Although property prices continued their upward climb in Kota Kinabalu (KK) in 3Q2013, the growth rate has been decelerating a trend that has been observed since the start of 2013. Sentiment varied between cautious and buoyant in the period between the 2013 general election and the announcement of Budget 2014, says Sulaiman Saheh, director of Rahim & Co Research, in presenting.

average y-o-y growth of 7.36%. However, q-o-q, the pace dropped by 0.4% from the 3.93% recorded in 2Q2013.

occupy the homes and investors who aim for capital appreciation.

Areas to watch out for include Putatan, Lok Kawi, Kinarut, Menggatal, Inanam and Tuaran

In Putatan, 2-storey terraced houses in Taman Desa Ketiau, priced at RM427,000, recorded strong sales. The second phase has yet to be launched.

Slower growth was observed on a y-o-y basis. Condominiums recorded an average y-o-y growth of 7.79% in 3Q2013 compared with 10.01% in 3Q2012, indicating a slower pace of 2.22%.

NEW LAUNCHES

DEMAND FOR HOMES TO REMAIN STRONG

Demand for houses in the suburbs of KK remains strong despite the higher prices, says Max Sylver Sintia, branch manager of Rahim & Co Sabah.

“Though the starting price was rumoured to be around RM440,000, we anticipate further success in sales performance despite prices being slightly higher than [similar] existing houses within the area,” says Sintia. The upgrading of the Petagas-Lok Kali highway into a three-lane carriageway will spur further growth, he adds.

According to Sulaiman, 2-storey terraced houses recorded an

Demand, he says, is driven both by genuine buyers who intend to

Meanwhile, Desa Height Residences, comprising two blocks of 15-storey

While most of the properties sampled continued to record positive growth year on year, growth was slower quarter on quarter..

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condominiums, is set to be launched in early 2014 in the Ketiau precinct, also in the Putatan district. According to Sintia, this development will offer 528 units at prices starting from RM320,000 for a 980 sq ft unit (RM326 per sq ft) and RM340,000 for a 1,040 sq ft unit (RM363 per sq ft), effectively setting a new benchmark in the Putatan area. Another condominium development in KK, Bay 21 TOO, will also be launched soon. Offering 286 units ranging from 395 to 1,800 sq ft, indicative selling prices range from RM680 to RM700 per sq ft. All units will be pre-installed with built-in cabinets, light fittings, air conditioners, fully-fitted bathroom and a pantry with a sink, built-in

hood and hob, plus a microwave oven. SLOWER GROWTH EXPECTED FOR LANDED HOMES According to Sulaiman, slower growth in landed home prices due to the surge in supply over the last 18 to 24 months. Prices would have to be supported by actual occupation or tenancy demand to be sustainable in the long run.. “Nevertheless, fluctuations in price growth rates do occur and generally, prices are still climbing,” he adds. Developments north and south of KK will continue to be targeted by genuine and first-time buyers due to their affordability says, Sulaiman. An average y-o-y growth of 7.36% (about RM27,000) was recorded during the 3Q2013 review, slower by 1.54% compared with 2Q2013. The average y-o-y growth for the same review period in 2012 was 8.41%, indicating slower growth of 1.05%. Taman Indah Permai continues to lead price growth for the second consecutive review period with an average growth of 11.67% y-o-y (about RM35,000) in 3Q2013. Q-o-q, the area recorded 1.52% growth — up RM5,000 from RM300,000 in 2Q2013. Values for homes in Taman Indah Permai, which currently hover at RM450,000 to RM500,000, are set to catch up with those of neighbouring developments such as Taman Bukit Sepangar as they are marginally lower.

According to Sintia, a similar scenario is seen in Taman Jindo, which recorded 11.43% growth y-o-y in 3Q2013 — up RM40,000 from RM350,000 in 3Q2012. In comparison, y-o-y growth for the same period during the previous year was 7.69%. Two-storey terraced houses are priced from RM450,000 to as high as RM1 million. Ujana Kingfisher recorded 9.72% y-o-y price growth in 3Q2013, slower by 1.71% and 1.05% compared with 2Q2013 and 3Q2012 respectively. For other sampled properties, y-o-y growth was between 3.57% and 4.44%, all below the average y-o-y growth for the current review. Single-storey terraced houses saw price growth of 10.22% y-o-y (about RM25,000), slower by 1.06% compared with the previous quarter. Compared with 3Q2012, however, growth rose 3.65%. Taman Sri Kepayan was the only area to record q-o-q growth (1.72%) — up RM5,000 from RM290,000 in 2Q2013. Strategically situated in the Kepayan area, off Jalan Pintas Penampang, Taman Sri Kepayan continues to lead the price growth chart with 18% growth y-o-y, or about RM45,000. Though homes there are sought after because of the good location and accessibility, the higher asking prices makes it hard for potential buyers to obtain loans. Taman Tuan Huat recorded an average y-o-y growth of 9% — higher

by 2% compared with 2012, while Taman Nelly Ph9 recorded 4% growth, the same as last year. CONDOMINIUMS TO PERFORM WELL The strong sales performance of condominiums in the city, including the “100% sold out” luxury Pelagos Designer Suite (priced at almost RM1,000 per sq ft) as well as The Loft (prices start at an average of RM700 per sq ft), suggests the market will continue to perform well, according to the report. Overall, the outlook for the condominium market has been positive over the last five years, especially in some of the earlier schemes such as The Peak Condominium, where values rose 56% to about RM500 per sq ft, Sulaiman says. Some renovated units were transacted for as high as RM700 per sq ft. The second best performing condominium development was Alam Damai, which saw prices increasing 51% in three years (from RM290 to RM440 per sq ft). The average price for condominium units in KK rose from RM403 p in 3Q2012 to RM434 per sq ft in 3Q2013 — an increase of 7.79%. This was, however, slower by 0.44% compared with the average growth of 8.23% in 2Q2013 and down 2.22% compared with the 10.01% recorded in 3Q2012. The sampling registered a y-o-y growth of between 4% and 11%. Likas Square was the best performer

(11% growth) while Alam Damai continued to impress (10% growth). With the exception of Radiant Tower and Marina Court, the other samples recorded more than average growth. Marina Court registered 4% y-o-y growth, which is the same as 2Q2013 and the slowest pace since 2011. Although newly launched condominiums have been known to be launched at RM700 per sq ft (The Loft), the price appreciation for units in Marina Court was rather sluggish despite being located in the town centre, says Sintia. This, he adds, might be due to the large number of new units in the primary market, leaving buyers spoilt for choices. Another factor may be a new development, Ocenus Waterfront Mall, which is under construction, will block the sea view once enjoyed by Marina Court. STEADY GROWTH IN RENTAL YIELDS Rental growth for 2-storey terraced houses averaged 12.72% y-o-y, 3.47% higher than that recorded in 3Q2012. Taman Indah Permai registered the highest growth rate at 22.22% (from RM900 per month in 3Q2012 to RM1,100 per month in 3Q2013). This was followed by Ujana Kingfisher with 20% growth y-o-y (up RM200 from RM1,000 per month in 3Q2012). Overall, rents for 2-storey terraced houses are still growing, with all

Northern Corridor of Kota Kinabalu City

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/// Hot Topic

samples recording y-o-y growth of more than 6%. The average gross yield for 2-storey terraced houses rose 0.19% y-o-y, from 4.09% in 3Q2012 to 4.28% in 3Q2013. However, q-o-q, rents slowed by 0.02%. For 1-storey terraced houses, even though there was no significant growth q-o-q, growth in rents averaged 14.76% y-o-y — 9.76% higher compared with the same period last year. The best performer was Taman Sri Kepayan with 18.18% growth y-o-y (up RM200 from RM1,100 per month). This was followed by Taman Nelly and Taman Tuan Huat with a 15% and 11% increase, respectively. The average gross yield registered for 1-storey terraced houses rose 0.19% y-o-y, from 4.82% in 3Q2012 to 5.02% in 3Q2013. For condominiums, the average rental growth was 9.66% y-o-y and 1.62% q-o-q. The average gross yield for condominiums in 3Q2013 was 5.06% — a marginal decline of 0.07% from 3Q2012.

KOTA KINABALU capital values (1Q2008 - 3Q2013 ) Selected 2-storey terraced development scheme CAPITAL VALUE (RM’OCQ/UNIT) 1Q08 270 200 Taman Indah Permai 330 y g Perdana Luyang Taman Jindo 235 Taman Sri Borneo 290 g 250 Millenium Height Golden Hill Garden 390

1Q09 280 210 350 260 310 260 450

1Q10 2Q10 3Q10 300 300 300 240 245 250 380 400 400 290 300 300 320 320 320 270 280 280 500 520 520

4Q10 300 260 400 300 330 290 530

1Q11 2Q11 3Q11 300 300 325 260 270 275 410 410 420 300 315 325 330 350 355 290 320 320 530 550 550

4Q11 330 290 430 325 360 330 550

1Q12 2Q12 3Q12 345 350 360 290 290 300 450 450 450 340 345 350 380 385 390 335 350 360 550 555 560

4Q12 365 300 450 360 390 360 565

1Q13 2Q13 3Q13 370 390 395 310 330 335 455 470 470 370 390 390 400 410 410 370 380 380 570 580 580

4Q10 200 220 260

1Q11 2Q11 3Q11 200 200 205 220 230 230 260 270 270

4Q11 205 230 275

1Q12 2Q12 3Q12 205 210 220 240 250 250 275 280 280

4Q12 220 260 280

1Q13 2Q13 3Q13 230 240 240 270 290 295 290 290 290

4Q10 400 450 335 340 275 280 350 430

1Q11 2Q11 3Q11 400 410 410 450 450 450 335 335 340 340 360 360 275 275 280 280 280 285 350 360 370 440 440 440

4Q11 410 450 360 380 300 300 390 450

1Q12 2Q12 3Q12 440 440 450 460 480 480 380 380 390 385 400 400 300 300 310 300 310 310 395 400 400 460 480 485

4Q12 460 490 400 400 315 330 400 500

1Q13 2Q13 3Q13 480 490 490 500 500 500 410 420 420 420 440 440 330 330 335 330 330 345 410 420 420 510 520 520

4Q10 4 900 850 1,200 1,100 1,100 1,200 1,500

1Q11 1Q11 900 850 1,200 1,100 1,100 1,200 1,500

4Q11 900 850 1,500 1,300 1,400 1,400 1,800

1Q12 1Q12 900 850 1,500 1,300 1,400 1,400 1,800

3Q12 3Q12 1,000 900 1,600 1,300 1,400 1,450 1,800

4Q12 1,000 900 1,600 1,300 1,400 1,450 1,900

1Q13 1,100 1,000 1,600 1,400 1,400 1,500 1,950

4Q10 800 950 1,000

1Q11 2Q11 3Q11 4Q11 800 850 850 900 950 1,000 1,000 1,000 1,000 1,000 1,000 1,000

1Q12 2Q12 3Q12 900 900 900 1,000 1,100 1,100 1,000 1,000 1,000

4Q12 950 1,100 1,050

1Q13 2Q13 3Q13 950 950 1,000 1,150 1,300 1,300 1,100 1,150 1,150

4Q10 1.73 1.92 1.22 NA 1.21 1.48 1.62 2.10

1Q11 2Q11 3Q11 1.87 1.93 1.93 1.92 1.92 1.92 1.22 1.22 1.22 NA NA NA 1.21 1.31 1.31 1.48 1.48 1.48 1.69 1.69 1.69 2.20 2.30 2.30

1Q12 2Q12 3Q12 1.93 2.00 2.00 1.92 2.00 2.00 1.22 1.28 1.28 1.55 1.55 1.55 1.52 1.52 1.52 1.48 1.48 1.48 1.69 1.69 1.69 2.30 2.30 2.30

4Q12 2.00 2.00 1.28 1.55 1.62 1.48 1.69 2.30

1Q13 2Q13 3Q13 2.07 2.07 2.10 2.15 2.15 2.19 1.33 1.33 1.36 1.73 1.77 1.82 1.62 1.62 1.67 1.48 1.48 1.48 1.69 1.77 1.77 2.40 2.15 2.19

Selected 1-storey terraced development scheme CAPITAL VALUE (RM’OCQ/UNIT) 1Q08 Taman Tun Huat 170 p y Taman Sri Kepayan 180 Taman Nellyy Ph 9 190

1Q09 170 185 210

1Q10 2Q10 3Q10 185 190 190 220 220 220 230 250 260

Selected condominium development scheme

CAPITAL VALUE (RM PSF/UNIT) 1Q08 Jesselton Condominium NA Marina Court 355 y Bayshare Condominium 290 Alam Damai NA 1 Borneo Condominium 210 q Likas Square 230 Radiant Tower 260 The Peak Condominium 280

1Q09 325 340 310 NA 270 235 300 300

1Q10 2Q10 3Q10 380 400 400 440 440 435 335 335 335 390 310 340 270 270 270 240 250 280 330 350 350 400 430 430

OUTLOOK According to Sulaiman, slower Sulaiman expects prices for 2-storey terraced houses in KK to continue to perform well, albeit at a slower pace than the previous quarters due to the narrowing of the price gap between the primary and secondary markets. Older houses in the outskirts will continue to appreciate. “Due to the higher prices for 2-storey terraced houses , we anticipate further price appreciation for 1-storey houses, especially for older houses in Inanam, Luyang and Putatan,” Sintia says. He points out that as most of the new developments comprise 2-storey units, the supply of 1-storey houses is limited. This is evident from the asking prices in the outskirts, where prices have risen more than 40% compared with five years ago. For example, a 2-storey terraced house in Bandar Sierra was priced at around RM250,000 in 2008. A similar house in the area was sold recently at around RM380,000 — an increase of 52% within five years, equivalent to an average rise of 10.4% per annum. According to Sulaiman, developments north and south of KK will continue to be targeted by genuine and firsttime buyers due to their affordability. Areas to watch out for include Putatan, Lok Kawi, Kinarut, Menggatal, Inanam and Tuaran, says Sintia. Both Sintia and Sulaiman believe prices should continue to move positively as there is still a price gap between the primary and secondary markets. Condominiums in the vicinity of Likas, Damai and Signal Hill are expected to remain popular with young professional buyers looking for smaller units at affordable prices within the city area. Overall, the upward trend in house prices in KK is anticipated to continue but at a slower pace, especially within the city area, says Sintia.

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KOTA KINABALU rents (1Q2008 - 3Q2013 ) Selected 2-storey terraced development scheme RENT (RM’PER UNIT/MONTH) Taman Indah Permai Luyang y g Perdana Taman Jindo Taman Sri Borneo Millenium Height g Golden Hill Garden

1Q08 650 700 1,000 800 850 900 1,400

1Q09 1Q09 800 750 1,100 850 1,000 1,000 1,500

1Q10 900 850 1,200 1,100 1,100 1,200 1,500

2Q10 2 900 850 1,200 1,100 1,100 1,200 1,500

3Q10 900 850 1,200 1,100 1,100 1,200 1,500

2Q11 2Q11 900 850 1,400 1,200 1,300 1,300 1,700

3Q11 3Q11 900 850 1,400 1,200 1,300 1,300 1,700

2Q12 1,000 900 1,600 1,300 1,400 1,450 1,800

2Q13 1,200 1,100 1,600 1,500 1,500 1,550 2,000

3Q13 1,200 1,100 1,700 1,500 1,500 1,550 2,000

Selected 1-storey terraced development scheme RENT (RM’PER UNIT/MONTH) Taman Tun Huat Taman Sri Kepayan p y Taman Nelly y Ph 9

1Q08 750 850 800

1Q09 700 900 900

1Q10 2Q10 3Q10 800 800 800 950 950 950 1,000 1,000 1,000

Selected condominium development scheme RENT (RM’PSF/MONTH)

Jesselton Condominium Marina Court Bayshare Condominium y Alam Damai 1 Borneo Condominium q Likas Square Radiant Tower The Peak Condominium

1Q08 NA 1.69 1.06 NA 1.01 1.26 1.46 1.80

1Q09 1.67 1.85 1.06 NA 1.21 1.41 1.54 2.00

1Q10 2Q10 3Q10 1.73 1.73 1.73 1.92 1.92 1.92 1.22 1.22 1.22 NA NA NA 1.21 1.21 1.21 1.48 1.48 1.48 1.62 1.62 1.62 2.10 2.10 2.10

4Q11 1.93 1.92 1.22 1.55 1.52 1.48 1.69 2.30

Note: Prices shown are averaged and based on transacted deals. Rents shown are averaged and based on asking rentals deserved for unfurnished unit. Relevanr adjustments have been made where necessary

KOTA KINABALU yields (1Q2008 - 3Q2013 ) Selected 2-storey terraced development schemes (%) Taman Indah Permai y g Perdana Luyang Taman Jindo Taman Sri Borneo Millenium Height g Golden Hill Garden

1Q08 2.89 4.20 3.64 4.09 3.52 4.32 4.31

1Q09 3.43 4.29 3.77 3.92 3.87 4.62 4.00

1Q10 2Q10 3Q10 3.60 3.60 3.60 4.25 4.16 4.08 3.79 3.60 3.60 4.55 4.40 4.40 4.13 4.13 4.13 5.33 5.14 5.14 3.60 3.46 3.46

4Q10 3.60 3.92 3.60 4.40 4.00 4.97 3.40

1Q11 2Q11 3Q11 3.60 3.60 3.32 3.92 3.78 3.71 3.51 4.10 4.00 4.40 4.65 4.43 4.00 4.46 4.39 4.97 4.88 4.88 3.40 3.71 3.71

4Q11 3.27 3.52 4.19 4.80 4.67 5.09 3.93

1Q12 2Q12 3Q12 3.13 3.43 3.33 3.52 3.72 3.60 4.00 4.27 4.27 4.59 4.52 4.46 4.42 4.36 4.31 5.01 4.97 4.83 3.39 3.89 3.86

4Q12 3.29 3.60 4.27 4.33 4.31 4.83 4.04

1Q13 2Q13 3Q13 3.57 3.69 3.65 3.87 4.00 3.94 4.22 4.34 4.34 4.54 4.62 4.62 4.20 4.39 4.39 4.86 4.89 4.89 4.11 4.14 4.14

4Q10 4.80 5.18 4.62

1Q11 2Q11 3Q11 4.80 5.10 4.98 5.18 5.22 5.22 4.62 4.44 4.44

4Q11 5.27 5.22 4.36

1Q12 2Q12 3Q12 5.27 5.14 4.91 5.00 5.28 5.28 4.36 4.29 4.29

4Q12 5.18 5.08 4.71

1Q13 2Q13 3Q13 4.96 5.00 5.00 5.11 5.38 5.29 4.55 4.76 4.76

4Q10 5.20 5.13 4.38 NA 5.29 6.35 5.54 5.86

1Q11 2Q11 3Q11 5.60 5.66 5.66 5.13 5.13 5.13 4.38 4.38 4.31 NA NA NA 5.29 5.73 5.63 6.35 6.35 6.24 5.80 5.64 5.49 6.00 6.27 6.27

4Q11 5.66 5.13 4.07 NA 6.06 5.93 5.21 6.13

1Q12 2Q12 3Q12 5.27 5.45 5.33 5.02 5.00 5.00 3.86 4.04 3.93 4.82 4.64 4.64 6.06 6.06 5.87 5.93 5.73 5.73 5.14 5.08 5.08 6.00 5.75 5.69

4Q12 5.22 4.90 3.83 4.64 6.16 5.39 5.08 5.52

1Q13 2Q13 3Q13 5.17 5.06 5.14 5.17 5.17 5.26 3.90 3.81 3.89 4.94 4.83 4.96 5.88 5.88 5.97 5.39 5.39 5.15 4.95 5.05 5.05 5.65 4.97 5.06

Selected 1-storey terraced development schemes (%) Taman Tun Huat Taman Sri Kepayan p y Taman Nelly y Ph 9

1Q08 5.29 5.67 5.09

1Q09 4.94 5.84 5.14

1Q10 2Q10 3Q10 5.19 5.05 5.05 5.18 5.18 5.18 5.22 4.80 4.62

Selected condominium development schemes (%) Jesselton Condominium Marina Court Bayshare Condominium Alam Damai 1 Borneo Condominium Likas Square q Radiant Tower The Peak Condominium

1Q08 NA 5.72 4.37 NA 5.77 6.57 6.75 7.71

1Q09 6.15 6.52 4.09 NA 5.39 7.19 6.15 8.00

1Q10 2Q10 3Q10 5.47 5.20 5.20 5.24 5.24 5.31 4.38 4.38 4.38 NA NA NA 5.39 5.39 5.39 7.41 7.11 6.35 5.87 5.54 5.54 6.30 5.86 5.86

/// East Malaysia Property News

Masterplan Aimed at Capitalising on Kuchings’s River population will be required to live in higher densities.” Multi-storey apartments were designed with internal courtyard spaces, LCDA said, “which could be used as playground for the older children or for neighbourly interaction”.

Govt Will Buy Viable Land Offered by Owners

Four types of houses are included in the Darul Hana masterplan namely: • Slated for heightened progress: The Darul Hana mega project comprises 12 Malay villages along Sarawak River, starting from Sarawak Legislative Assembly Complex to parts of Bintawa The team behind the ambitious Darul Hana redevelopment are Australia’s Cox Architecture (CA) and Sarawak’s Jurubina Unireka. CA is notable for building a number of award-winning stadiums in Australia, and also for drawing up the latest masterplan for Singapore’s Orchard Road shopping district. Just as impressive, Unireka is the firm behind the state’s first Green Building Index (GBI) certified facility, the grand Sarawak Energy Bhd headquarters at the Isthmus. The Darul Hana masterplan is CA’s second project in Malaysia after Kuala Lumpur Convention Centre. The Land Custody and Development Authority (LCDA) is overseeing the implementation of the project, which it said would take between 10 and 15 years to complete. The mega project comprises 12 Malay villages along Sungai Sarawak, starting from the new Sarawak Legislative Assembly Complex to parts of Bintawa. All together, it involves 2,389 houses, consisting of 3,647 families with 14,680 residents. Presently, the villages cover approximately 300ha but the redevelopment would more than double the Darul Hana area to over 721ha. The masterplanners said the project was designed to

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capitalise on the “magic” of cities upon rivers and parkland areas, where there was harmony between the built environment and nature. “Darul Hana is conceived as a series of neighbourhoods linked by nodes of activities, which define the linear parkland areas extending across valleys and ridgetops. The vision for Darul Hana is to see it evolve into a sustainable new township,” said LCDA in a media statement. Key features include the addition of another pedestrian bridge across Sarawak River apart from the already-announced upcoming S-shaped Golden Bridge, a new civic centre, a commercial precinct, as well as adaptive reuse of village houses as tourism products. “The Malay kampung (village) of old had little demarcation between public and private spaces, due to a preference for community intimacy over public privacy,” LCDA said. However the combination of villages and higher density has created problems like narrow roads, limited expansion space, poor drainage and even toilets “facing the front of other houses”. “The ‘contemporary kampung’ seeks to capture the key aspects of traditional lived-in environment while meeting the needs of contemporary life. “By necessity, a growing

• • •

mixed-used shophouses for commercial purposes on the lower levels and residential spaces on the top floors. low-rise apartment units that prominently feature courtyards. “park-edge” detached and semi-detached houses. medium and highrise apartments and condominiums.

At yesterday’s unveiling, Chief Minister Tan Sri Abdul Taib Mahmud said the redevelopment would help eradicating the creation of a slum in the middle of a thriving city. “More than that, I have very fond memories of the kampung. When I was a secondary school student, I would visit the villages here come every Hari Raya. “I will never forget how welcoming the villagers were. As the hosts, they would keep you in one house for so long you almost could not go to the next one. I used to start (visiting) at 8am and would not finish until 1am,” he reminisced. The name “Darul Hana”, Taib added, was chosen as it had been unofficially adopted to refer to the villages here for centuries. “(In Arabic) Darul means house or state, while Hana is peace and harmony. This is a way of life that must be retained in the middle of the city. It reminds us that in Sarawak, we are genuinely living in harmony,” he said.

The Urban Wellbeing, Housing and Local Government Minister Datuk Abdul Rahman Dahlan The Urban Wellbeing, Housing and Local Government ministry will accept offers from owners of viable residential land for development of people’s housing projects (PPR). Its minister Abdul Rahman Dahlan said this was because suitable and strategically located land for housing development was lacking. At the same time the aim was also to provide housing for urbanites, that are integrated with facilities such as a recreational ground, kindergarten, playground and surau. He said this at the handing over of the Sibuga PPR project to the state government comprising 500 residential units valued at RM23.7 million. Chief minister Musa Aman represented the state government in the ceremony. Abdul Rahman said the project, marked under the Ninth Malaysia Plan, was one of 27 PPR projects implemented in Sabah involving 19,491 units of houses costing RM600 million. Another 4,750 units would be built in the state, with Kota Belud and Sandakan getting 1,000 units each, Kota Kinabalu, Kota Marudu, Tuaran and Kudat, 500 units each, Lahad Datu (400) and Tawau (350), he said. Meanwhile in a press conference, he said other state governments should adopt the Sabah government’s approach to initiate urban PPR projects.

/// East Malaysia Property News

Property Prices May See Mixed Outlook

Miri, Sarawak Property prices are expected to have a mixed outlook this year, with some positive news for those looking to purchase their first house. Sarawak Housing and Real Estate Developers’ Association (SHEDA) secretary-general Sim Kiang Chiok said the government is implementing various measures to slow down the pace of property price increases. He said the Real Properties Gain Tax (RGPT) introduced this year would deter speculators, while the prohibition of projects that have features of the Developer Interest Bearing Scheme (DIBS) would prevent developers from incorporating interest rates on loans in house prices during the construction period. Bank Negara also requires the banking sector to lend based on net income, which Sim said would dampen demand and maintain prices. In addition, the government is also helping first-time housebuyers by giving 110% loans for those who qualify under the Malaysia My First Home loan scheme. “For those who do not own houses,

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it is a good time to shop around. With the Malaysia My First Home loan scheme, they will be able to buy houses of a reasonable size and location,” Sim said. He commented on his concern that many young working adults here were burdened by rising property prices coupled with a significant increase in the cost of living. Sim pointed out that Prima Housing is also being undertaken throughout the country to build more affordable housing in urban centres and cities. He advised would-be home buyers to register online with Prima Housing so that they would know the exact demand and location of projects. “The definite outlook that we can foresee is that costs will rise and again in 2015 when GST (Goods and Services Tax) is implemented. Those who can afford a property, those with good credit ratings will benefit from investing in property in good locations (this year). They will enjoy good returns.” On property prospects here, Sim advised potential buyers to look at areas around Batu Kawah after the bridge to Bau, Matang area after Mile 6, Kuching-Serian road

after Mile 11 and Kota Samarahan. He also suggested aspiring house owners look at secondary markets. “Other types of houses that we usually overlook are second-hand property, which are usually located nearer to the city centre, which only need renovation and repair work. “These types of houses can be bought easily, as land titles in the state can be extended at any time for up to 99 years, which will mean that any titled second-hand house can have a title lease extended long enough for the bank loan over several decades, thus reducing the monthly repayment for the housing loan,” he said. However, he cautioned that prices are unlikely to drop due to rising construction costs. “On the cost of building houses in the country and state in particular, it is understood that the cost will rise due to reduced subsidies for fuel and electricity in the peninsula for this and last year, which will affect the manufacturing and transportation costs of building materials. “With the GST to be introduced in April 2015, some of the building materials are expected to rise.

All these increases in cost of construction will be translated into house prices. How much the increase would be will not only be subject to building cost increases but other factors such as demand, location, house design, types of houses and amenities and facilities in the surrounding area. Do note that some areas with low demand might not even see any increase in house prices,” he said.

Cement Price Increase to Have Minimal Impact on Property Developers

Naim Unit Sells 51% Stake and Naim Holdings Shares Up

design, location, surrounding amenities, facilities, demand of houses, interest rates and ease of getting bank loans,” Sim said. He noted that developers should be able to absorb the increase in cement price if the properties they develop are attractive or are in demand by consumers or property investors.

The increase in cement prices in Sarawak is expected to have minimal impact on developers as the cost of cement is a small aggregate in the overall construction cost. This piece of good news comes from the the Sarawak Housing and Real Estate Developers’ Association’s (Sheda) secretary-general Sim Kiang Chiok.

He said that while the increase in cement prices will definitely affect the construction cost of houses, raw materials such as steel must also be taken into account in the overall construction cost, and hence, the overall cost of a property. “The increase in the cost of a property is determined not only by the construction cost itself, but also on the

Sarawak’s sole producer and manufacturer of cement, CMS Cement Sdn Bhd (CMS Cement), announced a 5% to 9% increase in cement prices across the state, effective on February 17. The price increase is expected to differ based on location, cement type, and distributors’ retail prices. From 2009 to 2013, CMS Cement has increased cement price by only 5.2% although production cost had increased by 14.5%. Sim also pointed out that CMS Cement has not raised its price since the last petrol price revision last year.

Outcry Over Sandakan Shoplot Rent Hike the commissioning of the building in 1992. “We will look into it and discuss how we can work on a win-win situation, Wong said after the discussion with Tsen at Wisma Perbandaran.

Mile 4, Sandakan Shoplot tenants at Menara MPS in the heart of town can breathe a sigh of relief as Batu Sapi Member of Parliment Datuk Linda Tsen Thau Lin met with Sandakan Municipal Council President Datuk James Wong on the Menara MPS rent issue. A decision by Sandakan Municipal Council to raise the rent by 150% for premises on the ground floor of the

commercial cum multi-storey carpark effective 1 April 2014 drew strong criticism from the public and the tenants particularly coming at a time when business was slow. Many claimed the exorbitant rent hike would force them either to close down or move their businesses to premises elsewhere. Some of the tenants have been occupying the shoplots since

A tenant, Charles Lee said the current rent rate was RM2.80 per sq ft and it will shoot up to RM6.50 per sq ft when the new rate comes into effect on 1 April 2014. “The present tenancy contract runs until 31 March 2014 and if you are now paying a monthly rent of RM1,000, you will have to pay RM2,500 under the new contract following the rent hike,” Lee said adding that there are 32 units of shoplots on the ground floor of Menara MPS.

Investors attending a preview of Naim Holdings’ Bintulu Paragon development Naim Holdings Bhd’s unit Naim Land Sdn Bhd has inked an agreement to sell its entire 51% equity stake in Total Reliability Sdn Bhd (TRSB) to HWS Properties Sdn Bhd for a cash consideration of RM6.5 million. HWS currently owns 450,000 shares representing 9% equity in TRSB. “The original cost of investment in TRSB (for Naim) is RM2.55 million,” Naim said in a statement to Bursa Malaysia on 23 January 2014. Shares of Naim Holdings Bhd rose at mid-afternoon on 23 January after it sold its unit to a property based company on 22 January,

its shares rose 11 sen to RM3.79 with 620,900 shares done between RM3.63 and RM3.81. The FBM KLCI fell 4.79 points to 1,809.31. Turnover was 1.36 billion valued at RM1.682 billion. There were 192 gainers, 556 decliners and 316 counters unchanged. Naim Holdings had sold its entire 51% stake in property-based Total Reliability Sdn Bhd to HWS Properties Sdn Bhd for RM6.50 million cash consideration. After the purchase, HWS Properties’ stake will increase from currently 9% to 60%, according to a filing to Bursa Malaysia on 22 January 2014.

The increase in the cost of a property is determined not only by the construction cost itself, but also on the design, location, surrounding amenities, facilities, demand of houses, interest rates and ease of getting bank loans

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/// Contributor

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.

Trending Up Legally in View of The Property Boom in Malaysia (Part 1)

hese days, it is easy to detect a smile on those who have invested in real estate for the past 5 to 10 years. The low investment that they have invested has brought these investors handsome returns and such sweet after taste has led them to ask for more. It becomes even obvious when real estate investment seems to be a hot topic for social gatherings among friends and family. Beyond Kuala Lumpur, the list of property hotspots in Malaysia has expanded to cover the Greater Kuala Lumpur (thanks to the MRT and the ongoing highways connections as well as the spillover of the city center), Penang (on both sides of the sea connected by the old and new bridges and possibly an undersea tunnel to the North), Iskandar Malaysia (the obvious influx of foreign interests with theme parks and filming industry as well as the link to the Singapore), Kota Kinabalu (for its well established international flight connection network and its rich tourism resources) to even places like Melaka and Greater Johor given the potential stops in the route of the High Speed Rail from Kuala Lumpur to Singapore. From the above, it’s safe to say that your money is quite safe with real estate and more money will be flowing into this sector as the Country’s last push towards a developed status in 2020, notwithstanding all the cooling off measures introduced and to be introduced in this common journey. Given such destiny, we observe some new dealing patterns trending up in the process of buying and selling of real estate and along with it some much needed clarifications.

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

Trend No. 1: Trading of Real Estate as a Commodity while leveraging on the Bank’s financing Not every investor takes the effort to understand what real estate is all about. The simple strategy is to pay a low down payment with the help of discount and rebate thrown in by the developer as well as the ready leveraging and then looking for a buyer to sell as soon as the property is ready. The details are not relevant to them for as long as there is money to be made. Wastage normally happened when there is abundance. However, as the road forward is getting more challenging, keeping your bottom line intact is important. Most of the time, this happened in the secondary sale in the market when there are banks involved on both ends. The complexity of the property redemption process from the bank seems to be beyond the logic comprehension of the transacting parties. Payment of the balance purchase price to redeem the property from the Seller’s bank is as good as payment to the Seller. Therefore, the Seller cannot claim for any late payment interests on the redemption sum paid in the event that the transaction cannot complete in time. Similarly, payment to the Seller’s solicitors of the differential sum between the balance purchase price and the loan amount procured by the Buyer is as good as payment to the Seller. Therefore, Seller has no claim of late payment interests in the said differential sum is it has already been placed with the Seller’s solicitors.

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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Based on the above together with the unique practices of the respective banks, the Seller has always been left wondering about payment while it could actually been paid but pending release due to some technicalities yet to be complied with.

Here’s a useful flow chart that outline the entire process of redemption from the bank in a subsale situation:

Redemption of Property

Seller request from his existing financier a redemption statement stipulating the redemption sum. (Outstanding amount) 14 days Seller’s financier to issue redemption statement to Purchaser’s financier

Purchaser’s financier to release first stage of loan sum. (Redemption sum)

With title

14 -21 days

Seller’s financier to execute the discharge form (16N) and original security documents which are: 1. Original title 2. Sale and Purchase Agreement 3. Facility Agreement 4. Duplicate Charge (16A) 5. Give the executed 16N form to Financier’s lawyer

Financier’s lawyer registers the discharge form (16N) and transfer in favor of Purchase and charge in favor of Financier with the land office

Purchaser’s lawyer to complete the Deed of Assignment in favor of the purchaser

Financier’s lawyer to complete the Deed of assignment in favor of the Financier

Purchaser’s financier will process to release the remaining loan sum

Without title

Seller’s financier to execute the Deed of receipt and Reassignment (DRR) and will return the original security documents which are: 1. Deed of Assignment 2. Original Sale and Purchase Agreement 3. Facility Agreement 4. Power of Attorney

Seller’s lawyer to register DRR and revoke Power of Attorney with High Court

This is a series of articles that examine the latest trends and issues in real estate investment. In the next issue, I will share with you on whether you can sell your property before you take vacant possession of the completed unit. Stay tuned.

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/// Hot Topic

The Worst Places to Invest in 2013

/// HOT TOPIC

Venice, Italy

No property investor wants to miss out on the next big opportunity, but there are still some countries that, despite all the marketing hype, will leave you feeling the chill of recession long after you have parted with your cash. Although there are arguably many worse places in the world to put your hard-earned money, overseas property investment company Colordarcy took a look at what it considered to be the worst property markets of 2013 – markets that enjoyed stable governments and democracies, as well as functioning economies. All of its selections of the worst property markets for 2013 were in Europe, with just one making it onto the list for the second year running. 5. ITALY Italy’s economic situation is so bad the government is even laying off job centre staff to save money. This goes some way to explaining why Italy enters our Worst Property Markets list. Property prices in Italy have slumped by 5.1 percent. Just when other parts of Europe are

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worrying about property bubbles – Italy has lost all the fizz out of its property market. That said, there is no shortage of opportunities to invest in Italy if you enjoy la dolce vita (the good life) with some nice properties to be found amongst the lemon trees in those green Tuscan landscapes. Any students of Italian history will know about Italy’s economic miracle of the 50s and 60s. It needs another one now. Italy has suffered the longest recession since the end of the Second World War and, with consumer spending low and exports not competitive, the economy is forecast to shrink by 1.8 percent this year. The next generation now has to deal with youth unemployment at a record high of more than 40 percent. Many would rather leave the country than buy a home in Italy. Italy hasn’t been in this kind of mess since the end of the Second World War, and it is unlikely that a second economic miracle will be coming anytime soon.

If you bought a property in Italy in 2013 it is likely you will have lost money, and the chances are that you will lose even more in 2014 while trying to plug the leak in rental returns. ECONOMY: It’s still shrinking and the outlook remains bleak. CAPITAL GROWTH: All the cards are stacked against it. RENTAL MARKET: At 2.56 percent in the capital, Rome, the rent wouldn’t even cover your costs. FINANCE/MORTGAGE ACCESSIBILITY: The mortgage market is tight in a country where job security is a thing of the past. VALUE: Property in Italy is expensive and there are better places to invest your money unless, that is, you have a particular liking for this country. 4. CROATIA The head of Croatia’s Chamber of Commerce was recently arrested on suspicion of corruption and embezzlement. This is news the country can do without, after years

of recession and plummeting property values which saw another 5.5 percent fall in 2013. Croatia is a beautiful country and a nice place to visit for cheap holidays, but a property investors’ paradise it most certainly is not. This is a country where it is still acceptable to send ‘thugs’ around to evict a stubborn tenant, according to The Global Property Guide. What can be said about Croatia is that it is an example of how joining the European Union doesn’t necessarily guarantee an upsurge in property prices and an economic feel-good factor. Unlike some East European countries fortunate enough to join the EU party early, Croatia was the latecomer – arriving just as most of the rest of Europe was nursing a hangover. After four long years of recession there are rumours that Croatia may seek assistance from the International Monetary Fund (IMF). The country’s borrowing needs were described as “enormous and very risky” by their own Finance Minister. This doesn’t inspire confidence;

however, if you are willing to take a very big gamble, Croatia is expecting to be out of recession in 2014. It has to be said, however, that adoption of the euro is unlikely to happen for two to three years – and is that a good thing anyway, these days. ECONOMY: Croatia has been in recession pretty much since 2009. There are real hopes of a recovery in 2014, but this depends on EU growth and there hasn’t been much of that lately. CAPITAL GROWTH: Prices were still heading south in 2013 and are likely to continue doing so in 2014. RENTAL MARKET: 2.73 percent rental yields are hardly better than Italy. Still, if you have a problem tenant, you can send around some ‘thugs’ who may be happy to remove your tenant for a fee! FINANCE/MORTGAGE ACCESSIBILITY: Let’s face it, no serious lender will want to lend you money to invest in property in Croatia unless you can convince them that they will get it back somehow. VALUE: It’s cheaper to buy a house here than Latvia â but why would you? 3. SPAIN Spanish property developers have been trying all sorts of incentives to attract investors into its property market in 2013. The result, another 7.6 percent fall in property prices which wipes off nearly 40 percent in total prices in some areas since the peak of 2007. The problem with Spain is that its people are dealing with a deep recession – and foreign investors know they can go there and negotiate for bargain prices. This means every discount brings a further fall in prices. It has been part of a vicious circle that has been going on for years. Spain managed to avoid the list last year, because we thought that things surely couldn’t get any worse for the country, and that the bottom had been reached. Unfortunately, this turned out not to be the case. Everyone trying to sell property in Spain is willing the market to recover, yet the numbers just keep

on falling to the point where nobody knows how long it will be before the bottom is finally reached. Still, there is a bright side now with Spain. Fitch, the credit ratings agency, has removed the country’s negative outlook, even though Moody’s (another major credit ratings agency) continues to see Spain’s creditworthiness as “just above junk”. Even unemployment has fallen, though it remains at more than 25 percent. Countries with high unemployment and 0.1 percent GDP growth don’t make ideal destinations for property investors, however Spain must surely be one to watch in 2014 if the market does hit bottom. ECONOMY: Bring out the Cava (these are hard times!). Things are looking up after another tough year. Spain finally made it out of recession in 2013. CAPITAL GROWTH: You may have lost another 7.6 percent this year. Still, at least we can look forward to better things to come – just not yet. RENTAL MARKET: Still poor at 3.45 percent or less in some cities. The Spanish people just don’t have enough money to pay high rents, and holidaymakers remain spoilt for choice..

enjoy a long weekend. There is also the recent announcement that Hungary will record some economic growth in 2013. One percent GDP growth might not sound like much but, for a country that has been through the mill, this is a huge boost and might hint at better things to come even if the fact remains that property prices slumped by 8.2 percent in 2013. Hungary expects to see double the GDP growth in 2014 and it looks like the spending power of its people will be boosted by a government committed to stimulating growth. I’m sure I heard all this last year from the optimistic Hungarians and it might be enough to convince property investors to set off for Hungary again next year if economic growth returns and demand for housing rises. Until then, investing in Hungarian property means sub-5 percent rental yields and no capital growth. ECONOMY: More good news than the other four on our list, with GDP expected to double to 2 percent in 2014 and the living standards of its people rising again. CAPITAL GROWTH: Maybe next year. RENTAL MARKET: 3.83 percent yields are nothing to write home about.

FINANCE/MORTGAGE ACCESSIBILITY: You can easily get a mortgage to invest in Spanish property.

FINANCE/MORTGAGE ACCESSIBILITY: You can get 70 percent loan-tovalue but there are a few hoops to jump through to get the finance. Not worth the effort at the moment.

VALUE: After years of painful price falls, Spanish property is looking a lot cheaper.

VALUE: In Hungary you get more for your money compared to Western European cities.

2. HUNGARY

1. GREECE

There is an old saying in property, “Invest in Hungary and you’ll go Hungry”. Actually, we just made that up – but it is true that this central European country continues to offer property investors nothing - and things must be even worse than last year because it makes our top (or bottom) two – whichever way you prefer to look at it.

People were celebrating the fact that Greece’s economy shrank by “only 3 percent” in the third quarter of 2013. This should tell you something about the trouble Greece was in before.

The only positive things we can say about Hungary is that the situation is not as bad as in Greece, and Budapest is still a great place to

double-digit price falls. Property prices were down another 11.5 percent, according to Knight Frank. Now, if you happen to be a property investor considering Greece then there may well be something in this if you like to look at the very long term – and can afford to take some of the pain in the short- to mediumterm. It has to be said that the situation is still grim in Greece, even if it hasn’t been in the news so much lately. Youth unemployment is over 60 percent now and general unemployment is more than 27 percent. There are drive-by shootings of party officials, and the situation in the country can be described as unstable and volatile. Not ideal for foreign investors who crave stability after a long downturn. Rental yields average about 3.5 percent if you are lucky to get a tenant in a steady, well-paid job, but don’t expect to see any capital growth in 2014. It is more likely that you will lose capital here. ECONOMY: The Greeks are relieved that their economy is only shrinking 3 percent a quarter now. Unemployment is 27.3 percent. CAPITAL GROWTH: You will almost certainly have lost money on property in Greece in 2013. 2014 is unlikely to be any better. RENTAL MARKET: Yields are poor at less than 4 percent, even as property prices are still tumbling. Tenants may not have the job security they once enjoyed before the country got itself in an almighty mess. FINANCE/MORTGAGE ACCESSIBILITY: Mortgage for a property in Greece? Are you joking. VALUE: What someone is prepared to pay for your falling asset. There are safer and cheaper alternatives elsewhere.

Still, Greece moves up to number one on our list because the countries that we thought were worse places to invest last year have started to get their act together. The real downside for Greece in 2013 was another 12 months of

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/// Hot Topic

Year of Change for Property

The outlook for 2014 points to an evolving landscape of possibilities, tempered by current local sentiment. Different rules of engagement seem to be leading the winds of change in the property market this year. Some may be tempted to think that the elements of a perfect storm are brewing with the new measures outlined by Budget 2014, i.e. revised RPGT (Real Property Gains Tax) and the barring of DIBS (Developer Interest Bearing Scheme), etc. There is also stricter Loan-to-Value (LTV) ratio calculations, electricity tariff hikes and the increase in assessment rates to contend with. Still, others opine that the property market will continue to climb upwards in the second quarter – albeit taking off on a more sluggish pace during the first quarter of 2014. This is due to the current sentiment of the market, with most adopting a wait-and-see approach. In view of people tightening their belts and the rising need for affordable housing, a few savvy developers are already tapering down their high-end offerings to roll-out more affordable housing projects for the people. In the past few years, the property market has been riding on an upward trend.

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In some cases, prices of residential properties surging upwards by 30% to 35% have been nothing out of the ordinary. Fuelled by what seemed to be like an unending game, uncontrolled speculative buying and a lack of supply meeting demand have caused prices to rise, of which property prices have been especially robust. In fact, an upward spiralling trend – that witnessed property prices surging way past the perceived boom cycle to reach unprecedented highs, has proven that the property market has been especially resilient. So much so, that purchasing a property may seem like an impossibility for the average wage earner – even in his lifetime. Another restriction spells that the days of easy financing too is fast fading – with Bank Negara Malaysia (BNM) stepping in to exercise stricter control with regards to also imposing tighter lending criteria for developers and property buyers alike. Additionally, with the Goods and Services Tax (GST) coming into force on April 1, 2015, some argue that the prices of properties will only increase in the future, given the fact that rising material and construction costs inevitably contribute to the domino effect. Industry experts share their views below.

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REI Group of Companies CEO and Co-Founder Dr Daniele Gambero 2014 is going to see a change in the rules of property investment. The Government, BNM and all the bank systems are following the direction by BNM which has changed the rules of the game. RPGT and DIBS are minor changes. The big change is the imposed transparency developers will face on selling values. This brings back the basic value of the brick. Developers were selling bricks wrapped up with the financial package – air-conditioners, water heaters, kitchen cabinets and what I call “free-but not- so-free” items like free loan agreements and MOT(Memorandum of Transfer). Some developers even became “travel agents” – even offering trips to China. Others offered lucky draws for cars but all these items are not part of the value of the house. These additional values that developers are including in their sales are against the regulations as the purchaser is at the losing end. With the new rules, the purchaser will buy “a-brickfor-a-brick” and get finance on the brick for the real value. I am happy there is a slow readjustment to a healthier market, provided investors will start looking at property as a long-term

investment. Everything is mapped out in the property price. It will take six months for my forecast to readjust. The next 10 to 15 years or so, I think, will be positive. Iskandar Malaysia in Johor, Klang Valley, Penang, Ipoh and Kuantan are present and future hotspots as they offer a strategically sustainable location for investors. Malaysia has been legislated, so there is no reason for a property bubble. Speculations and prices are pushed up because the number of properties offered are low, as compared to the current actual demand. In this kind of situation, developers start building houses to the point where the offer is much higher than the demand. At that point, the bubble will burst, but if you were to look at the current prices in Malaysia and the house index value, we cannot find any huge jump in prices. The demand for property units is so much higher compared to what’s on offer, so the outlook is definitely very positive. Axis REIT Managers Bhd Chief Executive Officer (CEO) and e\ Executive Director Datuk Stewart Labrooy We have to reboot how we think about everything and how we

Malaysia has been legislated, so there is no reason for a property bubble. Speculations and prices are pushed up because the number of properties offered are low, as compared to the current actual demand. develop the housing market in the country. I think there are going to be a lot of changes. No one has really digested the effects. I believe that everyone is trying to do some sort of simulation of how things are going to work out. I see a lot of very positive signs in the sector I am in and I wish to focus on that rather than the market in general. The industrial property sector, to me, is showing tremendous resurgence and we are trying to work hard to create products to boost the demand for industrial properties. The problem is, it has been a very much ignored sector for many years. We see this as a real opportunity for developers to refocus on rolling out more industrial products. However, they should make them a part of their overall mixed development townships. I think the industrial property sector is definitely positive because the demand drivers are there and a lot of opportunities await the industrial sector moving forward. I think the big challenge in the residential sector is the affordable housing sector, which is huge. With the rising prices, many houses are beyond the reach of a lot of serious buyers. I personally do not see how people can afford to purchase properties. Everyone now looks at property as a property play rather than a long-term investment. And, this is what is driving up prices. So the outlook will be focused on developers who are already switching to producing affordable housing now because they see that the high end market is saturated and they will be able to actually continue their growth by

switching over to the affordable sector. I think that growth will not be hampered but the products being offered in the market will be increasingly different than what it was before. This means that luxury residences will be tapered down and be replaced by more affordable housing projects. Malaysia Property Incorporated General Manager Veena Loh I think the market outlook will be soft in the first half of this year as investors take stock of the new Budget 2014 ruling and the tighter BNM measures that have been implemented in the second half of last year which will make it less conducive for buyers in 2014. Other factors include the removal of DIBS effective Oct 2013, further tightening of the LTV ratio for property purchases issued in Nov 2013, the shortening of personal financing to a maximum of 10 years and the capping of the maximum tenure for residential and nonresidential property financing at 35 years that was announced in July 2013. On top of this, the uncertainty of when exactly the ruling limit on the threshold of the minimum purchase price of RM1 million for residential properties will apply to foreign buyers from the previous RM500,000 limit. Foreigners constitute less than 10% of the buyers in Malaysia, but the big bulk of luxury properties in Iskandar, Johor are targeted at Singaporeans. I think that luxury condominiums there are likely to be hit. Within Johor, the constitution of foreigners

who are buying quite a large portion are currently purchasing units priced at less than RM1 million. This percentage is larger in the three popular states – Penang, KL and Johor. I think that although all will be hit, Johor will be the worst. Penang has been hit since they raised the minimum property purchase price for foreigners to RM2 million on the island last July. According to the newest tax ruling for foreigners, there will be a 3% levy on foreigners who buy properties in Penang. The same is true for Johor with its levy of RM10,000 for foreign buyers. Now, they are raising it to 2%. When exactly this will be imposed is uncertain as the finer details are yet unknown. This is causing a wait-andsee attitude. In the second half, there is concern of the likelihood of rising interest rates on property affected by external measures as the United States tapers its quantitative easing measures. Although the short-term situation may not be so good, in the long-term – the property market in Malaysia will still be sustainable. Andaman Property Management Sdn Bhd Managing Director Datuk Seri Dr Vincent Tiew 2014 will be extremely challenging because the biggest obstacle that the developers face are the bankers. The first challenge is when developers want to buy land and try to get the loan for land purchase as well as the bridging loan. The second challenge that will be faced by 99% of the developers is the difficulties buyers will have in securing loans.

So, I feel that what will determine the success of developers in 2014 is actually their ability to manage the two points mentioned above. My outlook is that there will be slightly fewer property launches in 2014. However, the volume of transactions should remain the same and will pick up in the second half of 2014. The first half will be a confusing transition period for developers and buyers because of the new measures of Budget 2014. This is coupled by the BNM measures with more restrictions on the lending ratio and loan policies. I anticipate that the first half of 2014 will be very much a slow period whereas the second half should pick up very steeply and competitively. This is the time when buyers and investors will return to the market with their investment and wealth creation strategies. In 2014, one of the key things I would like to see is how successfully the concept of affordable housing will be implemented. This is because it will directly affect the developers’ strategies across the various states as each of the respective states will have different policies. Additionally, there are many states that may choose to develop their own affordable housing programme instead of linking up with the Federal Government’s 1Malaysia People’s Housing Scheme (PR1MA) project.

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/// East Malaysia Property News

Sabah Mulls Adding More Affordable Housing Units

2,600 More Hotel Rooms in Sabah and Peninsular at least three years ago were now recording average occupancy rate of between 75% and 80%, adding that the newer hotels would need time to build up their occupancy rates. He gave the thumbs-up to the Government for putting in place good infrastructure that was essential for tourism development.

Kota Kinabalu City

Low-cost house for the poor under construction in Kg Sabah Baru in Lahad Datu Sabah wants to increase the number of affordable housing units to be built in the state by another 10,000, Chief Minister Datuk Seri Musa Aman said. He said this was over and above the 23,126 housing units that are to be completed in the state over the next few years. “We need the additional houses to accommodate the number squatter families that have been recorded by our local authorities,” Musa said after witnessing the handing over of the 500-unit Lintas Sibuga

low-cost housing scheme in Sandakan from the Housing and Local Government Ministry to state authorities. He said the Lintas Sibuga housing scheme was part of the 13,756 low-cost units that had been completed in Sabah so far. “We know there are many more families hoping for decent and affordable housing and we are doing our best to meet their expectations,” Musa added.

Everywhere you go, there are excellent airports like in Kuching and Kota Kinabalu. What is also important (for tourism development) is efficient immigration and customs services

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French hotel group Accor is rapidly expanding its network in Malaysia, with 15 new hotels nationwide in the pipeline by 2016. The new hotels coming up in Sabah and Peninsular Malaysia will provide about 2,600 rooms. By next year, the group’s Malaysian network is expected to more than double to 20 hotels with over 5,000 rooms from the current eight hotels. Senior vice-president for Malaysia, Indonesia and Singapore Gerard Guillouet said the Europe’s leading hotel operator saw Malaysia as one of SouthEast Asia’s top tourism destinations. “Malaysia has a lot of potential for us to grow. We are focusing our energy to aggressively develop more hotels in the country across all market segments. “The mix of hotel segments in the pipeline indicates that we will continue to have a well-balanced network in 2015, with 15% of the hotels being upscale, 40% mid-scale and 45% being economy hotels,” he told StarBiz. He said the network would also be geographically balanced, with hotels in strategic business

and leisure destinations throughout the country. Accor’s existing eight hotels in Malaysia are under three of the group’s 11 brands. The three are Pullman, Novotel and ibis Styles hotels. They are Pullman Putrajaya, Pullman Bangsar, Pullman Kuching, Novotel Kota Kinabalu, Novotel Kuala Lumpur City Centre, ibis Styles Fraser Perak, ibis Styles Cheras, Kuala Lumpur and ibis Styles Ipoh. The 513-room Pullman Bangsar opened for business last month. “We expect to open at least four hotels this year. They include Novotel Melaka (374 rooms), Mercure Kota Kinabalu Eton (103 rooms) and ibis Styles Sandakan Waterfront (135 rooms),” said Guillouet. According to him, Accor would have 25 hotels in 11 Malaysian cities and towns by 2017 based on committed projects under construction. He said Accor aimed to be Malaysia’s leading international hotel operator by 2017 from its current ranking of among the top five. Guillouet said Accor hotels in Malaysia which opened

“Everywhere you go, there are excellent airports like in Kuching and Kota Kinabalu. What is also important (for tourism development) is efficient immigration and customs services,” said Guillouet, who returned to serve Malaysia two years ago. His first posting in this country was in 1991. He said Accor recorded some 300 million visitors to its website and generated 25 million room nights in its hotels last year. He said as Accor saw faster growth in Asia for upscale and luxury hotels, the group was in the process of shifting its marketing base to Singapore from Paris. Accor currently operates four hotels in Singapore where its office will take over worldwide marketing for the group in the first quarter of this year.

Offer for Ireka ‘Not Fair’ but ‘Reasonable’ The group has continued to suffer losses via its 23.07% stake in Londonlisted Aseana Properties Ltd, which has resulted in a loss amounting to RM19.07 million for the financial year ended March 31, 2013. Landscape of Sandakan town with Harbour Mall in sight Minority shareholders of Ireka Corp Bhd are advised to vote in favour of its controlling shareholder and founder Datuk Lai Siew Wah’s proposed offer to take the company private via a selective capital repayment (SCR) and a corresponding capital repayment exercise of 90 sen per share totaling RM36.19 million. This was despite its independent adviser Affin Investment Bank Bhd (Affin IB) deeming the cash repayment sum as “not fair” as it is lower than the sum-ofparts valuation per Ireka share of RM1.20 as well as below the prevailing market price of Ireka shares of RM1.07 on Jan 21 of RM1.07. “(However,) entitled shareholders should monitor the market price of Ireka shares before arriving at the decision as to whether to vote in favour of or against the special resolution pertaining to the proposed SCR to be tabled at the forthcoming EGM,” said Affin IB in a circular to shareholders yesterday. Nevertheless, Affin IB found the cash repayment sum “reasonable” as it is offered at a premium that is above the average premiums paid for completed SCR transactions since January 2011 up to the

last practicable date. “We are of the opinion that the proposed SCR is reasonable, taking into account Ireka’s low trading liquidity and the opportunity for entitled shareholders to exit their investment in the company which provided a negative rate of return on investment of 0.26% over the past five years,” said Ireka. It also noted the uncertainties the construction and property development group has to face given the prevailing challenges in the construction industry, and the absence of an alternative offer and/or higher bid for Ireka shares. Accordingly, it is recommending that the entitled shareholders vote in favour of the proposed SCR at the forthcoming meeting. To recap, on June 2013, Ireka announced that it has received an offer from Olymvest Sdn Bhd, which is Lai’s specialpurpose vehicle for the deal, to take Ireka private via the SCR and repayment exercise. Lai’s investment vehicle, Ideal Land Holdings Sdn Bhd, is the single largest shareholder with a 43.02% stake, followed by Magnipact Resources Sdn Bhd with 13.52%. Lai and his parties acting in concert collectively control 64.7% of Ireka.

The loss incurred in Aseana is due to the decline in fair value of Aseana’s 16.32% investment in Ho Chi Minh Stock Exchange listed Nam Long Investment Corp, and operating losses of Four Points by Sheraton Sandakan Hotel and Harbour Mall Sandakan. “As Aseana’s projects require a long gestation period to achieve profitability, it is likely that Aseana will incur losses in the near term and that future profitability, if any, would depend on the level of patronage and occupancy for the mall and the hotels,” Affin IB noted. Lai and parties acting in concert intend to continue with Ireka’s existing business and operations and have no plans to liquidate Ireka in the next 12 months following the completion of the proposed SCR. Upon completion of the proposed SCR, Ireka will be 100% owned by Lai and parties acting in concert, who do not intend to maintain the listing status of Ireka on the Main Market of Bursa Malaysia.

MIEA Thinks Focus Shift From Primary to Secondary Market in 2014 priced ridiculously higher – at say RM1,500 per sq ft – than an existing project, with property tagged at RM1,000 psf. That is what speculation has done to the property market. If we are not careful, Siva believes, this could lead to a bursting of the property bubble, if not a market crash.

Malaysian Institute of Estate Agents president Siva Shanker The Malaysian property market has arguably been in a tailspin since late last year, after property curbs announced in Budget 2014 and cooling measures implemented by Bank Negara Malaysia.

About the 2014 property outlook, Siva believes the market will maintain its resilience as long as local household incomes remain intact, the Malaysian property market being driven by domestic demand.

Many investors, speculators included, who had bought properties from developers and had wanted to flip them two or three years after completion are in a bind, having to deal with measures such as the revised real property gains tax (RPGT) announced in the most recent budget.

Supported by a young demographic, the country should continue to form new households to support property demand. Other gamechangers will be the introduction of more innovative and premier lifestyle products, as buyers become more demanding. Siva says a good concept in the right location will always do well but cautions that while location is important, it is not everything.

The new RPGT rates have resulted in a number of investors putting property purchases on hold, says Malaysian Institute of Estate Agents president Siva Shanker, who foresees more investors switching focus from the primary to the secondary market. Although the primary market makes up just 10 to 15 per cent of total residential property transactions, the rest coming from the sub-sale market, Siva points out transactions of such properties from developers fell last year. This trend is expected to continue this year. Part of the reason could be developers having come up with similar products in the last few years. This explains how the prices of some high-end residential properties have shot up by as much as 35 per cent a year, he says. Citing another example to support his view of a shift to the secondary property market, Siva says launches could be

Concurring with Siva, Andaman Group managing director Datuk Seri Vincent Tiew views price as being equally important, together with timing, knowledge and networking with property experts. “Buying property is not just about location, location, location,” remarks Tiew, who also disagrees with the view that all properties along the mass rail transit (MRT) network should be snapped up. Investors must consider the standard of these properties, he says, and look at proven fundamentals. “Always stay focussed; adopt and practise smart property investment,” adds Tiew, whose favourite investment quote is from Bill Gates, who says: “If you are born poor, it is not your mistake; but if you die poor, it is your mistake.”

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Chang Cheng Realty Ushers in the Year of the Horse

he property market in the Year of the Horse is estimated to be on ‘wait-and-hold’ in the first quarter. And managing director of Chang Cheng Realty (who is also the head of the SHAREDA Youth Council) Tee Hong Wee believes that the market will bounce back in the second half of the year. He said, “Although there are a lot of uncertainties, life goes on. We (at Chang Cheng) are not in the position to just wait and see what happens. We still cater to the public and change our design to the needs of the people.” He adds: “The government needs to clarify a lot of things so that investors will come back and have the confidence in our property market. A lot of things are uncertain especially the GST, RPGT and cutting down of bank loans. Opportunity needs to be provided to genuine buyers.” In March, Chang Cheng will be launching the Eco Park and they will have another three projects lined up in Labuan this year. The developer will also launch their C

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Park SOHO targeting at a maximum of RM400,000 for a 900 square feet unit. According to Tee, “We will be more selective this year and we will be focusing on mid range residential. The market between the RM300,000 to RM400,000 range will be the gold mine as people won’t be so keen on high end residential. However, the demand for commercial units and industrial lots will remain good.” He concludes: “We would like to wish everyone great health and happiness this year especially in times of uncertainty.” The developer recently held an Open House at their sales gallery in KK Times Square to usher in the new year.

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Launching of New Restaurant by Kinsabina

a Vintage Bar & Grill is the brainchild of Francis Goh, the managing director of the Kinsabina Group of Companies. Located at Wisma Kinsabina in Penampang, this multi-theme restaurant features five different dining areas that highlight our local heritage and history. According to Goh, opening this restaurant was a diversification exercise for Kinsabina. The company is venturing into more tourism related property developments and F&B outlets will be one of their core businesses. He said, “One of the main elements in a hotel is the F&B outlet. We decided to open this restaurant to gain experience since we are going to develop more tourism related properties such as the Royal Kinabalu Hotel, Aman Saujana and Aman Pesona.” He adds: “F&B is a very tough business, but we have a good team. We are also hoping to open restaurants in our condos such as Lido Four Seasons and Sodomon Riverside. Our F&B team is training to manage all these operations so that we can provide better services to the residents.” La Vintage is supported by the function hall and seminar room that can cater up to 200 pax. Besides this restaurant, Kinsabina has also opened LV Restaurant in Suria Sabah and will soon open Nasi

Kandar Hameediyah in Putatan. At the recent opening of the restaurant, guest of honour Datuk Panglima Masidi Manjun minster of tourism, culture and environment Sabah said that tourism is one of the main industries and economy generator in Sabah. However, the state lacks hotel rooms especially in five-star hotels. Masidi said, “We need more upscale hotels to cater to more tourists coming in. Compared to 2012, Sabah saw an 87% increase of tourists from China in 2013. And KK was voted in the Macau Daily as the 18th most preferred travel destination by Chinese tourists. KL only came in at the 20th spot.” He continues: “Besides the hotels, we also need to improve the standards of our restaurants and entertainment outlets. We need to be more creative and have a wide range of offerings for diners and visitors.” 2014 is the Visit Malaysia Year and Sabah is expecting approximately 3.8 million domestic and foreign tourist arrivals. And the state has to be ready to cater to the influx of tourists visiting. A lot of them are also showing interest in investing in properties here which will benefit our Malaysia My Second Home residency program.

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Oceanus Waterfront Mall Celebrates the Year of Horse Graced by Datuk Seri Masidi Manjun

aterfront Development Sdn Bhd celebrated Chinese New Year at the harbor located by the Oceanus Waterfront Mall in Kota Kinabalu. Estimated to open in May 2014, the development will consist of the international hotel chain JW Marriot Hotel with 365 rooms; Pelagos, a high end condominium with 111 unit of designer suites; about 4,000 over square feet of retail lots; and a special Japanese corner with brands from Tokyo. The celebration was graced by guest of honour, Datuk Seri Panglima Masidi Manjun Minister of Tourism, Culture and Environment Sabah. During his speech he mentioned that Kota Kinabalu (KK) was nominated the seventh preferred travel destination in Asia and the 18th preferred travel destination in the world. He said, “KK is becoming an exciting and livable city. We have grown leaps and bounds. And I hope that this new development will attract more visitors and add value to our city.” The Mayor of Kota Kinabalu Datuk Abidin Madingkir who was also present hopes to make Kota Kinabalu a cleaner city in 2014. He said, “In

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conjunction with Visit Malaysia Year 2014, we will be focusing on two of the five Ks which is kebersihan (cleanliness) and kecantikan (beautification). We want to make KK at a cleaner city for the estimated 3.4 million foreign and domestic visitors that will be coming to Sabah. We have tighten the rules and made the penalty heavier for litter bugs.” For the Year of the Horse, former Mayor Ilyas Ibrahim hopes that it will bring success to local businesses such as the Waterfront Mall. And Executiive Director of Waterfront Development Sdn Bhd Johnson Koh wishes that the 2014 will be a vibrant year which turns KK into an iconic city.

Innovative Projects Will Attract More Buyers in KK

t is undeniable that the announcement of the Budget 2014 has caused the property industry a slight setback. However, group managing director of Remajaya Chua Soon Ping, believes that the market will recover in the second half of the year. He said, “From June onwards I expect the prices of properties to go up regardless if it is a new or second hand property. The implementation of the GST will increase building cost so naturally new projects that will be launched will also increase in price. Developers have no choice.” He adds: “The local government’s implementation of the new rule permitting only 80 residential units in one acre will further dry the market. But let’s see what happens by April 2015. Let’s see if the global market is still stable by then.” Chua who is behind the success of Bay 21, located at Likas Bay launched the dual key units, a crossover between the Phase 1

apartments with 3 bedrooms, and the Phase 2 business suite with one bedroom. The dual key units were launched during their Chinese New Year open house held recently at their sales gallery. Guest of honour Datuk Panglima Masidi Manjun minister of tourism, culture and environment Sabah urged developers to be responsible to the buyers and live up to their promises. He suggest that reputable developers go for less profit to gain the trust in buyers, and ‘hit and run’ developers will not survive for long especially in a small state such as Sabah. Masidi also advised developers to build more interesting and innovative projects like Bay21 TOO to attract more foreign investments. In 2013, Sabah had 207 chartered flights from China flying into Kota Kinabalu and it is expected that there will be an increase of interest in the local property market by these Chinese tourists.

Looking Forward to a More Vibrant 2014

roperty buyers should look forward to a vibrant 2014 says SBC Corporation Group senior sales and marketing manager Dennis Tan. The current market seems slightly bleak due to the new GST scheme and banks tightening their financing packages, however Tan is confident that things will pick up after the Chinese New Year celebration. He said, “A lot of new properties were on hold since last December because developers were still trying to figure out how to market and package their products due to all the changes and uncertainties. But the public can definitely expect developers to be more active in launching newer developments after the holidays.”

SBC Corporation also aims to become more aggressive in their promotion especially to the foreign market. A series of upcoming events will be held to promote the balance units at the Peak SOHO. And the developer also has a few more projects in the pipeline including Jesselton Quey, a joint venture Suria Capital. Registration is ongoing to create awareness about this mix development. He adds: “Buyers are becoming more selective now with the projects they invest it. The main criteria they are looking for are projects by developers who have good track records in the past.”

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/// Feature Property Event

WSG Development Celebrates CNY

he WSG Development celebrated Chinese New Year with a grand open house at The Palm showroom in Kinarut. The guest of honour who officiated the celebration was Assistant Infrastructure Development Minister Datuk Ghulam Haidar Khan Bahadar. Guests were entertained with special performances and were served traditional delicacies. Managing Director Datuk Susan Wong Siew Guen said, “I would like to wish the readers of Property Hunter, a Happy Chinese New Year! The Year of the Horse will bring success and I want to encourage home buyers to invest in more properties as it will appreciate in value and buyers will gain more in return.”

Hap Seng Statewide Chinese New Year Celebration

n conjunction with the celebration of the Year of the Horse, Hap Seng Properties Development Sdn Bhd brings you the most exciting show this year, the Acrobatic Performance from He Nan, China! As a part of Hap Seng’s statewide New Year celebration, the show will take place at D’Perdana Square, Lahad Datu on the 15th February (Saturday) and Lau Gek Poh Foundation, Tawau on the 16th February (Sunday). The doors will open at 6.30pm, the event will begin at 7.00pm. This special show is an effort from Hap Seng Properties Development Sdn Bhd to bring together the people of Lahad Datu and Tawau to witness a world class acrobatic show closer to home over this Chinese New Year season. Hap Seng’s Chief Operating Officer, Mr John Tan says that this statewide celebration is a sign of Hap Seng’s

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appreciation towards its customers and advises the public to take advantage of the limited special offers which only lasts until 14th February, and vary by district. He also wishes all Malaysian Chinese a Happy Chinese New Year. In addition to the shows in these two towns, there will also be a Chinese New Year Open House at Astana Heights Sales Gallery in Sandakan, with Chinese Orchestra, Diabolo, Lion and Dragon Dances, Martial Arts performance and Lucky Draw on Friday, 7th February 2014 from 7pm – 10pm. Get your complimentary tickets by calling in to our Sales Offices (Bandar Sri Indah, Tawau: 089-773311; Astana Heights, Sandakan: 089-236255 & Bandar Sri Perdana, Lahad Datu: 089862222). Tickets are limited and distributed on first come first served basis.

Mah Sing Group Celebrates CNY

he Mah Sing Group recently ushered in the Year of the Horse with their business partners and customers. The CNY celebration was held at their sales gallery at KK Times Square. The festivities came to life with firecrackers and a lion dance to chase away bad luck and negative energy in 2014. The God of Wealth, also gave away golden chocolate coins as a symbol of luck and wealth. Guests were also treated to a scrumptious lunch buffet. With various projects in the pipeline this year, Mah Sing is ready to continue moving forward.

SP Setia Group to Enhance KK’s Status

ota Kinabalu is experiencing dynamic growth in its economy, tourism and real estate market. And SP Setia Bhd Group who recently held their Chinese New Year celebration at their sales gallery in KK Times Square is set for 2014. The Group will enhance its status with the 60-acre Aeropod, the city’s first integrated transport hub development. Stategicially located directly opposite Terminal One of the Kota Kinabalu International Airport (KKIA), Aeropod will be the new home of the existing Tanjung Aru railway station, which is part of the 134km Tenom-Tanjung Aru line formerly known as the North Borneo Railway and is the only operational rail transport system in Sabah. SP Setia will modernize and redevelop the train station, which covers about 18 acres, and as he city’s new transport hub, Aeropod will be similar to KL Sentral is some ways. Business development senior manager Alex Loh said, “We hold a long-term goal everywhere we go and we will be cautiously looking at the opportunities open to us because the real estate sector

will be challenging this year. But we are excited that the number of tourist arrivals is very significant,” he said adding that Sabah’s growth is coming from multiple dimensions, including the robust oil and gas sector. According to project planning and development senior manager Timothy Lim, “The first phase is to do the train station while the second phase is the commercial part of it. Very soon you will see the superstructure coming up and we hope to finish off within two years according to schedule. We will also be constructing a flyover at our own cost which starts from KKIA all the way to Kepayan.” Launched in February 2012, Aeropod will take10 years to construct and upon completion will include two hotels, 1,500 to 2,000 residential units and 140,00 sq ft of retail space. The urban pad will also include retail offices, corporate offices, a shopping mall with food and beverage, and entertainment outlets, plus SOVO units. Construction of boutique retail offices are currently in progress and due for completion in 2015.

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/// East Malaysia Property News

Property Potential to Perk Up Valuations for Local Planters

Kota Kinabalu No. 6 on TripAdvisor’s Asia List

underweight view on the sector. “Singapore fund managers were surprised to learn that the valuations of plantation stocks in Malaysia are relatively higher than regional peers in part due to the growing pool of syariah funds in Malaysia,” Ong observed.

Certain plantation entities in Malaysia will see their valuations lifted by property development potential, says an analyst with Maybank Investment Bank Bhd (Maybank Research). Analyst Ong Chee Ting in a report on the sector noted that unlike Indonesian planters, selected Malaysian plantation stocks have a property angle to them. “Some of these plantation land, mainly those located in Peninsular Malaysia, have been held for more than 20 years and are prime for property development,” the analyst highlighted. “For example, Genting Plantations Bhd, KL Kepong Bhd, and Sime Darby have strategic landbanks in the Klang Valley and Iskandar Malaysia (Johor) which are prime for property development. “In Miri (Sarawak), Sarawak Oil Palms Bhd (Sarawak Oil Palms) is about to embark on a new journey into property development to unlock the value of its plantation estates.. Ong further pegged companies with young tree age profiles to grow the fastest and outperform their peers in the long run. “In this space, Indonesian player Bumitama Agri leads the pack with its young tree age profile of about

5.5 years old, followed by Sarawakian player Ta Ann Holdings Bhd (about six years), TSH Resources Bhd (about seven years), Sarawak Oil Palms (about 8.5 years), and TH Plantations Bhd (about nine years). On Maybank Research’s top buys in the region, the firm pegged First Resources, Bumitama Agri, TSH Resources, Ta Ann and Felda Global. “We prefer small- to midcap plantation plays for this year’s first quarter on significant earnings turnaround leveraging on higher crude palm oil average selling prices year on year and their relatively cheaper valuations vis-à-vis large caps,” Ong explained. “Companies with good longterm growth proposition given their younger age tree profiles like First Resources, Bumitama Agri, TSH Reosurces and Ta Ann are our top picks. “For large caps, Felda Global is a trading buy, for we expect it to post a significant turnaround in core earnings given its relatively higher cost base and for mergers and acquisition potential.” Meanwhile, on the firm’s recent visit to Singaporean funds, Maybank Research gathered that most have little exposure to the plantation sector, and largely neutral to

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Syariah funds are prohibited from buying conventional banking and sin stocks (like gaming and alcohol) which preclude about 40 per cent investable stocks on the FBM KLCI. “The growing pool of syariah funds has in turn benefited the largely syariah compliant plantation, tele-communication, and oil & gas stocks which also explains their relatively higher valuations vis-a-vis regional peers. “Hence, while Malaysian plantation stocks are relatively more expensive than regional peers, we believe its valuations will remain rich going forward as the growing pool of syariah funds in recent years are structural in nature.”

Kota Kinabalu managed to snag the sixth spot on the 2013 Asia List, based on the reviews and opinions of millions of TripAdvisor travellers, TripAdvisor announced recently. The world’s largest travel site named the winners of its 2013 Travellers’ Choice Awards for Destinations on the Rise. The awards highlight 54 spots globally that have seen the greatest increase in positive traveller feedback and traveller interest, yearover-year. Havana, Cuba, was the number one ranked destination for the top 10 in the world, and lists were also revealed for Asia, South Pacific, Europe, South America, and the United States. Kota Kinabalu in Sabah, ranked sixth in Asia, is the only Malaysian destination included in the Asia list. “For travellers looking for inspiration for their 2014 travel planning, TripAdvisor travellers have helped us put a spotlight some amazing destinations that caught the eye of travellers this past year,” said Barbara Messing, chief marketing officer for TripAdvisor.

“Between large cities gathering steam and off-the-beaten-path spots surfaced by our community, travellers can discover wonderful accommodations, attractions and restaurants in all of these award-winning destinations.” Top 10 Destinations on the Rise in Asia: 1. 2. 3. 4.

Kathmandu, Nepal Sapporo, Japan Hanoi, Vietnam Siem Reap, Cambodia 5. Hua Hin, Thailand 6. Kota Kinabalu, Malaysia 7. Sanur, Indonesia 8. Macau, China 9. Jaipur, India 10. Busan, South Korea Top 10 Destinations on the Rise in the World: 1. 2.

1. Havana, Cuba La Fortuna de San Carlos, Costa Rica 3. Kathmandu, Nepal 4. Jerusalem, Israel 5. Cusco, Peru 6. Ambergris Caye, Belize 7. Sapporo, Japan 8. Hanoi, Vietnam 9. Corralejo, Spain 10. Fortaleza, Brazil

Sabah in Top 8 Malaysian Destinations for a Retreat Getaway turtle tomb that houses many skeletal remains of turtles. It is an amazing experience to witness more than 20 turtles during underwater dive as well. Instead of getting a sunsoaked holiday, most of the visitors on Sipadan Island are mostly diving enthusiasts as the underwater world is simply stunning and mesmerizing.

The urban city lifestyle can be fun and exciting but it can also be tremendously exhausting and stressful. Just think about it, when was your last time enjoying a long holiday without worrying about work and other problems? If you haven’t done it for a while, then it is definitely time for you to leave for a few days and go for a retreat getaway! Here are eight of our favourite nature-friendly getaway destinations for some r ‘n’ r. 1.

Sekeping Retreats Sekeping Retreats now have numerous retreat centers in various places including KL, Petaling Jaya, Bangsar, Ipoh and Penang. Sekeping Serendah is the most recommended and best rated place as it brings you closer to nature, allowing you to be mesmerized by the beauty of its surrounding. There are seven shed sets available in Sekeping Serendah within five acres of tropical rainforest. If you prefer to do a quick getaway, check out the rest of the Sekeping retreats in their website HERE. Awanmulan Apart from Sekeping Serendah, Awanmulan is an alternative place for you to truly experience life in a rainforest. Living in the nature has never been this lovely! The

retreat in Negeri Sembilan is intentionally basic with natural environment surrounding the building. There are different rooms to choose from , and the biggest room can fit in up to 12 people. Awanmulan also has a signature saltwater pool with the water pumped directly from the river across the hill. 3.

Banjaran Hotsprings One would say a getaway should be simple and relaxing but going for a luxurious spa holiday is something we all want to do once in a while. Banjaran Hotsprings provides a wonderful spa experience with its geothermal hot springs and a naturally heated swimming pool as well as a steam cave and ice baths. Located in the deep rainforest in Ipoh City, it is a two hour drive from city of KL. This five-star luxury retreat sanctuary offers exclusive butler services for the ultimate hospitality experience.

Perhentian Island For some, a perfect retreat getaway involves sundrenched beaches with refreshing breeze. Perhentian Island is one of the best scuba diving and snorkeling spots in Malaysia, and it offers numerous affordable choices of accommodation.

The sea water is crystal clear and most beaches are well-facilitated. Located at the west of Perhentian Besar in Terengganu, it takes approximately seven hours or less to reach the destination if you’re driving from KL. You can also take a flight to Kota Bharu Airport. 5.

Bagus Place Retreat, Pulau Tioman Similar to Perhentian Island, the beautiful Tioman Island is also another option for island lovers. Bagus Place Retreat in Tioman Island provides you an unforgettable holiday experience with its peaceful sanctuary of breathtaking sea view and beautiful white sand beaches. The water sports offer at the Bagus Place Retreat includes kayaking, paddling, diving and snorkeling. Jungle trekking and rock-pooling are available as well. They offer different styles of chalets for example Rumah Laut or the Rock House, and packages include meals and soft drinks.

Sipadan Island Away from hustle and bustle of city life, Sipadan Island is a diving paradise and a protected marine park. One of the notable features of Sipadan Island is the underwater

Samadhi Retreat Samadhi Retreat is a one-of-a-kind private retreat located at two different places: Japamala Resorts in Tioman Island and Villa Samadhi in KL. The retreat sanctuary is intentionally hidden from the street view in KL and the exotic décor is its most distinguishing feature. The Samadhi Retreat at Japamala Resorts, on the other hand, offers absolute harmony without any stressful or annoying interruption. A number of water-based activities are provided as well including kayaking, diving and just exploring the island.

Spa Village The Spa Village is available at seven locations in Malaysia, and each location provides similar unique retreat experience but with different kinds of spa treatments. The award-winning spa village in Cameron Highlands features its signature tea bath before every treatment. The tea bath can help to relieve stress and slow down the aging process. Other Spa Village resorts also offer their own one-of-kind treatments including traditional Malay massage, ancient healing spa programs and many more.

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Setting Up China ConsulGeneral Office in KK Lauded

Sabah-Labuan Bridge Almost Ready to Be Built Labuan Entreport and the Sabah-Labuan Bridge to be assigned by the developer. The overall construction cost of the bridge, port and reclamation of the islands with basic infrastructure are estimated at US$5.4 billion and the overall development cost over 20 years is estimated at US$20 billion.

Datuk Seri Winston Liaw (second, right) and Jacky (second, left) together with Margaret (right) and Thomson (left) of Airworld Travel, awarded “Asia’s Best Service Excellence” The Federation of Chinese Associations of Sabah (FCAS) said the China Government’s decision to open a consul-general office here will boost tourism. Until July this year, Sabah recorded 204,129 tourist arrival from China, surpassing the 193,010 recorded last year. The move was announced by Prime Minister Datuk Seri Najib Razak on Friday after his meeting with visiting China President Xi Jinping. China Government will set up the consulate in KK and Penang while Malaysia will set up a similar office in Nanning. FCAS president Datuk TC Goh said he was convinced that the decision would further strengthen the existing bilateral ties between the two nations.

confidence of Chinese tourists to come here,” he said in Press statement. Sabah Association of Tour and Travel Agents (SATTA) chairman Datuk Seri Winston Liaw also welcomed the move as it would give sense of security to its people. “If they encounter any problems while on holiday here, they can go straight to the embassy office to seek help,” he added. Winston also added that the move would enable people of Sabah to apply visa to visit or stay in China without much hassle. “This will help to save time and money as at present applicants have to deal the matter in Sarawak or Kuala Lumpur,” he said.

“We will give full support and assistance to the setting up of the office to ensure its speedy and smooth establishment. “The move will definitely benefit the state as a whole, particulary Kota Kinabalu, as it will boost

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A new bridge linking Sabah with Labuan Island is timely to cater for the continuous growth of the oil and gas industry and its related businesses, said architect of Labuan Bridge, Sim Sie Hong.

expertise and the chairman of the company, Tan Sri Harris Salleh has an outstanding working relationship with the present government of Sabah and the Federal Territory of Labuan.

The need for the bridge was long overdue, he said yesterday during a briefing session for the leaders of Malay, Kadazandusun, Chinese and Indian chambers of commerce at Tiara Labuan Hotel.

“Shandong Laigang Construction Co. Ltd has assets in China exceeding RMB80 billion with a paid up capital of RMB1 billion. Shandong Laigang is also part of Shandong Steel, which is listed in the Shanghai Stock Exchange.

“When the bridge is completed, the new integrated entreport in Labuan and the SabahLabuan Bridge will bring business opportunities to both Sabah and Labuan. “There will be many economic spin-offs from the region especially in the Kuala Penyu peninsula stretching from Menumbok to Kuala Penyu town and toward Beaufort and Sipitang areas,” he said. Gaya House Sdn Bhd and Shandong Laigang Construction Co. Ltd. have entered into a joint venture agreement to set up a local incorporated company named Shandong Laigang Gaya Sdn. Bhd. to undertake the development of the two projects. Hong disclosed that the combined asset of the two companies exceeded the value of RM50 billion. “Gaya House Sdn. Bhd. possess local management

“They are one of the largest steel companies in China. They have been involved in the construction of the longest bridge in China, Jiaozhouwan Bridge, which is 37 Km crossing the Jiao Zhou Bay from Qingdao to Huangdao in the Shandong Province,” he said. He said Shandong Laigang Construction Co. Ltd would undertake the financing and construction of the Labuan Integrated Entreport and the Sabah-Labuan Bridge. The payment for the project from Sabah government and Labuan Corporation would be in lieu of land of 3,400 acres from Labuan Corporation and 2,000 acres from Sabah for various commercial, residential and marina development. He said the Sabah government would benefit from 2,100 acres of reclaimed land and the 30 years of operation concession right of the

Hong said the 13Km SabahLabuan Bridge would not only benefit Labuan, but also to Menumbok, Kuala Penyu and its vicinity. Currently, he said there was no problem funding the projects, but they were still waiting for the approval from the Sabah and Federal governments before they can move further in implementing the projects.

Putrajaya Eyes Lucrative Sabah Port

Petronas Pipes Gas to Sabah Terminal

be given opportunities and priorities in any federal project.

Speculations are rife here that experienced ports handlers from the peninsula with ‘direct connections’ to Putrajaya are aiming to take over operations of Sabah’s main west-coast port – Sepanggar Port, the last jewel in the state’s crown. Industry sources told FMT that the federal government is looking at the possibility of getting big handlers from Klang Port to expand to Sabah ostensibly for their experience, expertise and efficiency which will help raise the profile of Sepanggar Port internationally. The planned move is said to be related to the realisation in the peninsula that the cabotage policy is unsustainable after becoming a major sticking point in federal-state relations. “When the federal government does this, it ensures there already is strategic business alliances developed as ports’ business is a big business and the big players would always want that their interests protected once Sabah ports develop. “With the cabotage policy liberalised,

this will mean Sabah ports like Sepanggar would become the next big hub for container ships and those with interests will not ignore such an opportunity,” said one source. The cabotage policy stipulates that foreign container ships need to call at Klang Port first ensuring that all goods bound for Sabah and Sarawak are off-loaded there and reloaded on to Malaysian vessels thus incurring an increase in handling charges and contributing to a hefty increase in the prices of goods in the two state. According to industry sources, negotiations could well be under way between all the stakeholders to find a way to ensure the interested parties do not suffer losses when the cabotage policy ends. “If things are on schedule, we shall see bigger allocations for Sabah ports especially Sepanggar Port in the subsequent federal budgets starting from next year,” the source said. The source added that it is “normal” for big players in peninsular with links to the federal leadership to

Both sides are expected to announce their intentions to establish strategic port alliances to coincide with the announcement to abolish or further liberalise the unpopular cabotage policy. When this is announced it will see Sabah lose ‘control’ over yet another utility system. Already oil, air, road and electricity are with the federal government . Sepanggar Port became the main container port in the last decade after most sea traffic was directed away from the Kota Kinabalu Port, formerly known as Jesselton Harbour, which has now become the main anchorage for cruise ships and similar vessels. The relocation of container ships to Sepanggar in 2007 paved the way for the development of the old port area into a shopping and touristrelated business district. The Sepanggar Port project, on the other hand, opened up the area to the development of a container terminal, a naval base, an oil terminal, an industrial park and allowed institutes of higher learning such as Universiti Teknologi MARA (UiTM) and the Kota Kinabalu Polytechnic among others to build campuses there.

Sabah Oil and Gas Terminal (SOGT) in Kimanis Petronas has begun piping natural gas into the RM3.8 billion Sabah Oil and Gas Terminal (SOGT) in Kimanis, marking an important milestone in the industry. With an initial flow of 65 million standard cubic feet per day (MMSCFD) from the Kinabalu Non-Associated Gas field southwest of the state via a 120km underwater pipeline since Monday, it was part of the commissioning process for the terminal. The commissioning process will put to test and ensure the systems and components at the terminal are running according to specifications and requirements before it starts commercial operations. Once fully operational, the SOGT, located 65km from here, will have the capacity of 260,000 barrels per day (bpd) of oil and 1,250 mmscfd of natural gas, said a statement from Petronas Sabah and Labuan Regional office. It is the biggest integrated terminal in the country with the ability to receive, handle and export oil and gas produced

offshore. It will position the state as an onshore oil and gas hub in the region, complementing the operations of the existing Sabah Gas Terminal, the Labuan Crude Oil Terminal and the Labuan Gas Terminal. Sabah branch Malaysian Malay Chamber of Commerce chairman Datuk Ag Buhtamam Ag Mahmun yesterday said the move was a positive development for the country. “The SOGT and other key oil and gas projects in the state are part of the national agenda to bring more progress. “To see it up and running to fulfil its potential surely makes the business community excited as it is bound to trigger economic spillovers.”

linked companies to assist in the national Bumiputera Economic Empowerment Agenda policy and this is where Petronas can play its role.” Buhtamam said Petronas could start by identifying vendor development programmes (VDP) for local companies in Sabah and look into developing more human resources in the industry to support the oil and gas industry. Petronas embarked on a host of projects in the state over the past three years such as the SOGT, the 512km Sabah-Sarawak Gas Pipeline, Kimanis Powerplant, Kinabalu NAG upstream development, Sabah Ammonia and Urea Plant in Sipitang and Kimanis Power Plant.

Buhtamam said, however, Petronas needed to play its part in ensuring active participation of local entrepreneurs, especially Bumiputeras, and make it part of their key performance indicators. “The prime minister has called on government-

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/// Hot Topic

Office to Hotel Conversion on the Rise in Malaysia tenants and their yield is far lower than what it should be,” she says. Malaysia’s current vacancy rate is nearly double that of Britain, which translates into a larger need for office to hotel conversion, she adds. Furthermore, tourist arrivals have been increasing, hitting the 25 million mark in 2012. Vacant office buildings in cities with popular holiday destinations nearby are perfect for conversion into hotels. In fact, this trend may have already started. A shop office converted hotel in KK Times Square Converting office buildings into hotels is an easy way to maximise asset value in certain markets and has resulted in a big change in the way property developers are creating new hotel supply to cater to the country’s growing tourism industry. A recent Zerin Properties report, “Office to Hotel Conversion”, highlights this growing trend and examines whether vacant office buildings in Kuala Lumpur can be converted into hotels to increase their net profit and yield. A National Property Information Centre commercial property stock report states that the supply of purpose-built offices in Kuala Lumpur was at 81.6 million sq ft while incoming supply was at 13.6 million sq ft as at 3Q2013. Selangor’s supply of purpose-built offices stood at 32.4 million sq ft while incoming supply was at 4.2 million sq ft. The

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occupancy rate for Kuala Lumpur offices was 78.8%, compared with Selangor’s 73.9%. As a comparison, 12% of offices in the UK have stood empty for many years, according to the report by Zerin Properties. In some areas such as Birmingham, 18% of commercial properties are said to be empty. The UK government believes thousands of sites can be converted into homes [rather than hotels], while still meeting the demand for offices when the economy picks up. According to Roja Rani, Zerin Properties’ head of research and consultancy, the need to fill commercial space in Malaysia is greater because there is an oversupply. “However, this could just be that there is an oversupply of old buildings and these are being converted simply because they lack

The report cites Tan Sri Tony Fernandes, group CEO and director of AirAsia Bhd and founder of Tune Group Sdn Bhd, who was quoted as telling Endemic Guides that many property owners wanted to convert their office buildings into hotels to get higher yields. Fernandes himself has converted office buildings in prime areas of London, including Kings Cross and Paddington, into hotels. A few Malaysian entrepreneurs have taken a leaf from Fernandes’ book and done the same back home. Mak Hoong Weng, director of Art Form Enterprise Sdn Bhd, owns buildings in Kuala Lumpur, Melaka and Kuantan that he has amassed over a 10-year span. He plans to convert 10 of them into hotels, offering over 1,000 rooms. One of Mak’s boutique hotels, Star Luxury Hotel in Jalan Raja Chulan,

/// HOT TOPIC

Kuala Lumpur, was converted from two office towers and currently charges between RM280 and RM1,500 per night. He also owns a multi-storey heritage building in Jalan Tun Perak, where the ground floor has been leased out to a food and beverage operator and the rest of the building rented to a budget hotel operator. The 13-storey Wisma Peladang in Jalan Bukit Bintang also underwent a complete retrofit in 2006, becoming Piccolo Hotel. It immediately drew investment from Berjaya Land, which now owns 51% of the four-star hotel, which charges an average room rate of RM246. As at September 2013, Piccolo had an occupancy rate of 80%. Roja said “This could just be that there is an oversupply of old buildings and these are being converted simply because they lack tenants and their yield is far lower than what it should be” Meanwhile, corporate office tower Plaza Atrium in Lorong P Ramlee is being converted into 109 serviced apartments spread over 34 floors by Pinehigh Development Sdn Bhd, a wholly-owned subsidiary of Far East Organization. According to Roja, more developers in Kuala Lumpur are starting to jump on the bandwagon. “Recently, it was announced that an old office building, Menara CMY in Jalan Ampang, would be redeveloped into a hotel.” Foo Gee Jen, managing director of WTW, also cites some conversions in Kuala Lumpur, namely Wisma KLH into Wolo Hotel, Magnum Plaza into Sky Express Hotel (previously Flamingo Hotel) and Sentosa Hospital into Tunes Hotel. However, he does not believe this is a growing trend. “It all depends on the location being suitable for a hotel, the cost of refurbishment

compared with potential profits and whether the property has been vacant for a long time.” There have been such conversions in Kota Kinabalu and Kuching as well, he says. Two office buildings in Kuching were converted into hotels to cater for the increase in tourist arrivals. KKB Engineering Bhd’s building was redeveloped into the 80-room Abell Hotel while Kuching Tower became the 50-room Lime Tree Hotel. Overall, says the report, the current trend of investing in office building redevelopment in Kuala Lumpur seems to be focused on old buildings. This is due to the growing number of new Grade-A office buildings in prime locations that boast much better facilities. The more stylish offices draw tenants to relocate despite the higher rents. Old office buildings are also ripe for transformation because their rents are lower than new buildings, which translates into shrinking yearly income. The redevelopment of old office buildings in strategic locations, close to tourist attractions, into hotels would maximise yields and boost income. A vacant building costs its owner huge sums in lost rent. With Malaysia’s office vacancy rate at 23%, with a substantial future supply in the pipeline, the competition for tenants is tight and it could take months or even years before a client can be found. According to Roja, apart from office towers, several office buildings have been converted into serviced apartments, condominiums and retail space. Foo, meanwhile, adds that shopoffices in many cities have also been converted into budget hotels. “More are converted into hotels rather than purpose-built offices. In fact, several heritage shophouses are now boutique hotels, especially in Penang and Melaka.” Foo says office space can also be converted for use as universities, colleges, hospitals or specialist centres. “The conversion is usually

done by the operators after they acquire the building. However, there are more hotel operators than education or hospital operators as it is easier to obtain a licence for the hotel business than for universities or hospitals.” Foo quoted; “It all depends on the location being suitable for a hotel” The conversion of offices into hotels represents a great opportunity for investors and developers. Foo says from a purely investing viewpoint, an office building generates more profit than a hotel. “Most hotel profits are generated as a business and not as an investment and therefore are not comparable with office building rental returns.” According to the Zerin Propertie problem, a major problem in this new scenario could be the investors’ lack of experience in the hotel industry as they would have mainly invested in office space before. One way to overcome this is to carry out detailed research on the demand for particular types of hotels in specific areas and whether they fit the layout of existing office buildings, it advises. For example, a 3-storey building in Seri Kembangan may not be suitable for a luxury hotel. Another problem could be that the original floor plan of an existing office building may not cater for the type of hotel the developer wants to invest in, says Roja. He adds that most floor plans of old offices would tend to cater for boutique and budget hotels. Nevertheless, the conversion of office buildings into hotels seems right at the moment, given the high vacancy rates and the booming local tourism industry. It makes sense to transform older office buildings that are currently vacant into something that offers better returns. A GROWING TREND AROUND THE WORLD The conversion of offices into hotels is evident in many other parts of the world, according to the Zerin Properties report, “Office to Hotel Conversion”. In Germany, for example, a huge

amount of office space has been turned into budget hotels. In Berlin, some of these hotels, located near busy transport lines, enjoy high occupancy and revenue per room. Hotel Indigo Berlin Hardenbergstrasse is an 81-room office conversion that opened in 2012. Tourists are drawn by its cheap prices and prime location close to Ku’damm Avenue, which is known for its designer shops, restaurants and bars. Tan Sri Tony Fernandes, founder and key shareholder of Tune Hotels, has converted office buildings into hotels in prime areas of London, including Kings Cross and Paddington.

into luxury condominiums, a hotel and an upscale retail space. In Auckland, a number of office buildings in the central business district are said to be appropriate for conversion into hotels. International hotel operator Accor Hotels has announced that it will be opening a boutique operation in the Reserve Bank office building on Customs Street in downtown Auckland. This is expected to be the start of a trend of such conversions as there is strong demand for hotels in the city due to an acute shortage of existing hotel stock for sale.

In September 2011, Fernandes acquired a vacant office building, which was formerly the headquarters of the Unite union, at 324 Grays Inn Road, Kings Cross. He turned it into Tune Hotels Kings Cross and opened it in 2012, a few weeks before the Olympics. The hotel saw an occupancy rate of 95%. More recently, a 1960s 8-storey building in Red Lion Street in Bloomsbury, central London, was granted permission for conversion into a 150-bedroom hotel because it could no longer be used as an office. The conversion was considered ideal because of the need for increased hotel supply in London. Over in the US, Trump Organization is planning a US$200 million redevelopment of the Old Post Office Building in Washington, DC, into a luxury hotel. The company has finalised a deal with the US General Services Administration to redevelop the landmark building in Pennsylvania Avenue now that a congressional review has been completed. In Manhattan, planned conversions have been key to some of the largest office transactions in recent years. These include 650 Madison Avenue, which sold for US$1.3 billion (US$2,200 psf), as well as 550 Madison Avenue, which Sony Corp sold for US$1.1 billion to an investment group headed by developer Joseph Chetrit. Chetrit is exploring plans to convert the asset

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WEST MALAYSIA PROPERTY NEWS

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

IKEA to Open Outlet in Penang

SP Setia’s Liew, Teow, Lee Step Down

“The whole commercial development in the area is expected to complete in 10 years from the date of the agreement,” he told a press conference to announce the project at his office here today.

Yow as acting president and CEO for one year from May 1, 2014 until Apr 30, 2015. Chairman Tun Zaki Tun Azmi said over the next year the group intends to work with its major shareholder Permodalan Nasional Bhd, before finalising potential successors.

He said the land cost for the development amounted to RM483.95 million, to be paid within 60 months from the date of the agreement, and a deposit of RM5 million made to the PDC will not be returned. Penang chief minister Lim Guan Eng speaks at a press conference announcing the expected opening of Ikea in Batu Kawan The state government and Penang Development Corporation (PDC) will get a new investment with the construction of the IKEA shopping mall by Ikano Pte Ltd on a 98-hectare area in Batu Kawan in Seberang Perai Selatan. Penang Chief Minister Lim Guan Eng said besides the IKEA shopping mall, offices and residential properties would also be built in the area, which is to be jointly developed by Aspen-Ikano, a joint-venture company to be formed by Aspen Vison Land Sdn Bhd and Ikano.

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With the shopping mall in Seberang Perai Selatan, he said it would enable the development of areas on the mainland to be an attractive destination of choice to study, work and live. “We are very proud as IKEA has chosen Penang as the first destination outside Kuala Lumpur to open its store. After this, residents in Penang do not need to go to Petaling Jaya to shop at IKEA,” he said.

CEO of S P Setia Bhd, Tan Sri Liew Kee Sin has resigned from the company along with chief financial officer Datuk Teow Leong Seng and non-independent S P Setia Bhd has announced the resignation of its chief executive officer (CEO) Tan Sri Liew Kee Sin, chief financial officer Datuk Teow Leong Seng and non-independent & non-executive director Tan Sri Lee Lam Thye. In a statement on Monday, the group said Liew will leave on Apr 30, 2014 whilst Teow will stay on until Jul 31, 2014. Lee resigns immediately as a non-independent and non-executive director. The group has appointed its chief operating officer Datuk Voon Tin

Under Liew’s leadership, S P Setia has achieved RM8.24 billion in sales in FY2013. As at Oct 31, 2013, it had RM9.6 billion in unbilled sales to be realised over the next few years. Liew said: “Given the solid footing which the company is on, I believe the time has arrived for me to step down after 18 years as CEO. With my children all growing up and starting out on their own career paths, I am looking forward to spending more time with them, mentoring and guiding them,” he said. However, Liew will continue to represent S P Setia as chairman of the Battersea Project Holding Company Limited and also managing director of Qinzhou Development (Malaysia) Consortium Sdn Bhd until September 2015.

OSK Properties to Officially Launch Eclipse Residence

Map of the proposed Malacca-Dumai bridge

Artist’s impression of Eclipse Residence OSK Property Holdings Bhd is set to officially launch its RM398 million serviced apartment Eclipse Residence by end-March. The project, where units come fully furnished, is in Pan’gaea, a 16-acre integrated freehold development in the heart of Cyberjaya. The developer held a preview at Plaza OSK in Jalan Ampang, Kuala Lumpur from Nov 15 to 24.

activities are on selective levels of each tower.

“Approximately 30% of the available units have been taken up so far since the preview,” said OSK Property’s head of sales and marketing department Chee Kok Keong.

The Eclipse Residence is within a five- to 15-minute walk to educational institutions such as the Multimedia University, LimKokWing University and the University College of Medical Science. It is also a five-minute drive away from retail hubs, business centres and schools, among others. It is also easily accessible to Puchong, Kajang, Subang and Shah Alam, as well as major expressways such as The North-South Central Link (Elite Highway), South Klang Valley Expressway, The Damansara-Puchong Highway and the Maju Expressway.

“Eclipse Residence will be completed in about four years. The entire Pan’gaea development is expected to be completed in 2018 or 2019, depending on market response.” Eclipse Residence is the third of five phases in Pan’gaea. The latest launch offers 668 fully-furnished serviced apartments within two towers. The developer is offering four types of serviced apartments ranging from one- to three-bedroom suites with built-ups from 450 sq ft to 990 sq ft. The facilities will be on the 10th floor and rooftop, and will include a multi-purpose room, gymnasium, sauna and steam room, jogging track, squash courts, yoga and tai chi lawn, gourmet and chill zone, games room, BBQ area, children’s playground and a viewing deck. The residents will also have access to a sky bar and lounge, jacuzzi, landscaped gardens and an infinity swimming pool on the rooftop of the two residential towers. Communal thematic decks designed for leisure

Hope for Bridge Over Malacca Straits

The other components in Pan’gaea include small office flexible office (SoFo) suites, boutique retail shops, serviced residences, a street mall as well as the Gallery Mall, with over 300,000 sq ft of net lettable space. A boutique hotel is also in the works.

OSK Property’s total project gross development value (GDV) is about RM9 billion. Pan’gaea takes up the largest chunk at RM3.5 billion followed by Bandar Puteri Jaya in Sungai Petani, Kedah at RM2 billion and Atria in Damansara Jaya, Selangor at RM1 billion. Next on the developer’s cards is Emira Retail and Serviced Apartment, a mixed development with a GDV of RM250 million on just under three acres of prime real estate. The retail component in Emira is slated to be launched in the middle of the year.

Denmark has renewed the Malacca government’s enthusiasm to revive the controversial 48.69km-long Malacca-Dumai bridge project across the Straits of Malacca.

surfaced in October last year. The 48.69km-bridge is expected to link Teluk Gong in Malacca with the port of Dumai in Sumatra.

Chief Minister Datuk Seri Idris Haron said there was a possibility the project would go ahead. “As I have stated earlier, the ambitious project could go on as planned. I am not discounting the possibility,” he said.

Insights on a feasibility study on the bridge undertaken by Strait of Malacca Partners Sdn Bhd were given during the meeting.

On Friday, Idris met Danish ambassador Nicolai Ruge at his office in Seri Negeri where the project was discussed, besides sharing know-how on renewable energy and green technology.

The company had earlier appointed the Hunan Provincial Communications Planning, Survey and Design Institute of China to prepare documents pertaining to the study.

Ruge, when met, said Denmark had the expertise and engineering feats to embark on such a mega project. Danish engineers had constructed many such bridges in Denmark, he said. “We could work on the financing aspect of the project as the bridge could impact the fiscal growth of this region,” he said. However, Idris said the finer details of the project could only be unveiled after the viability study and engineering analysis had been completed. Talk of the bridge construction

The project was discussed during the 10th Chief Ministers and Governors’ Forum of the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT) held in Thailand on Sept 12.

The idea of the bridge was first mooted in 1995 to foster economic opportunities, especially in trade and tourism, between the two countries but it died down during the Asian financial crisis in 1997. In 2006, then Chief Minister Datuk Seri Mohd Ali Rustam resumed interest in the project by saying that the groundwork for it had started and that studies showed that the bridge was technically feasible. He also announced that the Export-Import (EXIM) Bank of China had agreed to finance 85% of the link’s total cost, then estimated at RM44.3 billion.

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/// Hot Topic

More Cooling Measures Will Dampen Property Market

/// HOT TOPIC

”We expect to see more housing developments in these areas, particularly those with potential access to public transport links such as the light rail transit extension and the upcoming Klang Valley mass rapid transit lines,” it said.

The mid -to high-end residential market in Kuala Lumpur is expected to “self-correct” in the next six to 12 months, with the impending implementation of more cooling measures aimed at curbing speculative activities, said international property consultant Knight Frank Malaysia. “Overall, the slew of cooling measures is anticipated to dampen speculative activities,” said Knight Frank, referring to the increase in Real Property Gains Tax (RPGT) for disposals made within five years of the purchase of the property and the ban on Developer Interest Bearing Scheme (DIBS). Other cooling measures include increasing the minimum price for properties to be purchased by foreigners from RM500,000 to RM1,000,000, and requiring banks to give out property loans based on net selling price (after discounts and rebates) rather than on gross selling price. “While we expect lower volume of transactions going forward, property prices, in particular for landed

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residential units, are expected to remain competitive with positive growth for those located in selected, established or upcoming areas, albeit at a slower pace — mainly due to limited existing or incoming supply, and higher land cost,” it said in its report Real Estate Highlights for Kuala Lumpur, Penang and Johor Baru for the second half of 2013. The global property consultancy firm also noted that more property developers are now adopting a “wait-and-see” approach to evaluate the impact of these new cooling measures. “Going forward, we expect to see developers offering greater discounts and more freebies in view of the abolishment of DIBS in order to push sales and remain competitive in the primary market. “Some developers are also starting to focus on township developments in upcoming suburban locations, such as Rawang and Kajang in Selangor, where demand for housing with affordable price remains strong.

Meanwhile, Knight Frank believes that landed houses priced between RM600,000 and RM800,000, as well as high-rise residential properties priced below RM500,000 will continue to attract strong demand, particularly from firsttime home buyers and upgraders. The overall outlook is expected to remain challenging, impacted by the various cooling measures, softening demand and the expectation of interest rate hike this year which will dampen sentiment,” it said. On the Kuala Lumpur office market, Knight Frank sees tenants being spoilt for choice as supply continues to outstrip demand, with landlords offering attractive incentives to retain existing tenants and attract new tenants to maintain and improve their levels of occupancies. It also noted that several property developers have adopted a cautious stance by deferring the construction of their office projects, with work to commence only when they have secured pre-leasing commitment from potential anchor tenants. “But the concerted efforts by InvestKL to attract multinational corporations (MNCs) to set up their regional hubs in Kuala Lumpur are expected to help cushion the high level of office supply. As at November, nine MNCs had committed to set up or expand their operations in Malaysia,” it added.

Additionally, Knight Frank has a cautious optimism on the Klang Valley retail property sector as consumers are expected to tighten spending ahead of further government subsidy rationalisation measures as well as a hike in electricity tariff and toll rates. Nevertheless, the Kuala Lumpur hotel market is set to remain resilient with concentrated efforts from the government to ensure that the tourism sector remains at the forefront of the country’s economic development. On Penang’s property market, Knight Frank said it is expected to remain in its consolidation mode. “With the new measures introduced in Budget 2014, the high-end residential sector is expected to be affected to a higher degree while the commercial sector should remain relatively stable. “On the other hand, the impending opening of the Second Penang Bridge and the Penang government’s efforts to spur developments in the southern parts of both the island and the mainland will very likely lead to brighter prospects in these locations,” it added. The Johor Baru property market is also expected to remain firm in the medium term with more Malaysians and Singapore-based developers expected to venture into Iskandar Malaysia. “Development activities will continue to be concentrated within the city centre, Danga Bay, Nusajaya and Medini locality within Zones A and B of Iskandar.” Knight Frank said besides high-end condominiums and apartments, the Iskandar region is expected to see more retail malls and purpose-built offices coming up in the skyline.

KL Office Market Remains Stable

Can SP Setia Really Afford to Lose Liew?

SP Setia sales gallery in Johor

The Kuala Lumpur office market has remained stable despite mounting pressure on occupancy and rental rates as supply continues to outstrip demand. According to Knight Frank, the overall rental rates were generally flat while occupancy inched up marginally following delay in several completions. It further added that the investment market was less active during the review period, in comparison to the first half of 2013. “There were noticeably more announcements of owners expressing their interest to dispose their buildings and developers seeking to secure tenants or purchasers for their office components before commencement of construction works amidst the increasingly challenging office environment,” Knight Frank observed. Overall, average occupancy in KL City rose slightly to 83.2% in 2H13 from 81.6% in the preceding quarter with improved take-up in several buildings

that are popular with the oil and gas (O&G) sector and multinational corporations (MNCs). These buildings included Menara Binjai, Integra Tower, Vista Tower, Menara Citibank and Menara Etiqa Twins. “The review period also saw an overall improvement in the occupancy of office buildings in KL City Fringe with average occupancy inching up marginally to record at 82.7% from 82.3% in 1H13,” the research house noted. In addition, during 2H13, there were several notable announcements of large scale integrated developments with office as a key component. Knight Frank opined that tenants are spoilt for choice as supply continues to outstrip demand with landlords offering attractive incentives to retain existing tenants and attach new tenants to main and improve their levels of occupies. “Amid a challenging leasing market environment with a high supply pipeline, several

developers have adopted a cautious stance by offering the construction of their projects, with works to commence only when they have secured pre-leasing commitment from potential anchor tenants,” the research house highlighted. Nevertheless, it pointed out that good grade dual compliant (MSC CyberCentre status and Malaysia’s Green Building Index) buildings will continue to be popular with sector, particularly those located within prime and established/ upcoming office locations in KL City and KL City Fringe. “The concerted efforts by InvestKL to attract MNCs to set up their regional hubs in Kuala Lumpur are expected to help cushion the high level of office supply. As of November, nine MNCs have committed to set up or expand their operations in Malaysia. InvestKL is in the talks with more MNCs from the US, Europe and Japan to make Kuala Lumpur their business hub,” it noted.

No man is an island but Tan Sri Liew Kee Sin quitting as S P Setia Bhd boss has implications beyond the management changes that will take place in the country’s top property developer, post April 30. The Battersea Power Station project in London will miss Liew much more than S P Setia, and at stake is the reputation of Malaysia’s top builder in London.

up rate for the 866 residential units named Circus West. Besides the Battersea project, Liew brought S P Setia to Melbourne, where it is developing Parque, which comprises 323 apartments worth RM800 million. Obviously, the man has international contacts to help in the design of properties, acquire choice land and pinpoint growth areas abroad.

The knee-jerk reaction has been to look at how S P Setia will cope without Liew. With the excitement over his resignation, most people have forgotten that the Battersea project is Liew’s brainchild. He has been spearheading the project, located by the River Thames, from Day One. To recap, a Malaysian consortium comprising SP Setia, Sime Darby Property Bhd and the Employees Provident Fund won the bid to redevelop the Battersea power station, which had sat idle for 30 years. The project, currently the biggest development in the United Kingdom and perhaps also in Europe, has shown that Malaysians can be world champs.

These are the tools that Liew will bring on board to Eco World Development Group Bhd (formerly Focal Aims Holdings Bhd), which has a few billion ringgit worth of projects in hand. And these are the very same things S P Setia will miss when Liew clocks off. The Johor-based Eco World is linked to Liew through his son, Tian Xiong, who is a director of the company. The most defining thing about Liew is the loyalty he commands from the people who work with him. The true quality of a leader is not in the leadership but in how he is perceived by the people who work with him.

It is expected to generate more than RM40 billion in gross development value over 12 to 15 years.

At S P Setia, the question is not who will replace Liew but who will bring in 250 “foot soldiers” to replace the 250 who will quit S P Setia to mostly join Eco World.

Phase 1 of the project, launched in January 2013, has since seen a 99 per cent take-

Those 250 are the nuts and bolts of the once formidable SP Setia juggernaut.

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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.

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Touristic Hot Spotsand the Property Market Sustainability

enang has been for several years the 8th chosen destination worldwide for retiring and this year has been achieving also to be the third destination in the world for the best original food. Kota Kinabalu has been for years one of the best destination for diving and water sports attracting millions of tourists every year. Both these Malaysian touristic paradise have been also gaining a top ranking position as Property Investment and the last 6-8 years have seen property values multiplied two or even three times. The Government has set 2014 as the Visit Malaysia Year and this will further contribute to spread the fame of these two touristic/property hot spots worldwide dragging a targeted 30 million tourist to hit the Malaysia shores and keep on maintaining the Malaysian Tourism as third earner of foreign exchange and the Tourism industry to contribute for and estimate 15% to the Nation GDP. It is surely interesting to compare the trend of tourist arrivals between 1998 and 2012 and their “spending” capabilities which are all in favor of a flourishing touristic industry.

Tourism is one of the best “by mean of mouth” form of advertisement and till now Malaysia has been smart enough to profit out of it. But it is not all about Tourism. A flourishing touristic industry is the driver for further development of the Country economy as Tourism is getting the world attention that means, big multinational corporations’ attention that means FDI inflow and so on. Tourism is one of the best “by mean of mouth” form of advertisement and till now Malaysia has been smart enough to profit out of it. Changes in what are the “holiday habits” worldwide and a different way of looking at retirement in the western countries have been the booster for our local property market as we have seen it growing in the last few years. More and more are the tourists that prefer to go for a short term rental of a private house, where they can have the “I’m living here” feeling compared to the “all included hotel packages” offered by travel agencies worldwide. Compared to Europe, US and Australia, Malaysia is a country where a western foreigner can have a high standard of life style at very affordable levels, on top we surely have plenty of appealing places and attractions all around the Country to satisfy the most demanding ones. If we give a look at how much has changed the “skyline” of Pulau Pinang (BatuFeringi and the old Georgetown in particular), Melacca and Kota Kinabalu in the last 8 years thanks to high-raise buildings that have been mushrooming almost everywhere there was a free piece of land and the latest trend, started by Hatten Group in Melacca, of integrated Waterfront developments now very common all around Malaysia we can easily understand the impact of tourism on property developments. In Kota Kinabalu after a slow start during the early 2000 we have now a full swing movement of developers with many of the big market’s players fighting each other in term of design, location, height and so on. Property prices have been following the war accordingly and nowadays is quite difficult to buy anything less than 450 RM psf in the whole Kota Kinabalu.

The market is asking if there is a forthcoming bubble for all the three locations mentioned above as it looks like sky is not the limit for Property Prices there. My personal take, looking at the current and forecasted touristic situation, is that we are still in safe waters and there is still a lot that can be done to increase the touristic inflow by becoming more and more a worldwide recognized touristic destination instead of a mostly regional one. Less than 10% of the total tourist arrivals in 2012 and 2013 were from countries outside the SEA region and this gives a good sustainability to the market above all when looked at together with the Visit Malaysia Year 2014 campaign that the government and the Ministry of Tourism have been placed into practice since the end of the last year. Going back one moment to the waterfront development, I would like to make few consideration of this new “property trend”. Hatten Group with their Hatten City in Malacca has been the first launching the new design trend of iconic waterfront development which are offering a unique panoramic view combined with high standard of life-style living and entertainment. For sure a strategic location and a futuristic design have contributed substantially to its success. The main issue is now how to maintain the uniqueness of a waterfront development while preserving the safety aspect of building commercial and residential properties on water and at the same time how to avoid and overcrowding situation where all developers will try their best to have in their portfolio at least one waterfront project. Local and federal authorities are the ones supposed to come up with rules and regulations that, at the moment, are totally missing. Few days ago I’ve found out, and I’m still trying to get a double confirmation on this, that waterfront project on reclaimed land are currently 100% out of any type of control from the competent authorities as the only one involved is the local government who is alienating a piece of water yet to become land. Local Authorities should be the ones in charge to define how many and which type of waterfront project a certain area can have to secure a livable environment, a high standard of construction quality and a proper raise in the values. We will need to wait and see what comes next from this point of view, for the moment I just close this article with a short but meaningful quote on property and real estate which is giving a good idea of how to look at these touristic hot spots as property investment opportunities: “In Real Estate don’t wait to buy but buy and then wait”. Wise and long term picture.

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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

Should I Buy

MRTA or MLTA? I

have been asked in numerous occasions during or after my seminar whether a loan borrower should take up Mortgage Reducing Term Assurance (MRTA) or Mortgage Level Term Assurance (MLTA). In this article I would like to shed some light for the benefits of everyone. I will not be elaborating much on MRTA in this article as I have already wrote about it at length during my last article. If you would like to read go to http://michaelyeoh.com.my/mrta/. I would like to introduce to all of you, Ms Elane Goh, Agency Manager of Hong Leong Assurance who is an expert in MRTA and MLTA in which I have interviewed her prior to writing this article. Thank you Elane for being so patient with me. What actually are the major differences between MRTA and MLTA? Letâ&#x20AC;&#x2122;s take a look at the following table summarize from my discussion with Elane. Letâ&#x20AC;&#x2122;s take a look at the following table comparing the 2 Insurance Products.

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MRTA

MLTA

Protection

Limited: Death & Permanent Disability

Death & Permanent Disability (option to purchase additional rider)

Claims

Reducing balance. Based on loan outstanding amount.

Level throughout loan tenure.

Premium

Cheaper. Paid Lump Sum. Can be finance by bank.

More expensive. Periodic - monthly, quarterly or yearly.

Cash Value

No cash value. Expired at the end of loan tenure.

Policy holder will get back premium paid.

Transferability

Yes

Nomination

Beneficiary is bank.

Benificiary is next of kin.

...every property purchaser be it 1st time purchaser or investors I strongly encourage to buy either MRTA or MLTA to protect your property and your love ones.

encourage to buy either MRTA or MLTA to protect your property and your love ones. MLTA at an early aged which is cheaper and continue to use it for your subsequent properties purchase.

BLR Fluctuation

According to Elane, in terms of financial planning the cash value accumulated from the premium collected after certain years (surrender value) can also be used to pay off the remaining outstanding loans in the bank. If you were to take a 30 years loan , you might be able to make a full settlement much earlier using the Surrender Value of your insurance premium. MRTA has very limited coverage but for MLTA you can always buy additional “rider” example critical illness for extra protection. You can always add on after you have purchase the policy.

Ultimately, if you asked me which one is better depends on your budget. If you are on a tight budget buy MRTA which is cheaper and you can also get the banks to finance in your loan and pay the interest monthly. If you have the additional budget than I will recommend MLTA as the coverage is much better and also you will get your premium back when the tenure ends.

In MRTA when it comes to claims, the insurance company will only pay the loan outstanding amount whereas MLTA after the loan outstanding has been paid the balance of the insured amount will go to the beneficiary.

Whichever the case is, every property purchaser be it 1st time purchaser or investors I strongly encourage to buy either MRTA or MLTA to protect your property and your love ones.

Please also take note that in MRTA there is an interest rate associate to the coverage amount. Most of you might not be aware that when MRTA is calculated the agent or the banker will have to key in an interest rate. If for example there is a claim and at that time the Base Lending Rate (BLR) is higher than the interest rate being keyed in, you might not receive the full amount of claim to cover your loan outstanding. Normally, the agents or bankers will put at least 1.5% or 2% interest higher than the current BLR.

What I really like about MLTA and especially for property investor is the flexibility. Let’s say you bought Property A then you sold it and bought Property B. You can continue to us the same MLTA and top up the difference which is cheaper than buying a new policy. Remember, as we aged the insurance premium will be more expensive. You can lock in every property purchaser be it 1st time purchaser or investors I strongly

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

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/// West Malaysia Property News

Johor Government to Slap 2% Levy on Foreign Property Buyers

Andaman Upbeat on Property Market Andaman currently owns land in Kota Damansara, Ampang and Subang, which will be developed and launched over the next few years as mixed developments. The property player is targeting to achieve above RM1 billion in sales from all its projects in 2014.

Andaman Property Management Sdn Bhd managing director Datuk Seri Dr Vincent Tiew: “After buyers grasp a better understanding of the central bank guidelines, many will want to keep investing” The Johor government has plans to impose a 2% levy on foreign buyers across all property segments including the secondary property market from May in addition to the recent cooling measures announced in the Budget 2014. The rate is lower than the 4% to 5% mooted earlier. The current flat rate is RM10,000 for all types of properties. Knight Frank Research, in its report titled Real Estate Highlight Second half 2013 noted that the recent cooling measures announced in the Budget 2014 to curb speculation in the local property market may have a slight impact on demand for the Johor property market. However, foreigners particularly Singaporeans, will continue to buy properties within the state as most of the existing high-end properties available in the market are already being priced above the RM1 million threshold level and there is still a huge disparity in property prices between Malaysia and their home countries. The strong Singapore dollar and growing interest from other foreign purchasers particularly in the locality of Nusajaya and Medini will continue to drive the growth of the residential market. Medini will continue to

be the ‘hotspot’ due to its special economic zone status whereby it is granted a substantial tax break and is exempted from the RM1 million minimum price threshold for foreign purchase. “The implementation of the Transportation Blueprint (2010 to 2030) which includes forming an integrated transit terminal network to link major towns and gateway terminals; developing a bus rapid transit system linking Johor Baru with Skudai, Johor Jaya and Nusajaya is set to transform the Iskandar region into a bustling business district and enhance its global competitiveness. Going forward, the Johor Baru property market is expected to remain firm in the medium term with more Malaysian and Singaporeanbased developers expected to venture into the Iskandar region. “Development activities will continue to be concentrated within the city centre, Danga Bay and the Nusajaya/Medini locality within Zones A and B of Iskandar. Besides highend condominiums and apartments, with growing demand for good quality prime office space and retail space, the region is expected to see more retail malls and purpose-built offices coming up in the Iskandar skyline.

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The local property market will pick up in the second half of the year, following further announcements from the central bank on lending guidelines, said Andaman Property Management Sdn Bhd managing director Datuk Seri Dr Vincent Tiew. “From my observations of the industry in the past, I anticipate further announcements following these five months or so post budget 2014. “People are somewhat confused and prefer to wait this period out. Once buyers grasp a better understanding of all the guidelines, many will want to keep investing,” he said at the sidelines of Andaman Group’s Loyal Buyers Reward Programme ticket distribution ceremony for its Property Outlook Conference 2014, which took place over the weekend. To recap, Bank Negara had set the brakes on interest capitalisation schemes and the developer interest bearing scheme last year in an effort to cool speculative activities in the property sector.

Among other guidelines announced during the Budget 2014 included the use of the net selling price of a property – which excludes rebates and discounts – to obtain bank loans , as well as the reimposition of the real property gains tax (RPGT) of 30% for the first three years upon disposal. “Further announcements by the central bank will not necessarily be negative news to investors. They could be measures to curb or better manage certain classes of property assets in terms of loan financing,” he added. Tiew speculated that sub-urban areas will perform better in 2014 as small-town residents still had cash to invest. Andaman Property started in 2005 with its first residential condominium project in Subang USJ, worth RM150 million in gross development value (GDV). To date, Andaman Property manages more than 15 projects in the residential and commercial market in the peninsula totalling RM3 billion in GDV.

On the RPGT, Tiew said the 30% levy on a profit amount was fair. “It would affect property holders in the first half of the year to hold on longer to their real estate but to me, it’s an acceptable amount to pay compared with Singapore,” Tiew said. Currently, the challenge for property developers was to manage the consistency of business flows and billing, Tiew said. “I expect prices to increase by 10% as more development charges are being imposed on new projects,” he said. “As such, property prices will not fall except in the event of a world economy slump.” In view of cautious consumer sentiments in the face of rising costs, Tiew urged investors to hedge their financial portfolio by investing into real estate. “Property players targeting the middle income group will have to restrategise because that market is suffering. Seeing as the affluent are not affected by new rulings and guidelines, the middle income group – whose household income sits between RM2,000 and RM10,000 – needs a lot of reasoning,” Tiew said.

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/// West Malaysia Property News

Malaysia’s Property Sector to Remain Competitive

Slowdown in Property Launches half and the market finding its equilibrium, he said more action was expected in the second half of the year.

Rain fails to dampen property buyers at a developers launching

Promising property hunters at a developer project sales gallery Malaysia’s property sector is expected to remain competitive and stable this year as Malaysia had only imposed a third round of property cooling measures. “Compared to Singapore which has so far imposed eight round of cooling measures, Hong Kong (six) and China (five), Malaysia definitely stands in a better position,” Malaysia Property Incorporated general manager Veena Loh Geok Mooi said. Earlier, during her presentation, Loh said in the first half of 2014, the market would be softer as buyers would adopt a-wait-and-see attitude due to the announcement of the real property gains tax (RPGT) which would discourage investors who were in for the short haul. Investors are mainly attracted the most to properties in Greater Kuala Lumpur, Johor and Penang. She said Kuala Lumpur offered the highest gross development profit (GDP), given the employment opportunities, per capita income, population and sufficient transportation facilities such as the Mass Rapid Transit system which links suburban

areas within the capital city. Iskandar Malaysia in Johor, with a 7% to 8% annual GDP growth, experienced an increase in property purchasers by Singaporeans and expatriates as they were cheaper when compared with those across the causeway. Expatriates working in Pinewood Studio, Legoland, Hello Kitty theme park, Medical Healthpark, Southern industrial and logistics clusters and educity were among the buyers of properties in Iskandar Malaysia, Loh said. “Penang’s real estate, on the other hand, has made it to a US-based publication’s list of eight great places for foreigners to retire in, along with its connectivity to international destinations. “However, Penang was expected to face a glut based on the assumption that future property projects, when they come on stream by 2015 or 2016, would result in a surplus supply of 44,844 units,” she added.

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Property launches and sales will soften this year, as the market gravitates towards the actual impact of the 2014 budgetary measures, property consultants concur. Managing director of property consultancy VPC Alliance Malaysia Sdn Bhd James Wong said with the cooling measures in Budget 2014, sales volumes would drop and the property market would soften, particularly the sales of condominium prices ranging from RM750,000 to RM1 million, which are targeted at foreigners. He said property launches were expected to slow down compared with 2013 and some launches might even be delayed or scaled down, if effective demand was not there. Wong expected more affordable homes to be introduced this year, with properties near the proposed mass rapid transit and light rail transit extension lines set to be popular. “Although the landed residential sector is expected to be resilient with stable growth, especially property within gated and guarded enclaves, sales of residential properties to foreigners would be slow as a result of the budget measures. Transactions in condominiums would slow

down, with a possible price correction. “The abolition of the developer interest-bearing scheme (DIBS) and other freebies is expected to reduce the volume and value of the transactions in the primary market, and new property launches may be affected, as without the DIBS, many potential housebuyers may not be qualified to purchase houses. Overall, the housing market would moderate, with a reduction in property transactions and prices,” Wong said. According to CB Richard Ellis Malaysia executive director Paul Khong, the minimum RM1 million limit for foreigners would affect the mid-range residential sector, and potential buyers would tend to defer their decision to buy. The imposition of the full real property gains tax will have a blanket effect on curbing speculation across all sectors and impact the take-up rate. It has been a quiet start this year and most developers are deferring their launches till the later part. With the Chinese New Year coming up end-January, it is traditionally a quiet period for the property sector. More project launches are expected to come through in or after the second quarter,” Khong observed. After a relatively quiet first-

He pointed out that developers would have to work harder this year to attract sales, and many might consider marketing their projects overseas and incorporating innovative and lifestyle concepts into their projects. “Good and innovative packages plus value-formoney features in property projects would go far in 2014,” Khong conceded. He said one of the property hotspots would be Medini@ Iskandar where new projects like I Medini Walk (by Singapore’s Tang Group of Companies) and Avira (Eastern & Oriental Bhd) both near Legoland would be entering the market soon. Many developers will be looking at the Medini area, as it is a special international zone with various taxes/benefits, including an exemption of the RM1 million minimum price limit imposed on foreigners.

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/// West Malaysia Property News

Penang’s Second Bridge Boosts Land Prices which could be considered hotspots due to their proximity to the first and second bridges were Bukit Tambun, Juru, and Simpang Ampat.

Stop Pre-Launch Sales to Curb Excessive Speculation, Property Developers Urged

“Cheaper land cost and property prices will spur the pace of development in Seberang Prai. “Gated landed projects with lifestyle facilities will be the trend in Seberang Prai.

The second Penang bridge will be open to traffic next month Penang’s property prices have risen by quite a bit since the mid-2000s although the appreciation in prices has been limited to several popular locations on Penang island, particularly George Town. However, since the second bridge project was announced in 2007, vacant land prices on both ends of the bridge, which connects Batu Maung on the island and Batu Kawan in southern Seberang Prai, have jumped. Raine & Horne Malaysia director Michael Geh told StarBiz the price of vacant land in Batu Maung on the island which had increased to RM250-RM300 per sq ft from RM50-RM60 per sq ft. The 24km-long bridge, which is the longest in South-East Asia, has been scheduled for opening next month. Geh pointed out that the pricing depended on whether the land had been zoned for agriculture, commercial or residential usage. “In Seberang Prai, prices of vacant land hover at RM50RM60 per sq ft, compared to RM8-RM9 per sq ft prior to the announcement of the second link project. “The price of vacant land has appreciated 500% on the island and about 700% in Seberang Prai,” he said. For landed properties, new

two- to three-storey terrace houses now cost from RM1.2 million south of the island, compared with about RM450,000 prior to the announcement. “The new condominiums in similar locations are now priced at RM700,000RM800,000, compared to RM250,000-RM300,000 prior to the announcement,” Geh said. Geh said there would be more housing projects planned for Seberang Prai in view of the Ikea project to be developed in Batu Kawan and a mixture of commercial and residential properties. He noted that with the island getting saturated, developers and investors would take more interest in building or acquiring properties in Seberang Prai especially since new housing regulations for the island to take effect on Feb 1 would restrict the sales of properties priced below RM400,000 for a period of five years and if disposed within the period, can only be sold to a state government approved list of first-time buyers. In Seberang Prai, the same restriction applies to residential properties priced at RM250,000 and below. According to Malaysia Institute of Estate Agents (Penang) chairman Mark Saw, the locations in Seberang Prai

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“On the island, we have already seen the full impact of the second bridge on property prices, as Penang and Kuala Lumpur-based developers and property buyers have already invested substantially near the second link,” he said. Saw said that in the first half of the year, Penang’s property market would cool off before picking up again in the second half. Meanwhile, Real Estate and Housing Developers’ Association (Penang) chairman Datuk Jerry Chan said should land prices in Seberang Prai grow at the current pace, developers may be pressured to build more high-rise properties.

Overwhelming crowd at a developer preview Property developers should eliminate pre-launch sales to curb excessive speculation, said Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar. He said there were cases of property buyers purchasing multiple homes without the intention of staying in any one of them and some of these transactions were done prior to the official launch of the property. “While we appreciate that developers want to sell their products and that is part of the risk mitigation, I don’t think we should continue to allow this as it will lead to property speculation,” he told reporters on the sidelines of the launch of Cagamas’ 25th anniversary publication, “Housing the Nation: Policies, Issues, Prospects”. Also present at the launch was Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz. Abdul Wahid said the government estimates that 1.7 million

households (20% of the total) have yet to own their own houses, primarily due to price hikes. “On the supply side, the government therefore plans to build one million houses for the lower- and middleincome categories over the next five years, undertaken by Syarikat Perumahan Negara Bhd (SPNB), PR1MA Corporation Malaysia and private housing developers,” he said. Meanwhile, Real Estate and Housing Developers’ Association Malaysia President, Datuk Seri Michael Yam, said developers ‘test the market’ through prelaunch sales to gauge public response for the project. “Maybe we can come up with some specification on ‘test-marketing’ by developers,” he said, responding to the minister’s suggestion.

Neutral Outlook for Construction Sector in 2014 compared to RM5 billion in 2012

Property Transactions Likely to Decline Amid Stringent Loan Conditions

Nevertheless, Alliance Research expects 2014 to witness higher foreign contract awards for Malaysian companies as it perceives contractors are likely to venture overseas to bid for construction works, given the slowdown in the domestic construction sector.

Despite higher value of construction contracts awarded in the fourth quarter (4Q) of last year, the perspective for the sector is expected to remain neutral this year. Alliance Research Sdn Bhd (Alliance Research) in a report said domestic contracts for 4Q13 stood at RM4.9 billion, which is 52% higher year-on-year (y-o-y) and a 14% increase quarteron-quarter. However, for the full year of 2013, it said domestic contract awards which totalled RM15.4 billion decreased 45% y-o-y compared to 2012. This was due to higher contracts award related to Mass Rapid Transit (MRT) projects, the largest being the RM8.3 billion tunnelling works in 2012. For 4Q13, it observed that some of the Sarawakian companies which have secured notable construction works include Hong Seng Lee Bhd, KKB Engineering Bhd and Sarawak Cable Bhd. To recap, Hong Seng Lee was awarded a RM54 million contract for the infrastructure works for Demak Laut Industrial Park and a RM87 million raw water pumping station at Tanjung Manis in October last year.

In November, Sarawak Cable was awarded RM619 million worth of contracts for power transmission lines projects connecting Mapai and Lachau and Lachau to Todong and KKB Engineering was awarded a contract for phase one of the water supply project in Tanjung Manis. The research firm expects 2014 to witness a decline in domestic construction contract award and sets full year target at RM13 billion. Alliance Research believes that with fiscal tightening soon to be implemented by the government, a slowdown in government-related projects is inevitable as the government is now more cautious on its spending. It observed that over the last five years, on average, government-related projects made up 72% of the total contract awards for the construction sector. As for the private sector contracts, it noted that there is a risk of a slowdown as well. For foreign construction contract, Alliance Research pointed out that there was just one project announced in 4Q13, which was upgrading works for Phnom Penh and Siem Reap airports. It observed that for 2013, foreign contract awards stood at RM1.2 billion

As for peninsular companies, the research firm cited that Gamuda Bhd’s earnings growth will be supported by the MRT project and the potential enhancement from the recent acquisition of Kesas Holdings Bhd, operator of the Shah Alam Highway, while it said Ahmad Zaki Resources Bhd is expected to benefit from the award of Bumiputera projects. Hence, given the potential slowdown of construction contract awards this year, Alliance Research maintains its neutral outlook for the sector.

Real Estate and Housing Developers Association (REHDA) Penang Chairman, Datuk Jerry Chan Property transactions are likely to decline this year amid cautious sentiment and stringent housing loan regulations by financial institutions. Real Estate and Housing Developers Association (REHDA) Penang Chairman, Datuk Jerry Chan said the property market was likely to register a decline in both sales and value. The market is likely to see a 20% decline in value. Chan said the central bank’s move to tighten consumer loans were likely to impact the property market and between 80% and 90% of prospective buyers depended on loans to purchase houses. Besides, he said buyers

were also becoming more cautious this year given the backdrop of rising living cost. However, Malaysia’s property market was still bullish as the segment was driven by low interest rates and economic growth. He explained that 2014 would be a good year for buyers to purchase properties despite the uncertainties. And developers would sell new products at new cost and land value amid rising construction and labour costs. Chan also said developers were concerned over project delays amid the labour shortage following the major crackdown on illegal immigrants.

...2014 would be a good year for buyers to purchase properties despite the uncertainties. And developers would sell new products at new cost and land value amid rising construction and labour costs.

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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. 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. Website: www.ahyat.com YouTube channel: AhyatPropertyTV

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Property Bubbles (Part1)

3 Things I Learned From My 15 days in Spain – Portugal

just came back from my 15 days Property Exploration from the 29th January to 12th February. It brought me into 2 nations; Spain and Portugal, 3 ghost towns: Ciudad Valdeluz, Sesena and Castellon Airport and 7 cities: Barcelona, Madrid, Seville, Cordoba, Granada, Valencia in Spain and Lisbon in Portugal. It was a blitz of an exploration, after flying 18hours from KL to Barcelona, with a transit in Doha, Qatar which was only a 10,500 km distance one-way, traversing 3,500km within the Iberian Peninsular of Spain – Portugal, in 15 days, meeting 10 property investors there and learning as much as I can from them. The experience and lessons I will keep forever, from investors who have seen it all, the crazy BOOM and the equally devastating CRASH! Here are the first 3 powerful lessons, Part 1 of a series that I will be sharing in my articles to come, that I bring back from my Spain – Portugal property exploration.

Knowledge Will Liberate You From Fear

I came back from this property exploration feeling like a new person. I was humbled at the experience of my travels and interviews with the investors there. I got jolts of excitement and fear running through my spine listening to their stories of the boom and bust. But the fear I had quickly turned into motivation. I realized something powerful was happening to me. The more I pursue knowledge about property bubbles and how devastating its impact is to investors, the lesser I fear it. With knowledge, I was liberating myself from fear! We’ve all heard this adage before, “The only way to rid yourself of fear, is to face it!” Property investors today cannot operate with fear. It is a silent emotion that distorts your investment senses and disrupts your natural ability to make sound investment decisions. Too many property investors fear property bubbles, and too many times I’ve been asked to talk about this taboo of a topic. Why should it be a ‘forbidden’ topic to talk about? Why do investors fear it so much? In most instances, we fear the unknown. Lets talk about property bubbles; the booms and the bust not with the intention to incite fear, but rather, to liberate us from fear! Only once we can operate without fear, can we truly be invincible investors!

Only once we can operate without fear, can we truly be invincible investors!

History Tells The Future?

I run the risk of being labeled as a pessimist and be a doctor doom by talking so much about all this. But the truth of the matter, I am not. In fact, I tend to think of myself as the opposite, an optimist. The only reason why I am so driven in the pursuit to learn about the booms and the bust of the property market is because an economist once told me that you need to learn history to predict the future. That was another one that I never really got? How can we predict the future by learning history? I finally got it. Human beings are so predictable as they are creatures of emotions. And bubbles happens time and time again in the history of mankind. It happens with every asset class imaginable; in equity, in property, in businesses and even for the silliest things; tulips and roses! Was the American housing bubble that imploded in 2006/2007 the first that the country has seen? What happened to the California housing market in the 1970’s? It has happened before but perhaps in a smaller scale. Then in the 1980’s the boom happened in Japan and then the stock and property bubble burst in the 1990’s, followed by the lost decade of the Japanese economy; which seems more like it is reaching it’s third decade, never really being able to pull itself out even until today. And then the great bubble burst in the late 2000’s, which hit too many countries all at once; some worse than others. Spain and Ireland saw their property bubble burst more dramatically than perhaps Italy and Portugal and some others. Do we have to let it happen to us to finally learn? Can’t we learn from others to save ourselves from destruction? It is almost a common sense that is perhaps uncommon amongst investors. I urge you, if you are serious about being great investors, make sure that you will spend equal amounts of time learning about history, as you so passionately learn about strategies to make more money in property investment. As avoiding losses and understanding risks is of fundamental importance in your pursuit to creating immense and sustainable wealth!

Only Great Investors Survive and Thrive

Early in my investment journey, a property sifu told me, “Ahyat, you don’t just want to be a good investor, you need to be a great investor”. I often dwell deep into these words of wisdom by these great gurus that god has given me the privilege to learn from, but only to find myself more confused. I never understood what he meant, and why he used the word ‘need’ when he asked me to choose to be a ‘great’ investor. Coming back from this property exploration, I finally got it. As I was able to personally meet and shake the hands of great investors, chat with them over coffee in Spanish cafes and listening to their stories. Mediocre investors had been flushed out of the system. Many have ceased to exist from the face of the Spanish and Portuguese investment landscape. But many great investors like them survived through the irrational boom and the destructive crash. But it would be wrong for me to use the word ‘survive’, because some truly thrived through the grave times, being able to rise from the ashes and be able to call themselves great investors. They didn’t consider themselves that, but in my eyes, they were truly great investors. Who are still standing tall even after the crash. Today I see so many people jump into the bandwagon and call themselves property investors. Many such players in the good times. And just as in Spain and Portugal, everybody seemed like smart investors in the boom times, but where are they in the bust? Make a decision to be great investors and be able to invest in any times; good and the bad!

Stay tuned for more powerful lessons that I have learned from my Spain-Portugal property exploration. You can check out my youtube channel AhyatPropertyTV for more than 60 videos I made while I was there. You can also check out www.ahyat.com for other online resources as well.

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/// Contributor

Richard Oon

Real Estate Taxation Expert Richard Oon is the National Tax Director of TY Teoh International, a member firm of the MSI Global Alliance, which is one of the world’s largest independent associations of accountancy and law firms. Richard is a member of the Malaysian Institute of Accountants (MIA), a fellow member of the Association of Chartered Certified Accountants (ACCA), a fellow member of the Chartered Tax Institute of Malaysia (CTIM) and also a Certified Financial Planner (CFP). He has more than 20 years experience in the taxation industry and holds a tax agent licence issued by the Ministry of Finance under Section 153 of the Income Tax Act 1967.

Goods & Services Tax and The Property Investor

hile presenting the recent Budget 2014, Prime Minister Datuk Seri NajibRazak announced the introduction of the Goods and Services Tax (GST) and when enacted, GST will be effective from 1 April 2015 and standard rated supplies will be subject to GST at a rate of 6%. With the introduction of GST, the current indirect taxation systems of sales tax and service tax will be abolished on the same date.

What is GST? GST which is also known as the ‘value added tax’ (VAT) in many countries, is a multi-stage consumption tax on goods and services, which ultimately falls on the final consumer.GST is levied on the supply of goods and services at each stage of the supply chain from the supplier up to the retail stage of the distribution. Even though GST is imposed at each level of the supply chain, there is no compounding tax effect, regardless of the number of stages a product or service undergoes in the supply chain, as GST is only charged on the value added element at each stage in the supply chain. This is achieved through net of ‘output tax’ (the GST on the goods and services sold by you) minus ‘input tax’ (the GST you paid on the raw materials, equipment and services used in your business) mechanism adopted under the GST administrative process. Stages

Sales Price (Before GST) RM

Input Tax RM

Output Tax RM

Net GST Paid RM

10.00

0.60

50.00

0.60

3.00

2.40

80.00

3.00

4.80

1.80

100.00

4.80

6.00

1.20

Supplier

 Manufacturer 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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 Wholesaler

 Retailer



Customer End Result

100.00

6.00

GST is a broad-based consumption tax covering all sectors of the economy i.e all goods and services made in Malaysia including imports except specific goods and services which are categorized under zero rated supply and exempt supply orders as determined by the Minister of Finance and published in the Gazette.

Scope of Charge GST will be charged on any supply of goods and services if the following conditions are satisfied: 1. 2. 3. 4.

it is made in Malaysia; t is a taxable supply of goods or services; it is made by a taxable person; and it is made in the course or furtherance of any business carried on by that taxable person.

A taxable supply is a supply which is standard rated (6% under current proposals) or zero rated, whereas exempt and out of scope supplies are not taxable supplies. GST can only be levied and charged if the business is registered under GST. A business is not liable to be registered if its annual turnover of taxable supplies does not reach the proposed prescribed threshold of RM500,000. Therefore, such businesses cannot charge and collect GST on the supply of goods and services made to their customers. Nevertheless, businesses can apply to be registered voluntarily.

Properties Acquired From Property Developers Even though it has been proposed that residential properties are deemed to be exempt supplies (ie. the developer cannot charge housebuyers GST), you will realise that from the above diagram, the developers will still be subject to GST on the construction materials and supply of various services. As the developers will have to pay for the input tax (ie. GST) on those construction materials and other services, they are unable to claim output tax as GST is not imposed on residential properties. Consequently, the GST element of the costs of construction would eventually be passed on to the housebuyers. In the case of commercial properties, the developers will have the relief of claiming GST incurred as input tax as they are able to charge output tax (GST) on the buyers. In the case of a mixed development of both residential and commercial properties by a developer, the proportion of GST incurred in relation to the construction of residential properties cannot be passed on and absorbed by the construction of commercial properties either.

Some may argue that cost of construction may instead reduce, considering that the rate of sales tax in Malaysia which is currently 10%, will be abolished and replaced by the 6% GST come 1 April 2015 and this would in fact translate into some savings on the cost of construction materials. However, it would be worthy to note that pursuant to the Sales Tax (Rates of Tax No. 2) Order 2012, the sales tax rate on most building materials enjoy a preferential sales tax rate of either 0% or 5% as at 31 December 2013. So in fact, the tax element of construction materials would in reality, increase!

Properties Acquired From The Secondary Market Post-GST implementation, there will be no GST implications when you buy or sell a residential property from or to the secondary market, as it is an exempt supply. Commercial properties, however, are a separate matter altogether. Whether the commercial property transacted will be subject to GST would depend on whether you as a buyer, are buying the property from a GST-registered person or, when you sell, if you are likewise GST-registered or not. If so, the seller will need to charge 6% GST on top of the value of the property. The advantage of being GSTregistered is that while you are now required to charge and collect GST on the taxable supplies, you will be able to claim the GST incurred as a deduction (as input tax credit) against any output tax that you may incur during the taxable period. If the input tax is greater than the output tax for the corresponding period, you will get a refund from the Royal Malaysian Customs. As you can see from the above, the GST-mechanism may seem quite complicated to the layman. With the implementation of GST, property investors will have to consider another cost-factor (ie. GST) in their property investment decision-making process.

The GST mechanism described above is illustrated in the following diagram:

SUPPLIERS

SUPPLIERS Bills for supplies and services + 6% GST

DEVELOPER

Value adding activity + profit margin

RESIDENTIAL PROPERTIES Selling price WITHOUT GST (Exempt Supply)

BUYER

With the implementation of GST, property investors will have to consider another cost-factor (ie. GST) in their property investment decision-making process.

COMMERCIAL PROPERTIES Selling price + 6% GST

BUYER

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Cautiously Optimistic Outlook with Property Developers in Iskandar Expecting Tough 2014

The “feel-good” factor that was prevalent in 2012 and 2013 for the property market in Iskander Malaysia is unlikely to continue this year following property cooling measures introduced by the Government in the last quarter of last year.

sidelined and denied from owning houses.

Property developers are rather cautiously optimistic on the market outlook for 2014 and are anticipating it to be a tough year for many.

He said these members raked in a combined RM3 billion in sales over a one-month period.

Johor Real Estate and Housing Developers Association (REHDA) branch chairman Koh Moo Hing said the Year of the Horse would be more challenging and that developers must be well-prepared to face the worst.

Koh said 2013 was the best year for 30 odd members of Johor REHDA who participated in the Malaysian Property Exposition (MAPEX) held here in May and November.

“It would an achievement if they could repeat the sales figure again for this year’s events,” he added. The 30-day period starting from the first day of MAPEX is the benchmark used by REHDA to determine the value of sales by participating developers.

“I assume that many of our members will adopt the wait-andsee approach in the first-quarter of 2014, to see the real impact from the (property cooling) measures,’’ Koh told StarBiz.

“Johor MAPEX to be held in April will give a clearer picture on the Iskandar property outlook and how developers are coping with the uncertainties and challenges,’’ said Koh.

He said the measures were not something new as other countries would also resort to similar measures to ensure locals were not

He said developers would be ready to face the tough year ahead and adapt well as they had experienced the ups and downs in the industry

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over the years and emerged stronger. Koh said that speculators would be phased out gradually from the property market with the implementation of the measures with owner-occupier buyers dominating the market. “This year’s launches will see between 100 and 200 units with more developers opting for landed houses as demand for them is still strong in Iskandar,’’ he said.

He said if this could prompt developers to lower the selling prices of their new launches to attract potential buyers and also offer no-frills houses to cut costs.

KGV International Property Consultants (M) Sdn Bhd director Samuel Tan Wee Cheng concurred with Koh that the market would see more serious buyers.

S P Setia Bhd divisional general manager Hoe Mee Ling said many uncertainties in both global and domestic market might affect the property market in the first-half of 2014.

But he said buyers would be more cautious on the new policies – the real property gains tax (RPGT) and the hike in ceiling price from RM500,000 to RM1 million for foreign property buyers. “Prices of houses will continue to go up this year, determined by the policies and escalating costs of labour and building materials,’’ said Tan. He said it was matter of time buyers especially first-time house owners decided whether to continue waiting or make the kill before the prices move up north. Tan said if the prices continued to go up, more buyers would go for the secondary market where prices were between 20% and 30% cheaper compared with new launches. “For instance, the average selling price for a new double-storey link house in Iskandar is RM800,000 per unit, but if you look around in the secondary market, you’ll be paying RM600,000 for it,’’ he said. Tan said landed houses in the secondary market came with generous land size and bigger floor area plus ready amenities and facilities within the neighbourhood or the development.

Tan said foreign buyers would continue to buy properties in Medini, Nusajaya as there was no restriction to foreign ownership in the area and they were not subject to the RPGT regime.

She said among the issues were the pressure of increasing costs as a result of skilled labour shortage, reduction in subsidies beginning with petrol last September and electricity tariff adjustment in 2014 and policy changes. “However, challenges always come with opportunities and there are still positive factors in the Iskandar property market,’’ said Hoe. She said the fundamental demand for properties in Iskandar would remain high and strong as long as developers could adapt to their products to suit this demand. Hoe said the outlook was still good as properties fetched good yields and were the best hedge against inflation.

Developers Must Play a Role in Curbing House Price Speculation

Tropicana’s Transformation as a Premier Developer Meanwhile, the group’s PWC project and its Tropicana 218 Macalister development in Penang are expected to stir interest in the northern region. The group is also making inroads into Sabah where it plans to develop a luxurious golf fronted condominium project called Tropicana Landmark.

Tropicana Penang World City artist impression Real Estate and Housing Developers’ Association (REHDA) president, Datuk Seri Michael Yam The government wants housing developers to play a role in curbing price speculation as there have been cases of one person buying many houses without any intention of staying there, Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar said today. He said some of the transactions were made before the official launch of the properties. He asked that housing developers to focus on genuine buyers so that those who really want affordable homes can have access to them. “We (the government) want to make sure we curb excessive speculation (in the market) and build enough supply. “This is to ensure that those who really want it, will have access to affordable homes,” Wahid said after launching Cagamas Holdings Bhd’s book entitled Housing the Nation: Policies, Issues and Prospects today. Wahid said the government did not want to over-regulate. “We want developers to come up with their own steps (to curb speculation)..” Meanwhile, Real Estate and Housing Developers’ Association Malaysia chairman Datuk Seri Michael Yam Kong Choy said: “I think a responsible housing developer wouldn’t want to sell too many units to one party. The reason is because people who purchase multiple units want a discount. “Also, some parents would like to purchase multiple units for their children,” he said.

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Tropicana Corporation Bhd, formerly Dijaya Corporation Bhd, is all set for strong growth ahead as it enters 2014, judging from its past year’s performance, well-received new launches and transformation initiatives. The group is also on track to achieve its vision as a premier developer in the country, given its strong presence in the key growth areas in the central, southern and northern regions. A large part of the credit goes to its impressive sales performance for its ongoing key projects such as Tropicana Grande and Tropicana avenue in Greater Kuala Lumpur (KL) and Tropicana Danga Bay project in Iskandar Malaysia, Johor where its first phase of Tropez Residences, has been fully sold and is expected to be completed by end of 2014. Meanwhile, its second phase, Bora Residences, with sizes ranging from 694sq ft for a 1+1 bedroom to 3,443sq ft for a 4+1 bedroom penthouse with a private pool, has opened for sales. This phase will be infused with generous landscapes and water features. The group’s recent new launches – Bayberry Serviced residence at Tropicana Gardens,Pandora Serviced residence at Tropicana Metropark in Subang and Tropicana Bay Residences in Penang Worldcity (PWC), Bayan Mutiara, Penang – which enjoyed strong take-up averaging over 80%, is testimony to the group’s brand appeal, design and development concepts. Taking into consideration that the group’s DNA emphasises on location, accessibility, innovative designs, security, efficient use of space and developing sustainable townships, this augurs well for its developments that are on the drawing board for 2014.

New Project Highlights In the Klang Valley, the group’s new project line-up include Tropicana Gardens in Kota Damansara and Tropicana Metropark in Subang. In addition to these projects are W Kuala Lumpur Hotel and The Residences in KL as well as Tropicana Heights in Kajang, Selangor, where phase one of its parkview homes is expected to be launched soon. Besides its RM8.3 billion Tropicana Danga Bay project which spans 37 acres of freehold land, the group will roll out two other projects in the southern region, namely Tropicana City Centre and Tropicana Danga Cove. Sited within Zone A of the Johor Bahru City Centre in Iskandar Malaysia, Tropicana City Centre is a RM5 billion mixed development that includes lifestyle properties such as SoHo (Small office Home office), an office tower, hotel and retail or food and beverage outlets. Targeted for launch in October 2014, its first phase, the 7.95acre Veridian Residences, will comprise four towers of luxurious serviced residences. Tower A1’s unit size will range from709sq ft for a 1+1 bedroom to 1,946sq ft for a four-bedroom penthouse. Jointly developed with Iskandar Waterfront Sdn Bhd, the 227-acre Tropicana Danga Cove in Bandar Baru Kota Puteri will be another vibrant mixed development. Its first phase, Oasis, will be a 38-acre freehold commercial business hub comprising 350 shop offices with a gross development value (GDV) of RM600 million. Located between Pasir Gudang Highway and the new Coastal Highway, Oasis is accessible via the Eastern Dispersal Link highway which connects the Johor Bahru Customs, Immigration and Quarantine Complex to the Pasir Gudang port.

Outstanding 2013 Performance According to Tropicana group managing director Datuk Dickson Tan, the group achieved record new sales of RM2.17 billion for the year 2013. With this sales achievement, the group will finetune its FY14 launches and sales strategy. Tropicana also managed to successfully raise RM168 million through its land disposal activities besides notching an additional RM337 million gross proceeds from land sales. Its group pre-tax profit rose 12% to RM178.473 million while its group revenue registered a whopping 160% increase to RM1,030.38 million as at Sept 30, 2013. Currently, 90% of Tropicana’s revenue is generated by its dealings in property development, resort operations, property investment and land trading. The group, with about 2,200 acres of landbank, has a potential future GDV of RM80 billion. It is the latest property developer to achieve market capitalisation in excess of RM1.2 billion. Corporate Social Responsibility As part of its corporate social responsibility, the group, through its Tropicana Foundation, contributed a total of RM3.5 million to various organisations and charities in 2013. They include Ti-Ratana Welfare Society, Persatuan Rumah KIDS, Rumah RACTAR, Federation of Chinese Associations Malaysia, Tzu Chi Foundation Malaysia, Football Association of Johor, Hospis Malaysia,Tan Sri Muhyiddin Charity Golf Foundation, World Chinese Economic Forum, Foon Yew Associated Chinese Schools and SRJK (C) Yeong Chang. The group also donated to the historical Penang Starwalk 2013 to reach out to the community and promote a healthy lifestyle.

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The Latest Luxury Condo Project Launch

Artist’s impression of The Mews entrance Lifestyle property developer Eastern & Oriental Bhd (E&O) launched its latest downtown condominium project The Mews. When completed in 2017, it will be one of three high-rise residential developments on Jalan Yap Kwan Seng in Kuala Lumpur. There will be three residential projects along that stretch of about 500m. The Mews starts at RM1,700RM1,800 per sq ft (psf). It will be among the highest in terms of price point among the three on-going projects there currently. The first project to be launched close to the Jalan Yap Kwan SengJalan Tun Razak intersection is Mirage Residences. The Mirage was launched a couple of years ago at RM1,000 per sq ft with prices trending up to between RM1,300 and RM1,400 psf last year. According to a member of the marketing team, some of the units were sold at RM1,600 psf last year. The Mirage is 100% sold and is expected to be completed by May 2015. It is a 25-storey block comprising 102 units developed by OSK Properties Holdings Bhd. Most of the units have built-up areas of between 1,000 sq ft and 1,200 sq ft with two bedrooms. The second project to be launched closer to the Petronas Twin Towers at the Jalan Yap Kwan Seng-Jalan Ampang intersection is Star Development. This was launched late last year by joint-venture partners Symphony Life Bhd (previously known as Bolton Bhd) and United Malayan Land Bhd.

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It comprises three residential highrise blocks of which the first will be 57 storeys. Its next two blocks are expected to have 61 storeys. Besides the residential portion, there will also be a retail portion. When completed, Star Development will have a total of 1,500 serviced apartment units, comprising mainly one-bedders with sizes ranging from 650 sq ft and 750 sq ft. Each of these three projects have their pluses. The Mirage, at RM1,000 psf seems like a steal considering today’s prices and when matched against The Mews. It is also not as dense as The Mews, which will have 256 units on 1.29 acres compared with Mirage’s 102 units on just under one acre. Both are on residential titles, which is a plus point. The Mews will be more private than Mirage, located about 100m on one of the inner roads, and does not directly front Jalan Yap Kwan Seng. Sizes range between 900 sq ft and 2000 sq ft for the one- and 3+1 bedroom units. There are four penthouses with built-up areas of about 2,500 sq ft each. Two of the penthouses have been sold. E&O is a lifestyle brand. It built St Mary Residences in Jalan Tengah, parallel to Jalan Raja Chulan in the main commercial district of Kuala Lumpur and Dua Residency along Jalan Tun Razak. While St Mary Residences is both urbane and stylish, The Mews will

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have an understated elegance in earthy tones and colours. This will be E&O’s first joint-venture development with Japan’s largest developer Mitsui Fudosan Residential Co Ltd with E & O having a 51% stake.

be 1,500 units on four acres, or 375 units of residences per acre compared with Mirage’s 100 units, and Mews’ 198 units. There will also be a retail portion. While there is convenience, it may not be that private.

When E&O’s deputy managing director Eric Chan first unveiled the company’s plans for this project a couple of years ago, they mulled over what would appeal to females. Hence, the large shoe cabinets and storage area. Units come with bedroom and kitchen built-ins.

It will be the most dense among the three projects but in terms of proximity, it will be the closest to the Twin Towers. Located behind Avenue K mall, it will be within walking distance to the KLCC LRT station via Avenue K. Because Star Development is built on commercial land, upkeep and maintenance will be a consideration. Also, the price of the unit does not include a car parking bay. Residents will have to rent it at RM150 to RM200 a month. Moving forward, having a unit that comes with a car park will be a luxury.

There will be one parking bay for one-bedroom units, two for twobedders and three for the larger units. The penthouses will have four parking bays. The development will come with pool, gym and squash courts and concierge services. According to Chan, about 70%, or 180 units have been sold, of which about 20 units have been purchased by Japanese. About half the buyers are Malaysians. Shuttle services will also be provided to Twin Towers and the vicinity. With the traffic situation in the Klang Valley today, that will be a huge plus. From what is seen of St Mary Residences and Dua, The Mews is expected to be another oasis in the busy and bustling city centre. On how the various cooling measures will affect sales, Chan says the long term prospects for the sector are still good. “We are still in the first three months of the year. We are focusing on the long term,” says Chan. Mitsui Fudosan (Asia) Pte Ltd executive director (head of residential team) Tomoo Nakamura says it has been a good experience working with Chan and his team and this partnership will pave the way for further cooperation. Dense development The largest project along that Yap Kwan Seng stretch is Star Development with prices beginning from RM1,500. It will be built on commercial land and there will

A point to note is this: If one is buying for investment, there are literally thousands of smallish onebedders in the Klang Valley today and there will be more entering the market as projects come to completion. Getting it tenanted may not be that easy. Most of the buyers at Star Development may be foreigners as small units tend to attract investors. Another thing to note is the price, which has moved up considerably from RM1,000 to RM1,700 psf in a matter of two to three years a jump of 70%. All three projects are not comparable because they are not homogeneous, both in terms of location and finished product. The steep rise in price is something to be considered, especially in today’s volatile times. There is a lack of clarity for now and with inflation at a 25-month high of 3.2%, those who have the means may well consider a branded unit. But there will be many others who will settle for bread-and-butter housing, without the frills. Either way, with the various cooling measures in place and maybe more to come, a property investment is for the long term and for those who have the holding power.

SP Setia President and CEO Resigns Battersea Power Station project in London until September 2015 given the prominence of the international project. Liew would also remain managing director for Qinzhou Development (M) Consortium Sdn Bhd, a Sinoforeign joint venture company to develop the China-Malaysia Qinzhou Industrial Park in the republic until the same period.

Tan Sri Liew Kee Sin Ten months after SP Setia Bhd unveiled its succession plan, head honcho Tan Sri Liew Kee Sin has announced his intention to resign as president and chief executive officer. Also quitting the company is chief financial officer Datuk Teow Leong Seng. Liew’s departure was expected by industry observers but Teow’s resignation came as a surprise as he was named deputy chairman in the property player’s succession plan earlier, analysts said. Liew would leave the property giant on April 30 while Teow would stay on until July 31. Liew and Teow would continue to be involved in the

Sources said the property magnate would eventually emerge in Eco World Development Group Bhd after his stint in SP Setia. It is also speculated that present chief operating officer Datuk Voon Tin Yow, who was appointed the company’s acting president and chief executive officer, might also resign later. In a statement, SP Setia said Voon’s appointment would be effective from May 1, 2014 until April 30, 2015. Voon would be supported by executive vice-president Datuk Khor Chap Jen who would be appointed acting deputy president during the same period, it said. Non-independent non-executive director Tan Sri Lee Lam Thye has also resigned yesterday to focus on his new role as the deputy chairman

of the National Unity Consultative Council. SP Setia chairman Tun Zaki Tun Azmi said: “Whilst the board and I are greatly saddened by the departure of Liew, Teow and Lee, we are confident that the group will continue to be in steady hands under Voon and Khor.” Observers expected its biggest owner Permodalan Nasional Bhd (PNB) to take more proactive measures in managing its talents as well as setting the company’s direction going forward. It was earlier reported that Datuk Jamaludin Osman of I&P Group Sdn Bhd – PNB’s property arm – was among the candidates tipped to take over Liew’s stewardship. There were also talks of a possible asset injection by PNB into SP Setia. Liew said: “Given the solid footing which the company is on, I believe the time has arrived for me to step down after 18 years as CEO. “With my children all growing up and starting out on their own career paths, I am looking forward to spending more time with them, mentoring and guiding them.”

Liew’s eldest son, Tian Xiong, is a major shareholder and director in Eco World, another property firm set up by former SP Setia top brass. SP Setia fell five sen to close at RM2.88 while Eco World was up one sen to RM4.15. Analysts said the market has priced in Liew’s retirement from SP Setia and they expected the company’s operation to remain intact for the time being. Bloomberg data showed that its forward price-to-earnings (P/E) was 13.4 times compared to 16.06 times currently. Its average P/E ranged from 17 times to 20 times from financial year ended Oct 31, 2011 (FY11) to FY13. Liew is instrumental in growing SP Setia from a RM200mil entity in 1998 into a multi-billion ringgit international property company. With him at the helm, SP Setia achieved sales of RM8.24bil in FY13, almost double from what it registered in FY12. The group has 4,782 acres of undeveloped land bank worth RM102bil while its unbilled sales stood at RM9.6bil as at FY13.

Developers: Soft Launches Helpful in Gauging Market Sentiment Wahid was reported to have made the remark at a book launch by property debt refinancier Cagamas Holdings Bhd on Tuesday. LBS Bina Group Bhd managing director Datuk Lim Hock San said since it was not easy to launch or sell real estate or big ticket items, soft launches have been helpful in gauging market sentiment.

Pre-launch sales or previews are part of marketing efforts by developers to gauge buying interest, according to property players. Alpine Return Sdn Bhd chief operating officer Alan Koh told StarBiz that under normal market conditions, pre-launch sales captured about 30% sales before the real estate was launched.

Commenting on Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar’s statement that property pre-launch sales should be stopped to curb excessive speculation in the market, Koh said:“We are unsure if such a ruling could possibly be legalised. Further clarity on the matter would be useful..

“Interested buyers do not sign the sale and purchase agreement forms there and then, so we do abide by the rules,” Lim said. Perdana Parkcity Sdn Bhd group chief executive officer Lee Liam Chye said as long as players complied with the rules and regulations, they should be allowed to continue to exercise creativity in marketing their product.

“The implication that speculators were getting a big bite of the pie simply isn’t happening. “Granted, it may be hard to differentiate speculators from long-term investors, we do see genuine buyers who do not flip their purchases. “Today’s market is already suffering because of cost hikes rather than wild speculation,” Lee said in a phone interview.. Mah Sing Group Bhd managing director Tan Sri Leong Hoy Kum said pre-launch sales were helpful. He said in an e-mail: “Pre-launch sales or previews allow developers to gauge market demand and obtain feedback on the product types that will eventually be launched.”

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/// West Malaysia Property News

Build PR1MA Homes Where Its Really Needed, Urge Property Experts

Penang to Enforce New Housing Rules

and Tradewinds Corp Bhd on a 50:50 basis to build PR1MA homes in Cheras, which he deems “exciting”.

Artist impression of PR1MA Alam Damai, Cheras, Kuala Lumpur Perbadanan PR1MA Malaysia, a government body tasked to build affordable homes, should develop them in or near city centres where the demand is, say property consultants. “At the end of the day, location matters. People want to stay near their workplaces,” JS Valuers Research & Consultancy Sdn Bhd executive director Chan Wai Seen told The Edge Financial Daily by telephone. “Even though many seek to buy 1Malaysia Housing Programme (PR1MA) homes, they end up not buying them because the homes are not near where they work,” he said. To date, PRIMA homes are in Nusantara Prima, Johor Baru and Alam Damai, Cheras. Chan also said that the body needs to address the availability of loans to middle-class earners to buy PR1MA homes, among other issues. As at August last year, out of the 20,519 units that were approved by Perbadanan PR1MA’s board of directors, 31.7% are in city centres, including 4,636 units in Kuala Lumpur and

1,877 units in Kuching, Sarawak. However, Perbadanan PR1MA chief executive officer Datuk Mutalib Alias was reported as saying that the company is planning to launch more PR1MA housing projects in the Klang Valley as part of its 160,000-unit target by the end of this year. These units form part of the 500,000 to be rolled out by the company by 2018. To date, the company has approval from its board to build 45,000 homes across the country. To meet its 2013 target of building 80,000 homes by March this year, Mutalib said last Tuesday that the company hoped to get approval to build another 35,000 homes by the first quarter of this year. A property consultant who declined to be named said the government should look into acquiring old abandoned buildings in city centres with low plot ratio for developing PR1MA homes. He cited the proposed joint venture project between S P Setia Bhd

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Under the project, S P Setia and Tradewinds will redevelop the low-cost public housing scheme in Cheras involving Flat Sri Johor, Flat Sri Melaka, Flat Sri Pulau Pinang and the Taman Ikan Emas longhouses. “[Developers] can still make profits out of that [project] and benefit the middle-income earners instead of selling the tract of land to private developers,” he added. Mutalib said his company plans to launch 1,349 new landed PR1MA homes in Sungai Petani, Kedah within one to two months at an indicative price of between RM150 per sq ft and RM250 per sq ft — 20% lower than the market price. However, he noted that the company still needs to perform all the required due diligence before it can proceed with the development.

S P Setia sales gallery in Johor

The state of Penang is set to enforce new housing regulations on the proposed date of February 1, 2014. At its core, the new regulation is designed to minimise speculation in the state’s property market and to ensure public housing and affordable homes are accessible to low and middleincome first-time home buyers. The new regulation affects citizens and non-citizens buying low cost homes (up to RM42,000), low-medium cost homes (up to RM72,500), affordable homes on the island (below RM400,000), and affordable homes on the

mainland (below RM250,000) and covers all past and future purchases. Homeowners who wish to sell their house within the 5 or 10year lock-in period must first make an appeal to the state government. Additionally, these houses can only be sold to “listed buyers” which are certified middle-income individuals registered with the state government’s Housing Department. Our infographic illustrates the new housing regulation and restrictions imposed on home buyers.

Last Friday, the company signed a memorandum of understanding with the Kedah State Development Corp to identify strategic land in the state, and develop with SP Baiduri Sdn Bhd the construction of the PR1MA homes in Sungai Petani.

Even though many seek to buy 1Malaysia Housing Programme (PR1MA) homes, they end up not buying them because the homes are not near where they work

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/// Hot Topic

Boom for Penang Hotels as Higher Demand for Rooms Expected

/// HOT TOPIC

The top hote in Penang, The Eastern Hotels in Penang are expecting to report record-breaking numbers for last year, as the hotel occupancy rate for 2013 is expected to hit close to 70%, the highest in the past five years, paving the way for a strong Visit Malaysia Year 2014. Till November last year, hotels in Penang registered an occupancy rate of 65.79% and the sales of some 1.8 milllion room nights, compared to 60.28% and 1.6 million achieved in the same period of 2012.

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Andy Fong, vice-chairman of the Malaysian Association of Hotels (MAH) Penang Chapter, said the industry is confident of achieving an occupancy rate of around 68%, very close to 70%, for last year. Previously hotel occupancy in Penang hovered around 55% to 60% annually. For the eleven months to November 2013, city hotels in George Town saw a higher occupancy rate of 67.92% on sales of over one million

room nights compared with the 65.22% occupancy and 607,744 room nights for beach hotels.

have seen more hotel rooms sold to domestic tourists, and higher arrivals from Asean and Asian countries.

MAH expects at least a 10% increase in hotel occupancy rate for 2014, according to Fong.

“Domestic tourist arrivals to Penang, for example, now comprise 50% of the total tourist arrivals.

“Previous trends also show that domestic arrivals contribute to about 40% of the occupancy rate, while European tourists dominate the arrival figures.

“Arrivals from the Asean and Asia easily make up more than half of the foreign tourists,” Fong said.

“Since about three years ago, we

Singapore, Indonesia, China, India, and the Middle-East contribute the highest number of visitors.

“Visitors from Australia, the UK, Holland, and the US top the nonAsian visiting countries,” he said. Fong said the new routes of budget airlines such as Hong Kong Express, connect directly from Hong Kong to Penang. Malindo Air, flying to Penang via Kuala Lumpur, also helped to boost tourist arrivals. Dragon Air will also start flying from Hong Kong to Penang in April this year, he added. When the Subterranean Penang International Convention and Exhibition Centre (SPICE) starts operating in 2015, MAH expects a an increase in visitors from the meeting incentives, conventions, and exhibitions (MICE) market. “There will be a shortage of hotel rooms. There are currently over 14,000 rooms from the 52 members of MAH (Penang). “While there are four major hotels on the way that will provide another 600 to 700 rooms, only one is confirmed to start operations this year, which is Royale Bintang Penang. “The Rice Miller Hotel, St Giles, and the Cititel Express are likely to start operations in 2015 or 2016,” he said. Penang Global Tourism managing director Ooi Geok Ling said from January to November 2013, the

visitors flying directly to Penang International Airport rose 7% to 601,920 from 550,408 in the same period of 2012. “The highest number of Asian visitors came from Indonesia, Singapore, and China. The weakening of the ringgit and the political instability in Thailand helped to boost the number of tourist arrivals in Penang,” Ooi said. The number of Indonesian visitors increased to 263,799 during the 11 months from 215,054 in the same period a year ago, while Singaporean and China tourists increased respectively to 112,801 and 50,726, compared to 85,577 and 40,605 in the same period a year ago.

achieving an occupancy rate of 67.3%. “For both hotels, it was the best in a five-year period. The breakdown for Eastern & Oriental Hotel was 30% domestic tourists and 70% international visitors. “Some 40% of the arrivals were here for MICE functions, while the remainder for leisure. Tourists from Australia, New Zealand, UK, Europe, and Japan topped our list of visitors,” he added. The Lone Pine Hotel, located in the Batu Ferringhi beach area, saw 51% international arrivals, and 49% domestic visitors, according to Saxon.

Meanwhile, Michael Saxon, Eastern & Oriental Bhd’s director for hospitality and lifestyle, said Eastern & Oriental Hotel and Lone Pine Hotel, set a new record in terms of room-night sales for 2013.

“Most of Lone Pine Hotel guests were here for leisure.

“The Eastern & Oriental Hotel, for example, sold 44,639 rooms, last year, compared to 25,325 in 2012. The occupancy rate went down to 63.7% in 2013 compared to 69.4% the year before because we added 122 rooms in early 2013, increasing the total number of rooms to 222,” he said.

G Hotel sales and marketing director Kevin Cheah said the occupancy rate of the hotel is expected to grow to over 90% in 2013, a 1% rise from 2012.

Lone Pine Hotel sold 22,296 rooms in 2013, compared to 20,028,

“For the Chinese New Year holidays, we are expecting over 90% occupancy for both hotels,” he said.

“The guests were largely international arrivals, who are here for leisure. We registered the highest occupancy rate since opening for business in 2007,” Cheah added.

Fong said the new routes of budget airlines such as Hong Kong Express, connect directly from Hong Kong to Penang. Malindo Air, flying to Penang via Kuala Lumpur, also helped to boost tourist arrivals.

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/// Hot Topic

/// HOT TOPIC

Healthy Growth in Residential Market KLANG VALLEY capital values (1Q2010 - 3Q2013) TYPES OF HOMES

1Q10

2Q10

3Q10

4Q10

1Q11

CAPITAL VALUE (RM/UNIT) 2Q11 3Q11 4Q11 1Q12

2Q12

3Q12

4Q12

1Q13

2Q13 3Q13

1-storey terraced houses (land area 1,300 - 1920 sq ft) 250 470 560 560 180 155

Bandar Sri Damansara TTDI (Openg) Bangsar Park Lucky Garden Bandar Kinrara (1,400 sf ) Puchong Perdana (1,300 sf )

260 480 580 580 190 170

260 480 600 600 200 170

300 500 620 620 200 175

320 550 640 620 200 175

340 600 680 650 230 175

350 650 680 720 250 180

380 660 800 750 280 180

400 660 850 770 300 180

420 660 880 770 320 180

420 660 880 780 340 180

470 700 900 800 360 200

470 530 770 820 950 1,000 850 950 390 440 200 220

2-storey terraced houses (land area 1,200 - 1,900 sg ft) Bandar Sri Damansara (SD7) TTDI (Athinahapan) Bandar Utama (BU1) Bangsar Baru USJ (USJ6) Bandar Puchong Jaya (1,500 sf ) Pusat Bandar Puchong (1,400 sf )

430 710 560 1,000 250 300 310

470 750 610 1,100 270 320 320

480 750 650 1,150 280 320 320

500 850 730 1,200 320 350 360

550 850 730 1,200 320 350 370

600 900 800 1,300 340 375 380

650 950 800 1,300 350 400 400

670 1,000 880 1,350 380 430 450

670 1,000 900 1,350 420 430 480

700 1,100 920 1,350 440 500 500

720 1,100 1,000 1,350 450 520 520

800 1,200 1,000 1,600 480 550 550

850 900 1,300 1,400 1,100 1,150 1,600 1,700 500 570 600 650 600 600

150 390 450 710 670 410 540 440 180 680 580 315 190 295 900 345 2

150 410 450 720 660 410 550 440 190 680 580 320 200 300 910 345 2,100

150 410 480 720 660 410 550 440 190 680 600 320 200 300 920 365 2,100

165 450 520 750 685 470 560 440 190 700 640 370 210 330 960 380 2,150

180 475 530 750 685 490 570 440 190 715 640 390 210 340 1,000 395 2,150

200 500 560 750 720 525 570 440 205 730 640 420 220 340 1,050 395 2,150

200 525 610 750 750 525 570 450 220 730 675 420 230 375 1,100 400 2,000

210 525 640 750 800 520 560 440 265 750 700 440 240 375 925 400 1,760

210 550 650 775 855 520 560 440 265 780 730 440 245 375 925 400 1,760

220 550 650 800 855 560 560 480 265 780 735 440 255 400 1,000 400 1,760

230 565 660 830 880 580 600 485 265 800 780 480 255 450 1,000 400 1,760

250 580 710 880 900 600 600 485 280 820 800 500 280 490 1,000 430 1,800

250 580 710 880 900 600 600 485 285 820 800 500 280 490 1,000 430 1,800

300 300 610 610 740 740 900 900 910 950 620 680 600 630 490 530 305 320 850 850 810 820 500 500 300 300 520 560 1,000 1,000 440 450 1,900 1,900

High-rises (residential) Menara Damansara Villa Flora Kiara Park TTDI _ The Residence TTDI _ The Plaza Mont’ Kiara Pines Mont’ Kiara Sophia Lanai Kiara Good year Court 6-10 Sri Penaga Cascadium Tivoll VIllas Plaza Damas - Mayfair Sri Putramas Marc Service Residence Parkview Service Apartment Stonor Park

The residential market performed well last year, according to Nabeel Hussein, associate director of C B Richard Ellis (Malaysia) Sdn Bhd. Presenting The Edge/C B Richard Ellis Klang Valley Housing Property Monitor for 3Q2014, he says, however, that it failed to show the same growth in capital value seen in previous years as a reduction in the availability of finance, concerns about economic growth and the government’s cooling measures

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served to dampen sentiment somewhat. “In general, the housing sector, especially the primary market in the Klang Valley, performed well in 2014. Many developers enjoyed brisk sales for new launches as buyers accelerated purchases ahead of the cooling measures, which are expected to impact the market in 2014.” Nabeel says there was also healthy

demand in the secondary market in the mature areas of the Klang Valley, with prices of landed properties growing considerably in locations such as Petaling Jaya, Shah Alam, Subang Jaya and Puchong.

According to Nabeel, the concern with these locations is the number of alternatives available. However, he adds that the limited size of quarterly samples may not show the true picture.

SINGLE-STOREY TERRACED For single-storey terraced houses, Bandar Sri Damansara and Bandar Kinrara saw the highest price growth Q-O-Q at 12.8%, while Taman Tun Dr Ismail’s Burhanuddin Helmi area recorded the lowest growth at 4.7%.

Bangsar Park recorded the lowest growth Y-O-Y, at 13.6%. Nabeel says the transaction prices of 1-storey terraced houses in Bangsar Park reached RM1 million each the highest for such houses in Greater Kuala Lumpur.

Many developers enjoyed brisk sales for new launches as buyers accelerated purchases ahead of the cooling measures, which are expected to impact the market in 2014 “The potential upward price trend of these 1-storey terraced houses is limited unless some upgrading work on the building is carried out. We noticed that some of the original 1-storey terraced homes have been converted into 1½-storey terraced houses with modern-design facades, which would probably push the price up further. A similar upgrading of 1-storey terraced houses to 1½ storeys has also been seen in other mature housing areas such as OUG and the older parts of Petaling Jaya,” he says. Bandar Kinrara also performed well for the single-storey terraced category. Nabeel says 1-storey terraced houses in Bandar Kinrara are among the most affordable choices with easy accessibility and good amenities and environment. DOUBLE-STOREY TERRACED For the double-storey terraced segment, price growth was minimal throughout Greater Kuala Lumpur as only USJ 6 in Subang Jaya saw movement Q-O-Q, with a 14% rise. According to Nabeel, USJ 6 house prices tend to be lower compared with similar units in USJ 4. “The rise in house prices in USJ 6 is actually in tandem with that in USJ 4, and the only difference is that buyers can purchase properties at lower prices in USJ 6 compared with similar choices in USJ.” Y-O-Y, BU12 in Bandar Utama, Petaling Jaya, saw the lowest growth as demand for properties there appears to have slowed in the past year, with buyers preferring other nearby areas such as BU1, says Nabeel. “The general opinion appears to be that BU1 is better located and offers better infrastructure, facilities

and services compared with BU12.” He adds that demand for properties in Bandar Utama appears to have slowed in the past year. Nabeel says despite minimal growth for 2-storey terraced properties, Bangsar had the highest growth in this category. He says Bangsar has been among the most-favoured locations in the Klang Valley for a number of years, driven by a mature catchment, limited supply, good accessibility, developed infrastructure, security and other factors. “These are established housing areas with good schools, easy accessibility and excellent community infrastructure. Double-storey terraced house prices in TTDI’s Athinahapan area also saw healthy growth. “TTDI has been one of the most-favoured locations in the Klang Valley. Furthermore, the announcement of the Sungai BulohKajang MRT alignment, with a stop in TTDI, has also brought renewed interest in TTDI.” Pusat Bandar Puchong was the lowest mover in this category. Nabeel says this is because the area is mature and the property values and yields have stabilised. “Other neighbouring developments such as Bandar Puteri offer newer and better alternatives. Again, this could be due to the sample size available during the review period.” Nabeel says single-storey terraced houses in Bandar Kinrara are among the most affordable choices with easy accessibility and good amenities and environment. HIGH-RISE For high-rise properties, not many products saw price movements.

Nabeel says the main advantages of high-rise properties are affordability and convenience. “However, they tend to be more susceptible to competition, and price increases will depend greatly on location and surrounding developments.. Menara Damansara in Bandar Sri Damansara was the only high-rise product that saw growth Q-O-Q. Nabeel says Menara Damansara represents an affordable alternative within a good location, making it attractive, especially as capital values elsewhere continue to rise. However, the product that caught the most attention, based on the data provided, was Mont’Kiara Pines in Mont’ Kiara. “Mont’Kiara Pines completed a major renovation three to four years ago and the building is well maintained and looks decent although it is an old building, completed in 1993,” Nabeel says. “Transaction prices are shooting up for these old buildings because of the big price gap between the newly completed buildings and the older ones, which are in well-kept condition. Overall, the older buildings are affordable compared with the new ones in the same area.” The announcement of the Sungai Buloh-Kajang MRT alignment, with a stop in Taman Tun Dr Ismail, has brought renewed interest in the residential area. POLICIES TO IMPACT HOUSING MARKET Looking at the many policies announced in Budget 2014, Nabeel says the housing market in 2014 will be impacted by its implementation.

policies are the new measures announced under Budget 2014 and the various proposed changes in Iskandar Malaysia. He expects an overall slowdown in the residential market in 2014. “The housing market has been mostly stable, with increases in capital values in some locations. We’re continuing to see increased activity in the southern Klang Valley areas as this has been an ongoing trend for some time now. The most notable location is Cyberjaya but other areas are seeing an uptick in development activity as well, driven by good infrastructure and other factors.” He adds that there’s a significant amount of development in areas such as the southern part of Puchong and Cyberjaya, mainly in the form of condominiums and serviced apartments. “Sales for most of these developments have been strong. The upcoming MRT also means that there is vigorous interest in the Sungai Buloh and Kota Damansara areas as well as Cheras and Kajang localities.” According to Nabeel, the cooling measures announced by the government are expected to dampen the market, although less impact will be seen in the owner-occupier segment. “Most of the areas and properties covered in this report cater to such end-user demand and not speculation by investors,” he says. “We expect the hardest-hit areas to be those catering to the middleincome group, who are faced with increasing costs and other financial obligations but do not qualify for the government relief programmes.”

Nabeel says the most significant

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/// West Malaysia Property News

What Is the Truth About KLIA2 Opening Delays? misses and delays.

Deadline on KLIA2 Remains, the Government Guarantee

The parties should be transparent about the issues they face.

Despite the delay MAHB shares are on the uptrend Nearly two months ago, there were reports stating that KLIA2 would surely get its certificate of fitness by the end of January to facilitate the start of its operations on May 2. The main contractor the UEMC-Bina Puri joint venture pledged to complete the airport with its certificate of fitness by Jan 31. This new date came about after several deadlines were not met to the extent that the Government had to establish a task force to monitor the progress at KLIA2, an airport dedicated to low cost carriers. The certificate would enable the airport operator, Malaysia Airports Holdings Bhd (MAHB), to conduct operational readiness and airport transfer or better known as ORAT. But the Jan 31 deadline was not met because the infrastructure has yet to get the green light from the Fire and Rescue Department, the Sepang Municipal Council and Indah Water Konsortium. Rectification works are under way, giving reasons for many to doubt if the airport can be operational by May 2. Against this backdrop, acting Transport Minister Datuk Seri Hishammuddin Hussein has given a commitment that the deadline of May 2 for the

opening will be maintained or the parties responsible would be penalised for delays. He has even said that the ORAT can be carried out by MAHB immediately. Typically, new airports need about six months for ORAT. Even when the main terminal, KLIA, was built more than a decade ago, it had originally planned for a three-month ORAT period, but took six months. So did Hong Kong’s airport, Bangkok’s Suvarnabhumi and South Korea’s Incheon. Delays in airport projects are not unique to KLIA2 as it is a complicated infrastructure. Even when airports are opened, many face operational issues. For instance, Denver airport faced huge baggage system problems from day one, while it was not smooth sailing at the Hong Kong international airport in its early days of operations. The Doha airport changed its opening date many times and now has fixed it for 2017. So have the authorities in Germany who have delayed fixing the date for the opening of the Berlin airport thus far despite Germany being known for its machine-like efficiency. So KLIA2 is not alone, but people need to know the truth as to what is really going on given the many

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Is it really true that a large portion of the main terminal is not ready for public occupation from the fire and safety aspects? Are there problems with the sewerage pipes due to soil conditions? There are plenty of construction jobs in the market, and the obvious question is whether the contractors have bitten off more than they can chew and that could be slowing down the completion of KLIA2. Are they also facing shortage of resources? Over a decade ago when KLIA was conceptualised, there was a planning committee that dedicated two years just to planning before the start of construction. After the plans were firmed up, it did not accommodate any changes. Only four main contractors were appointed to build KLIA. In comparison, KLIA2 has too many contractors in a bid to give many parties jobs, and it also did not lock up its plans, catering to last-minute requests for changes. This could also be a reason for the delay. To be fair, the third runway, taxiway and other supporting infrastructure were completed in December last year, making Malaysia the first country in the region to have a third runway for its flagship airport. Enough time has been spend on trying to complete KLIA2, and it is easy to point fingers, but this is an important facility. Some parties need to own up to all the delays so far.

KLIA2 will take off from May 2 according to the Government The Government is not budging from its guarantee that KLIA2 will take off from May 2..

that KLIA2 receives the CCC and the operational readiness and airport transfer (ORAT).

“From now until May 2, we have to do whatever it takes to make it operational.

In a related development, Deputy Transport Minister Datuk Abdul Aziz Kaprawi said there were no defects in the (KLIA2) terminal building, which is almost completed.

“I am serious (when I say) I will hold those responsible to their promise. “If there are parties found to have obstructed this schedule, I will not hesitate to take the necessary action against them,” said acting Transport Minister Datuk Seri Hishammuddin Hussein.

“The contractor merely has to make amendments to the fire and safety features to comply with the (Fire and Rescue Department) standards, which we hope will be in place by the end of this month,” he said.

KLIA2 had missed several deadlines for opening since September 2011, with the last scheduled opening on April 30 deferred to May 2 this year.

Meanwhile, UEM-Bina Puri confirmed it could not obtain the CCC by Jan 31, allegedly due to an “unexpected issue” which occurred recently during a follow-up inspection.

Speculations over another possible delay came on Tuesday, when Malaysia Airports Holdings Bhd reportedly failed to receive the certificate of completion and compliance (CCC) from main contractor UEMCBina Puri for the KLIA2 terminal building.

In the meantime, Indah Water Konsortium Sdn Bhd, Sepang Municipal Council and the Fire and Rescue Department inspected the building last month and found 65% of the main terminal did not comply with fire and safety standards.

Hishammuddin told a press conference here yesterday that he would closely monitor the matter and conduct spot checks at the airport site to ensure that the project was delivered on time. This, he added, would include ensuring

There were also reportedly cracks in the sewerage pipe outside the terminal and parts of the road and drainage were allegedly not fit for use. On the cracked pipe, Abdul Aziz, who chairs the KLIA2 task force, said: “We will fix it.”

Government Retracts Guarantee, but Will Do Whatever It Takes

MAHB Share on Uptrend Despite KLIA2 Delay

A near 60% increase is share price in the past 3 years

Acting Transport Minister Datuk Seri Hishammuddin Tun Hussein during his KLIA2 site inspection The Government will not promise from an earlier guarantee to have KLIA2 in operations starting May 2. Acting Transport Minister Datuk Seri Hishammuddin Tun Hussein, who emphasised this, said he would closely monitor the matter and conduct spot checks at the airport site to ensure the smooth delivery of the project. “From now until May 2, we have to do whatever it takes to make it (KLIA2) operational. “I am serious (when I say) that I will hold those responsible to their promise and if there are any parties found to have obstructed this schedule, I will not hesitate to take the necessary action against them,” Hishammuddin said in a press conference, here on Wednesday. Speculations over another delay of the KLIA2 project came Tuesday after Malaysia Airports Holdings Bhd said that it had failed to receive the Certificate of Completion and Compliance (CCC) for the KLIA2 terminal building from UEMCBina Puri.

This was despite assurances from the main contractor, UEMCBina Puri Joint Venture, that it would hand over the terminal building or the CCC to the airport operator by Jan 31. Indah Water Konsortium Sdn Bhd, the Sepang Municipal Council and the Fire and Rescue Department inspected the building in the last week of January and found that 65% of the main terminal did not comply with fire and safety standards. There were reportedly cracks in a sewerage pipe outside the terminal, and parts of the road and drainage were not fit for use. KLIA2 has missed several deadlines for its opening, with the last one scheduled for April 30 before being moved to May 2.

Airport operator Malaysia Airports Holdings Bhd’s (MAHB) share price was on an uptrend yesterday, reaching a high of RM8.26 on 5 February 2014, despite the opening of KLIA2 being potentially delayed once again. There were 1.57 million shares done. KLIA2, the new low-cost carrier terminal (LCCT), has missed several deadlines for opening, with the last one scheduled for April 30 before being moved to May 2. Analysts were mixed on the possible delay, following news that MAHB had yet to receive the certificate of completion and compliance (CCC) for the terminal from main joint venture contractor UEMC-Bina Puri, which had been scheduled for Jan 31. It has been found that 65% of the main terminal did not comply with fire and safety standards upon inspection by Indah Water Konsortium Sdn Bhd, the Sepang Municipal Council and the Fire and Rescue Department in the last week of January. There were cracks in a sewerage pipe outside the terminal, and parts of the road and drainage were not fit for use. Their recommendation is essential for the issuance of the CCC. “This is a big disappointment, given that management had briefed that everything was on track during the fourth quarter ended Dec 31, 2013 analyst

briefing held on Jan 27, 2014 – just one week ago,” said Maybank Investment Bank Research analysts. Although MAHB remains firm on the May 2 opening date, without the CCC, KLIA2 would not be able to commence the operational readiness and airport transfer (ORAT). “ORAT is an exhaustive and meticulous process and comparable projects of this scale have typically consumed three to six months, never less than three months. Based on this, we think a delay to the planned launch date looks imminent,” Maybank said. Maybank has downgraded its call on MAHB to “sell” from “hold” previously, with a lower target price of RM7.03.

growth at LCCT, could easily be compensated by the higher profit-sharing contract charges from Malindo Air, which will continue to operate from the main terminal building until KLIA2 opens,” he added. Both RHB and Alliance have maintained their “buy” calls on the company, with unchanged target prices of RM9.80 and RM10.37 respectively. Bursa Securities, meanwhile, has approved the listing of and quotation of up to 124.05 million MAHB shares to be issued pursuant to its proposed private placement exercise.

However, other analysts are convinced that a short-term delay would only represent a temporary setback to MAHB. If KLIA2 is delayed by a quarter, then RHB Research estimates that revenue loss from rentals collected and lower passenger spending would come in at RM48mil, 1.6% of its estimated RM3 billion topline, affecting only its 2014 earnings forecast. Passenger traffic is expected to remain robust, as congestion at the LCCT is unlikely to deter holidaymakers from travelling, said Alliance Research’s Tan Kee Hoong. “In addition, any shortfall vis-à-vis our aeronautical revenue forecasts due to a potentially slower passenger

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Top 5 Most Expensive New Condominiums in Kuala Lumpur of the world’s most fantastically expensive condos. Or at the very least own a few of these, so others can pay them a huge sum of rent to stay in these condos.

In an area known to be home to the affluent community, Arata is an exclusive development that promises privacy, attractive facilities and a deluxe lifestyle.

Here are some of the new developments available in Kuala Lumpur that might just scare you off your chair.

Tenure: Freehold Built up: 1,894 sf – 2,400 sq. ft. Listing price: From RM2,387,000 – RM2,848,000 Expected completion date: Dec 2013 Developer: Tijani (Bukit Tunku) Sdn Bhd

5. THE MEWS, KLCC, KUALA LUMPUR – FROM RM1,600,000 The Mews is an exclusive condominium located along Jalan Yap Kwan Seng in Kuala Lumpur. It offers an abode amidst the city centre but with a natureinspired design and a sustainable environment. Tenure: Freehold Listing price: From RM1,600,000 – RM4,700,000 Expected completion date: 2H 2017 Developers: Eastern & Oriental Berhad (E&O) and Mitsui Fudosan Residential Co. Ltd

Artist’s impression of The Mews, KLCC, Kuala Lumpur by Eastern and Oriental Berhad The public outcry for the government to step in to reduce the property prices, especially in urban areas, such as Klang Valley has led to the hike in real property gains tax (RPGT) and the removal of the developer interest bearing scheme (DIBS) recently. However, will these measures sufficiently discourage the affluent from continuing their real estate buying spree? This phenomenon driven by affluent investors is not just unique to Malaysia but also has caused massive sales in other cities, such as London, Singapore and Hong Kong, garnering worldwide attention. According to the annual World Cities

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Review report by Savills, a global real estate firm, major cities’ super luxury housing markets, referred to as ‘billionaire markets’, have grown at a much faster clip than mainstream markets of the same cities. The largest value increases have been clocked in China and Asia, thanks to the emergence of new wealthy classes and rising commodity prices. Kuala Lumpur, the capital city of Malaysia, is not left behind from this upward spiral in ‘billionaire markets’. While many of us live our lives in a small hovel we call home, there are plenty of others at the opposite end of the spectrum, living in some

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4. SUNWAY VIVALDI, MONT KIARA, KUALA LUMPUR – FROM RM2,300,000 Further away from the city centre, Sunway Vivaldi offers a lavish and low-density living in Mont Kiara. This avant-garde development presents a breath taking design with an impressive entrance and lush landscapes. Every unit enjoys a view of the multi-tiered central eco-park, while selected blocks also feature individual grand porte-cocheres to receive visitors in style and comfort. Tenure: Freehold Built up: 2,573 – 3,983 sq. ft. Listing price: From RM2,300,000 Status: Completed Developer: Sunway D’Mont Kiara Sdn Bhd 3. ARATA, KENNY HILLS, KUALA LUMPUR – FROM RM2,387,000 Located at the luxurious Kenny Hills in Kuala Lumpur, Arata is quietly tucked between lush greenery and natural settings.

2. 9 MADGE, AMPANG, KUALA LUMPUR – FROM RM2,497,800 Another exclusive development in Ampang, Kuala Lumpur is 9 Madge. Located at Taman U-Thant, 9 Madge offers a sanctuary to those who like privacy and greenery, and yet still want to be close to the city. Tenure: Freehold Built up: 1,836 – 8,149 sq.ft. Listing price: From RM2,497,800 Expected completion date: 1st quarter of 2014 Developer: Rodem Sdn. Bhd 1. RIMBUN, AMPANG HILIR, KUALA LUMPUR - FROM RM3,900,000 To recreate a haven amidst lush greenery in a concrete jungle, known as Kuala Lumpur, will not come cheap. The luxury condominium development, Rimbun @ Embassy Row, has made it possible to enjoy spacious living space with excellent facilities and great accessibility. At the selling price, Rimbun highlights the exclusivity by only having 56 units across 17 floors. Tenure: Freehold Built up: 3,500 – 18,000 sq. ft. Listing price: From RM3,900,000 – RM22,000,000 Expected completion date: End of 2014 Developer: Amphil Corporation Sdn Bhd

No Compromise on KLIA2 Safety

RM40 Billion Malacca Gateway to Open Doors in 2018 alone will cost some RM600 million. “It will be able to handle three cruise ships at the same time,” he said. Lau said funding for the project will be a combination of internal funds, partnerships and bank borrowings.

Artist’s impression of Melaka Gateway Hishammuddin inspecting the baggage facility during his KLIA2 site visit in Sepang The Government will not compromise on safety involving the KLIA2 project, Acting Transport Minister Datuk Seri Hishammuddin Hussein said.. Stressing that the project was on track to meet its May 2 completion deadline, he rejected allegations that 65% of the main terminal did not comply with fire and safety standards. “We have based the benchmark on safety on international standards. There are claims of a lot of problems with the airport but when I see with my own eyes, the system has been tested and proven to be fully-functional,” he said after an inspection yesterday at the KLIA2 site here. Accompanying the minister were Fire and Rescue Department and safety officials. The KLIA2 project has missed several deadlines for opening since September 2011, with the last scheduled one on April 30 also deferred. Speculation on another possible delay arose on Tuesday when Malaysia Airports Holdings Bhd reportedly failed to receive the certificate of completion and compliance (CCC) from main contractor UEMC-Binapuri for the KLIA2 terminal building. Hishammuddin said there were only minor issues, such as on drainage and sewage, which

he said would be addressed by the relevant authorities. “The aim of my inspection is to find and rectify weaknesses and remove obstacles with the cooperation of the relevant agencies. “I have told the consultants to submit a summary within two days on what needs to be done to resolve the problems,” he said. On what percentage of the project had been completed, Hishammuddin said: “That is not important as we want to tell the people that everything is going smoothly as planned.” He reiterated that the KLIA2 project would not be delayed again as all parties were cooperating with the ministry. “It should not be about when we get the CCC but the most important thing is not to compromise on safety and to meet the deadline,” he said.

The RM40 billion project in Malacca known as Melaka Gateway which will be launched by the prime minister will open its doors to visitors in 2018. The 609-acre project which is being developed by KAJ Development Sdn Bhd (KAJD) will see the first phase attracting some 900,000 visitors during the first year of operations, said KAJD CEO Datuk Michelle Ong. “We expect to have 900,000 visitors in the first year including international cruise passengers,” she told reporters at a briefing. Ong said the first phase, which will be built on Pulau Melaka, will include Malaysia Eye, two hotels, several resorts, a heritage walk, a fashion district and a marina terminal. “We have already started work on Malaysia Eye and it will be erected in six months’ time,” she added. According to Ong, the company obtained the concession for the project in September 2010 and received all approvals for the project in September last year. KAJD will be the master developer of

the project and it is currently in negotiations with various potential partners and investors for the project. Ong said it is talking to at least five international brands and will be announcing some of its partners at the launch ceremony. Melaka Gateway is a project with 12 precincts including residential, commercial, cultural, entertainment and lifestyle elements. It is scheduled for completion by 2025. The 12 precincts are Gateway Entertainment Precinct, Melaka Marina & Cruise Centre, Melaka Historical Walk, Gateway Maritime Arena & Beacon, Branded Fashion District, International Theme Park, Melaka Cultural Walk, Waterfront Marina Villas & Resorts, Gateway Wellness & Lifestyle Precinct, Melaka Skyline Apartments, Lohas Park & Residences and Eco Isle Resorts.

He said some of the land, especially the residential portions, may be sold to other property developers while some parts of the project will be jointly developed with other partners and investors. “There are 12 zones in total and there will be a lot of international operators. Some of the properties will be developed by other developers, some on our own and some with partners,” he added. KAJD which is predominantly a construction company, currently manages Malacca Zoo and Bird Park. It was also the company that undertook the revamp of Malacca River.

Its marina terminal will be the largest in Asia, tapping into the growing number of cruise ships plying the route which currently do not stop at Malacca due to lack of facilities. KAJD chief operations officer Gavin Lau said the marina terminal

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Lending Curbs Hurting Genuine Buyers showed a flurry of activity by developers, the secondary market was also busy. “There will always be activity in the property market due to the changing situations of families,” Geh explains. “For instance, for an old couple with a large house, their children have left and they need to downsize. Or a couple recently married is looking for a place to start a family. These genuine homebuyers will continue to sustain the market. That is, provided they can get loans.” Raine & Horne International Zaki + Partners director Michael Geh Bank Negara Malaysia’s policies to curb property speculation have been successful but they have also made it more difficult for genuine homebuyers to buy houses, says Raine & Horne International Zaki + Partners director Michael Geh.. The tighter lending policies, he says, have resulted in a high loan rejection rate. For projects he has handled, the rejection rate is as high as 50%, compared with about 5% before 2011. Geh said, “Bank Negara must distinguish between the real home purchaser and the speculator” “Buyers can’t get loans,” Geh says in presenting The Edge/Raine & Horne International Zaki + Partners Penang Housing Property Monitor for 3Q2013. “Bank Negara must distinguish between the real home purchaser and the speculator. The market should be differentiated — primary and secondary market, developer and second sale, homebuyer and investor. The market should be distinct — you can’t group all of them together.” He believes the recently abolished developer interest bearing scheme (DIBS) should be allowed for genuine homebuyers. Geh believes a detailed background check on the individual should suffice to weed out speculators. While the third quarter of 2013

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While the market is still active, there has been a contraction in the number of units sold. Based on National Property Information Centre (NAPIC) reports, Geh calculates that between 2011 and 2012, the contraction was about 15% year on year (y-o-y). From November 2012 to November 2013, he estimates that the contraction was around 10%. The latest report has yet to be released. The good news is that Bank Negara has assured that there won’t be further policies to curb speculation. This should auger well for homebuyers looking for houses in the Batu Kawan area, which will be linked to Batu Maung on Penang island by the Second Penang Bridge. “Batu Kawan will be the new hot spot, up to a radius of 5km,” Geh says. “People with houses there could see values increase about 10% to 20%.” According to news reports, the new bridge will be opened in February. 1-STOREY TERRACED HOUSES All locations except for Bandar Bayan Baru and Tanjung Bungah showed price growth quarter on quarter (q-o-q). Houses in Sungai Dua and Sungai Ara rose 8.33%, with prices hitting RM600,000 from RM550,000. “The significant rise is due to the lack of supply for this type of property,” says Geh. “We note that there is no longer new incoming supply of 1-storey terraced houses on Penang island. Thus, this type is the most affordable landed property to own and it will continue to increase in price.”

The lack of supply is the reason for the healthy growth in all locations sampled, with Bandar Bayan Baru (28.89%) and Sungai Dua (28.33%) homes showing the highest growth y-o-y. “This price trend should continue into 2014,” Geh says. “With low supply and high demand, the price for this type of property is expected to rise.” 2-STOREY TERRACED HOUSES For standard 2-storey terraced houses, only houses in Green Lane (10%), Pulau Tikus (8.33%) and Seberang Perai Selatan (2.33%) showed price growth q-o-q, with other areas remaining unchanged. “Pulau Tikus is a high-end residential area located close to Gurney Drive, Tanjung Tokong and the city centre,” Geh explains. “Most of the properties comprise 2-storey terraced houses, 2-storey semi-detached houses and bungalows. The 2-storey terraced houses are more affordable compared with the other properties, and thus shows positive growth in price. “As for Green Lane, it is an established residential neighbourhood in the middle of Penang island with easy access to the city centre and the Penang bridge,” he says. These property types are much cheaper in Seberang Perai Selatan on the mainland and demand is on the rise due to the close proximity to the Second Penang Bridge. There has been strong price growth y-o-y across the board with Pulau Tikus (29.17%) and Green Lane (20%) leading the way. Geh says there is very little new incoming supply of 2 and 3-storey terraced houses on Penang island as more developers are going for stratified properties, as well as land scarcity. “Thus, the price for this type of property is on the rise, especially in the northeast region of Penang island.” 2-STOREY SEMI-DETACHED HOUSES Houses in Sungai Dua grew 7.14%

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from the last quarter, followed by those in Sungai Nibong (6.67%) and Island Park (1.18%), but the other areas remained unchanged. “Many of the 2-storey semi-detached houses are located along the main road with the potential for commercial use, which contributed to the high increment in prices,” says Geh. “For example, 2-storey semi-detached houses in Island Park as well as those along Jalan Masjid Negeri and Jalan Delima, Jalan Sungai Dua in Sungai Dua and Jalan Sultan Azlan Shah in Sungai Nibong have been converted into car showrooms, furniture showrooms and offices.” The potential for conversion to commercial use were reflected in the strong y-o-y results, with all houses in this category showing a price growth of 15.38% to 50%% 2-STOREY DETACHED HOUSES For this category, only Pulai Tikus (11.11%) and Tanjung Bungah (5.41%) showed positive growth q-o-q. “Pulau Tikus is a high-end residential area and one of the prime areas that are located near Gurney Drive, which mostly comprises new luxury condominiums that cost a few million ringgit,” says Geh. This, he notes, has influenced the prices of 2-storey detached houses as buyers who can afford to buy a luxury condo worth several million may opt to buy a landed villa at a similar price. “Tanjung Bungah — one of the hot spots in Penang island — is located between Batu Ferringhi and Tanjung Tokong. Some of the 2-storey detached houses there are located along the main road and have the potential for commercial use, which contributes to the high increment of prices. Some are located near the beach, which is a value-add for that particular property.” Y-o-y, all areas sampled showed positive growth of 30% to 57.29% because of strong demand. He points out that there is little speculation on landed bungalows. Standard 3-bedroom flats and 3-bedroom apartments/condos In Bandar Baru Air Itam, standard 3-bedroom flats rose 16.67% to

RM180,000, from RM150,000. Units in Sungai Dua and Lim Sin Garden (10.71%), as well as Green Lane (6.67%) also showed price growth, while other areas remained stable. “The standard 3-bedroom flats in Bandar Baru Air Itam showed modest growth as the area is congested with many low-cost and low-medium-cost flats, which do not allow much room for appreciation,” says Geh. “However, there is demand as the prices are affordable and the area is surrounded by amenities.” Sungai Dua, Lip Sin Garden and Green Lane are doing better for this type of property as most of the flats are medium cost, which are in greater demand than low-cost or low-mediumcost flats, Geh adds. Y-o-y, standard 3-bedroom units rose by between 10% and 33.33%. “Most incoming supply comprises highend properties, which most buyers, especially from the younger group, can’t afford,” he says. “The standard 3-bedroom flats are appealing due to the affordable price tag.” Q-o-q and y-o-y, 3-bedroom apartment/ condo units showed mostly positive growth as younger buyers are able to afford this type of property, according to Geh. Prices grew 3.03% to 11.11% q-o-q, and 3.03% to 28.89% y-o-y. RENTAL MARKET AND YIELDS The rental market was fairly flat across the board, q-o-q and y-o-y. Geh points out that the Penang property market is speculative in nature, with investors buying properties for capital appreciation and not so much for the rental income. In Tanjung Tokong, rentals for 2-storey detached homes dropped by 12% from RM2,800 per month to RM2,500. “This was mainly due to the high number of incoming condominium units in the area,” he says. Yields for all properties have been receding across the board since 2010 and this trend will continue, with rentals expected to remain flat in the coming year, he says.

PENANG property prices (1Q2010 - 3Q2013) 2010 3Q

2012 3Q

2012 2Q

450 430 400 410 280 365 140 130 125

450 450 430 410 280 365 140 130 125

470 470 430 450 280 380 140 150 110

470 470 430 450 280 380 140 150 120

470 470 430 470 320 400 140 150 120

470 470 430 470 320 400 140 150 140

480 500 500 470 370 600 150 170 140

480 520 500 500 415 600 160 150 140

520 550 550 550 450 750 160 150 140

560 570 600 450 450 750 170 160 145

Standard 2-Storey - 1,800 sq y terraced houses ((1,300 , , q ft)) Green Lane 570 570 600 650 Pulau Tikus 625 625 700 700 Sungai g Nibong g 600 600 600 630 g Ara Sungai 560 560 600 610 S. Perai Utara 290 290 265 265 S. Perai Tengah 260 260 245 245 g S. Perai Selatan 170 170 175 175

650 700 650 610 265 245 175

650 700 650 630 265 245 160

650 700 680 630 230 245 160

700 750 750 650 270 260 180

800 850 750 700 280 260 185

820 870 800 750 280 280 200

850 900 1,000 950 1,100 1,200 850 850 850 750 750 750 280 300 300 290 300 300 200 210 215

2-Storey y semi detached houses (3,000 - 4,000 sq q ft) Isalnd Park 900 900 900 g Ara Sungai 800 800 800 Sungai 780 780 850 g Nibong g Sungai Dua 660 660 660 860 850 880 Minden Heights g

900 820 850 660 880

900 820 880 660 880

950 820 900 660 880

1,000 850 950 700 900

1,100 1,000 1,150 700 1,100

1,300 1,150 1,200 1,100 1,200

1,680 1,200 1,300 1,100 1,200

1,680 1,200 1,400 1,300 1,300

1,700 1,200 1,500 1,400 1,300

2,300 1,350 1,500 1,600 1,700 1,350

2,300 1,350 1,600 1,600 1,700 1,350

2,300 1,350 1,600 1,600 1,750 1,350

2,300 1,350 1,600 1,700 1,800 1,400

2,700 1,500 2,200 2,200 2,200 1,500

3,000 1,500 2,200 3,000 2,200 1,500

4,000 2,000 3,500 3,500 2,800 2,000

4,500 2,000 3,700 3,700 2,800 2,000

Price

1-Storey y terraced houses (1,200 - 1,600 sq q ft) Green Lane 430 430 Jelutong 430 430 g Sungai 380 380 g Dua Sungai 400 410 g Ara Bandar Bayan 270 280 y Baru Tanjung 360 360 j g Bungah g S. Perai Utara 120 120 S. Perai Tengah 145 145 g S. Perai Selatan 110 110

2-Storey sq y detached houses ((> 6,500 , q ft)) 2,500 2,500 Pulau Tikus Island Glades 1,300 1,300 Tanjung 1,500 1,500 j g Tokong g Tanjung 1,500 1,500 j g Bungah g Minden Heights 1,650 1,650 g Green lane 1,300 1,300

2011

120 115 145 185

120 120 145 185

120 120 150 185

120 120 155 185

120 120 150 188

120 120 160 188

125 120 170 190

125 120 180 200

125 130 180 250

130 130 180 250

150 150 200 280

180 150 200 300

140

130

145

150

160

170

180

190

200

230

250

280

Standard 3-bedroom apartments/condominiums p (exclude luxurious type) yp (>900 sq q ft) Tanjung 280 280 280 300 320 320 320 320 j g Tokong g Tanjung 260 260 300 300 320 320 320 320 j g Bungah g Batu Ferringhi 210 210 250 250 250 250 250 250 g Pulau Tikus 330 330 330 350 350 350 350 350 Batu Uban 250 250 255 265 275 280 280 280 Island Park/Glades 255 255 280 280 280 280 280 280

320 350 250 350 320 300

320 350 260 350 320 300

370 400 280 370 320 320

370 400 335 370 320 330

400 450 350 430 320 380

450 480 360 430 330 400

Bandar Baru Air Itam Paya y Terubong g Relau Green Lane Sungai Dua & Up p Sin Garden

PENANG property rents (1Q2010 - 3Q2013) 2010 1Q

2011

2012 3Q

2012 2Q

650 700 750 900 800 900 450 450 300

700 700 750 900 800 900 450 450 300

Standard 2-Storey - 1,800 sq y terraced houses ((1,300 , , q ft)) Green Lane 980 980 1,100 1,100 Pulau Tikus 1,300 1,300 1,500 1,500 Sungai 950 950 1,100 1,100 g Nibong g 900 900 1,200 1,200 Sungai g Ara S. Perai Utara 560 560 550 550 S. Perai Tengah 550 550 600 600 g S. Perai Selatan 360 360 380 380

1,100 1,500 1,100 1,200 550 600 380

1,200 1,500 1,100 1,200 550 600 380

1,200 1,500 1,100 1,200 550 600 400

1,400 1,500 1,100 1,200 550 600 450

1,400 1,500 1,300 1,200 550 600 450

2-Storey y semi detached houses (3,000 - 4,000 sq q ft) Isalnd Park 1,500 1,500 1,500 1,350 1,350 1,450 Sungai g Ara Sungai 1,300 1,300 1,500 g Nibong g Sungai Dua 1,200 1,200 1,300 Minden Heights 1,300 1,300 1,300 g

1,500 1,450 1,500 1,300 1,300

1,600 1,500 1,500 1,300 1,400

1,600 1,500 1,500 1,300 1,500

2-Storey sq y detached houses ((> 6,500 , q ft)) Pulau Tikus 5,500 5,500 Island Glades 2,200 2,200 Tanjung 2,800 2,800 j g Tokong g Tanjung 2,600 2,600 j g Bungah g Minden Heights 2,600 2,600 g Green lane 2,200 2,200

5,000 2,200 2,800 3,000 2,650 2,200

5,000 2,200 2,800 3,000 2,650 2,300

5,000 2,200 2,800 3,000 2,650 2,500

5,000 2,200 2,500 3,000 2,650 2,500

Rental

1-Storey y terraced houses (1,200 - 1,600 sq q ft) 650 650 Green Lane Jelutong 700 700 g Sungai 750 750 g Dua Sungai 700 700 g Ara Bandar Bayan 680 680 y Baru Tanjung 700 700 j g Bungah g S. Perai Utara 440 440 S. Perai Tengah 430 430 g S. Perai Selatan 285 285

Bandar Baru Air Itam Paya y Terubong g Relau Green Lane Sungai Dua & Up p Sin Garden

700 750 750 700 700 700 750 800 800 900 900 900 800 800 900 900 1,000 1,000 450 450 450 450 450 450 300 300 300

750 750 900 900 900 1,000 800 800 800 900 900 1,000 900 900 900 1,000 1,000 1,000 450 450 450 450 450 450 300 300 300

550 500 600 700

500 450 550 750

500 450 600 800

500 450 700 800

600

650

700

Standard 3-bedroom apartments/condominiums p (exclude luxurious type) yp (>900 sq q ft) Tanjung 1,200 1,200 1,300 1,300 1,350 1,350 1,350 1,350 j g Tokong g , , , , , , , , Tanjung 1,100 1,100 1,300 1,300 1,300 1,300 1,300 1,300 j g Bungah g Batu Ferringhi 1,000 1,000 1,200 1,200 1,200 1,200 1,200 1,200 g Pulau Tikus 1,500 1,500 1,600 1,600 1,600 1,600 1,600 1,600 Batu Uban 1,350 1,350 1,400 1,450 1,450 1,450 1,450 1,450 Island Park/Glades 1,100 1,100 1,200 1,200 1,200 1,200 1,200 1,200

1,400 , 1,400 1,200 1,600 1,500 1,300

improvements made, if any.

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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

IOI Properties Targets RM3 Billion Sales From New Projects Currently, IOI Properties’ land bank stands at more than 4,046 hectares in Malaysia, Singapore and China. For the next three years, he said, the company has set up an estimated investment of RM10 billion for development in Malaysia, S$3 billion in Singapore and RMB5 billion in China.

View of main entrance, lobby and commercial shop of the Marina Cover in Johor Bahru IOI Properties Group Bhd is targeting sales of between RM2.5 billion and RM3 billion from new projects to be launched this year. Its Chief Executive Officer Lee Yeow Seng said the demand is expected to boost further, particularly in the affordable housing segment, despite the

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new rule regarding property ownership introduced by Bank Negara Malaysia recently. “The new rule was introduced to curb property buying speculation so that there are only genuine buyers who will invest in our property market,” he said.

“The total capital expenditure (capex) for the domestic market this year stands at RM800 million, to be used for the development of IOI City, while for Singapore, it is estimated at S$1.8 billion. “Meanwhile, for China, the capex for this year is estimated at RMB500 million, for the second phase of our IOI Park Bay, Xiamen, which will be internally generated via the full take-up of the shoplots there,” he said.

The World Is Building to Accomdate as China Has World’s Most Outbound Tourists

An Alarming Map of the 17 Countries With Possible Housing Bubbles

The 17 countries identified as having potential housing bubbles

Close to a million international tourist touch down into Kota Kinabalu The world is preparing for China’s outbound tourist market, especially in South East Asia where communication is much easier for the Chinese, nearly 100 million Chinese tourists visited foreign countries last year, and they are likely to extend their lead as the world’s biggest-spending travellers, state media reported. A total of 97 million Chinese tourists left the country in 2013, up 14 million from the previous year, the state-run China Daily reported, citing official data from China’s National Tourism Administration. The figures underline the rapid rise in the numbers of Chinese travelling abroad, who numbered just 29 million in 2004. Chinese travellers spent $102 billion (RM333.8 billion) overseas in 2012, making them the world’s biggest spenders ahead of Germans and US tourists, and are almost certain to have surpassed that record last year, the report said, citing researcher Song Rui. China’s economy has boomed over the past decade, expanding the ranks of its middle-class who are hungry for foreign travel after the country’s decades of isolation in the last century.

European Union and Asian countries have moved to ease visa application procedures for Chinese tourists in recent years, keen to cash in on their big-spending habits. “Chinese tourists spend so much abroad that some foreigners are calling us ‘walking wallets’,” Song, a researcher at the Chinese Academy of Social Sciences, was quoted as saying. Hotels and retailers around the world have stepped up efforts to woo Chinese visitors. London’s renowned Harrods department store says it now has 70 Mandarin-speaking staff and more than 100 China Unionpay terminals allowing direct payment from Chinese bank accounts.

Economist Nouriel Roubini is warning that 11 countries are showing indications of potential housing bubbles – an alarming prospect for the global economy, which is still recovering from the aftereffects of burst housing bubbles in the United States and elsewhere. He identifies another six countries in which major urban areas may have housing bubbles. Those 17 countries with possible housing bubbles are mapped above in red. The lighter-red countries have housing bubbles in major urban areas only. You’ll notice that this map includes very rich countries such as Switzerland and Norway along with enormous rising economies such as India and Indonesia. Perhaps most alarming, if least surprising, Roubini joins the rising chorus of economists warning that China’s housing market is dangerously overinflated. (He identifies mainland China as well as Hong Kong.. Here’s the list of countries identified as having possible housing bubbles, from West to East: Canada, France, Switzerland, Germany, Norway, Sweden, Finland, Israel, China (mainland plus Hong Kong), Singapore, Australia and New Zealand.

Colleague Neil Irwin explains what’s going on: The major economies have been growing only slowly. Yet with low interest rates and aggressive central bank action across the globe, there is a giant pool of money that has to go somewhere. That somewhere has not been productive new investments, like companies building new factories. Rather, it has come in the form of people taking advantage of cheap credit to bid up the price of existing real estate in cities from Stockholm to Sydney. If these countries do turn out to have housing bubbles, and if those bubbles burst, Neil warns that it could actually be even worse than last time. Worse. Perhaps scariest of all, if Roubini is right, is that if these are bubbles that eventually pop, policymakers will not have the tools they had in 2008 to cushion the blow. The world’s central banks, in particular, don’t have much (arguably any) room to lower interest rates further. Let’s hope these economies are able to head off potential bubbles before the burst. China has certainly been trying, with decidedly mixed success.

And the countries with possible housing bubbles in major urban areas, West to East: Brazil, United Kingdom (just London), Turkey, India and Indonesia.

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Delay in RM1 Million Floor Price for Foreigners Sources said the ruling may only come into force as early as March or as late as May. At the time of writing, they confirmed that there has been no indication from government agencies on when the new minimum purchase price requirement for foreigners will be enforced. “We have been told that there has been no official directive from Bank Negara Malaysia or the Economic Planning Unit on this matter yet. We are still waiting for the circular to be issued to us,” said a source. am: The increase in the minimum purchase price for foreigners would not lead to much change in the absolute value of purchase The government’s ruling to increase the floor price for foreigners’ purchases of properties in Malaysia to RM1 million from RM500,000 by Jan 1 has yet to be implemented. It is understood that developers, while awaiting the official directive from the authorities, have been busy clearing stocks before the ruling kicks in. This is happening mostly in Johor Baru (except the Medini zone which is exempted from the RM1 million floor price ruling) where Singaporeans account for about 30% of buyers in popular projects, said real estate consultants. When contacted by The Edge Financial Daily, Malaysia Property Inc (MPI) general manager Veena Loh said the guideline for the new minimum purchase price for properties purchased by foreign buyers has yet to be gazetted. “There is a delay in the implementation because the ruling has yet to be gazetted,” she said. MPI, according to its website, is a Malaysian government initiative (under the purview of the Economic Planning Unit) that “serves as a bridge between foreign investors (both corporate and private) and real estate investment opportunities in Malaysia”.

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The increase in the minimum purchase price for foreigners was among several measures the government had announced under Budget 2014 to curb speculation in the property market. According to some developers, foreign buyers make up a small proportion of their sales, hence the hike in the floor price will not impact them much. “Our foreign buyers are minimal it is only in the Klang Valley that we are selling property above RM1 million to foreigners. In Johor, our properties fall under the Iskandar Medini special zone which is exempted from this ruling,” said a spokesman from Mah Sing Group Bhd, adding that only 6% of the company’s sales consist of foreign buyers. However, the case could be different for China-based developer Country Garden, which had launched 9,000 units of apartments in one go at Danga Bay in August last year. The company had managed to sell some 6,000 units, believed to be mostly to mainland Chinese buyers, and is now trying to clear the remaining units. Unlike Medini, Danga Bay is not exempted from the RM1 million floorprice ruling for foreign purchasers. The Real Estate and Housing Developers Association Malaysia (REHDA) views the RM1 million floor price ruling negatively, as it believes there is no evidence of significant foreign buyer speculation in Malaysia.

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“The increase in the minimum purchase price for foreigners would not lead to much change in the absolute value of purchase. It would (merely) dampen further the insignificant trend of foreign purchases. This impact would be felt most in areas outside Greater KL, Penang Island and parts of Iskandar as there are hardly any properties sold at more than RM1 million in these districts,” said REHDA president, Datuk Seri Michael Yam.

the scheme to customers in compliance with the new ruling. However, on the regulation to reduce mortgage refinancing tenure, sources say that banks are still waiting for further BNM directives and are therefore still accepting loan applications based on the old guideline.

He explained that the housing market and its products are not homogeneous and a “one size” or “one price fit all” policy will not be fair to smaller seaside resorts or rural towns which are unable to price their smaller type units at more than RM500,000.

Meanwhile, Wong Wei Sum, analyst at Maybank Investment Bank pointed out that banks are still pricing their mortgage loans based on gross pricing instead of net pricing.

REHDA proposes that the minimum purchase price limit should be varied depending on the location. “While it is acceptable and reasonable to impose a minimum purchase price of RM1 million in the urban areas of Greater KL, Penang and Medini in Iskandar, a RM500,000 minimum can be set for towns like Malacca, Ipoh, Kuantan, Seremban and Johor Bahru,” he said. “In quieter secondary towns, an even lower limit should be set to enable investment and encourage the retirement of expatriates and foreigners to these places. REHDA looks forward to further engagement and consultation with the Government to streamline and refine this policy,” he added. Other measures which were announced to cool the property market include the ban on Developers’ Interest Bearing Scheme (DIBS), the restriction of mortgage refinancing tenure to 10 years from 35 years, and a hike in real property gains tax (RPGT). All abovementioned regulations were mandated to come into effect on Jan 1. Where DIBS is concerned, developers say that they have stopped offering

As at press time, the Association of Banks in Malaysia was not available for comment.

“To my surprise, despite the BNM mandate of stricter loan-to-value ratios since Nov 2013 that all mortgage lending should be based on net pricing banks are currently still pricing their mortgage loans based on gross pricing,” she added. Like Yam, Wong also believed that the new floor price of RM1 million for foreign property buyers is unlikely to be effective in curbing property speculation. “Many things are not clear at the moment we have good regulations in place to control property speculation by foreigners, but it’s meaningless if they are not executed well. “Where property speculation is concerned, I doubt that the new ruling of higher floor price will affect foreign purchases significantly in the Iskandar region,” she said, adding that the ruling will merely affect nearterm sentiment. “The real problem I see in Iskandar Malaysia is more on the huge incoming supply especially with the entry of China-based developers that adopt ‘fast-turnaround’ strategy and launch everything in one go,” she said, citing Country Garden’s development in Danga Bay, Johor as an example.

China to Build High-Speed Rail to Singapore, via Laos

Chinese Engineers Build 17,000-Ton Flyover Section at 90 Degrees

Now Thats’s a swing bridge! The fastest train in China to date China is giving a steely infrastructural hug to its southeast Asian neighbours, with plans to roll out a massive high-speed rail system to crisscross Laos, Thailand, and Malaysia en route to Singapore. Laos, which currently boasts a humble two miles of functioning railway track, is in for a bit of a shock. The Lao government, the cuddly Lao People’s Revolutionary Party, met with Li Keqiang last year and welcomed the plan with open arms. As The Telegraph reports, Laos could be potentially transformed or crippled by the deal. Constructing it will be a mammoth engineering task. It will require 154 bridges and 76 tunnels, as well as 31 train stations, just to get the line the 260 miles from Boten on the Laos-China border to Laos’ capital Vientiane. An estimated 20,000 Chinese workers will be needed to build it, with the completion date set for 2019. Using untapped minerals as collateral, Laos plans to borrow £4.5 billion from Beijing to pay for its section of the railway. Equivalent to almost 90 per cent of Laos’s annual GDP of £5.2 billion, the loan will instantly make Laos the world’s

fourth most-indebted nation after Japan, Zimbabwe and Greece. Many international financial bodies regard the loan as a disaster waiting to happen. The Asian Development Bank has described it simply as “unaffordable”. Just servicing the yearly interest on the loan will amount to almost 20% of Laos’s annual government spending. In short, the Chinese government will essentially own Laos after the check clears, but with a national product of about 8.5 billion USD, there are several individual Chinese billionaires who could purchase the country in full anyways. The main railways are aimed for completion by 2019, with expansions planned into Burma/ Myanmar, Thailand, and Cambodia in the years to come.

It was the first time the innovative technique had been used in China.

Chinese engineers build 17,000-ton flyover section at 90 degrees so railway below could remain open then rotate it into place Engineers took 90 minutes to swivel the structure into place in Wuhan City on 17 January 2014. The section was built separately so as not to disturb the busy high speed railway track beneath it.

The country has the world’s longest high speed rail network with over 6,200 miles of routes in service in December 2012.

It was the first time the unusual construction technique was used in the country. China is home to the largest high speed rail network in the world. Forward-thinking engineers in China are the first in the country to have built a section of an enormous overpass and rotate it into place upon completion so as not to disturb the railways below. A 17,000 ton part of an elevated motorway was today slowly swung into place in Wuhan City after being constructed independently beside a high speed railway track.

The track beneath the bridge in Wuhan City was considered too important to be temporarily halted in order for engineers’ to complete construction. Once finished, the overpass will be 256m long and span 11 railways, including the 1,428 mile-long Beijing-Guangzhou service. Experts estimate the bridge will be open to traffic later in the month of January 2014 before Lunar New Year.. A similar technique was used to construct the Grade I listed Kingsgate Bridge across the River Wear in Durham in 1968. Designed in 1963 by Sir Ove Arup, the bridge’s two halves were built on the river’s bank and swung together at 90 degrees.

Experts took 90 minutes to connect the section to the rest of the bridge, tuning it 106 degrees on a 15metre high axis.

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$₤ ¥ € 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

Feng Shui 2014: Real Estate, Construction Seen Booming; Water, Shipping, Banking, Oil Sectors Strong Lilian Too, a famous practicing feng shui master and former banker, sees real estate and construction as the two most bullish sectors for the Lunar Year of the Horse. She also predicts that O&G, property, water, shipping and banking sectors will do well in the new lunar year, which starts on January 31. The worst performing sectors under her feng shui reading are wood-based sectors, including timber and plantations. \ These predictions of Lilian Too were made at the CIMB’s Corporation Day. CIMB Research said there are many similarities between Too’s predictions. It highlighted that Too is very bullish about the stock market. Her reading for 2014 is that the stock market will enjoy a bullish run and peak in the summer, whole sectors that will do well coincide with the Economic Transformation Programme (ETP) sector picks. In addition to O&G, construction and property, the water, shipping and banking sectors will also do well. CIMB Research

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noted that its KLCI target for 2030 points that 2014 is one of the highest among securities analysts. While CIMB is bullish on construction and real estate, as well as oil and gas sectors, it is neutral on the plantation sector. The only sectors where the views diverge are perhaps timber, which is wood-based which they believe will benefit companies from higher log producer and rising plywood prices. CIMB said it also likes selective smaller cap stocks due to their attractive valuatio. The research house advises investors to stick with the ETP beneficiaries this year as they will continue to gain from positive news flow during the year. Their top three picks are SapuraKencana for oil and gas, Gamuda for construction and Mah Sing for property. Picks for smaller caps include Karex, Signature International and Tune Insurance. Wildcards that are worth considering are Barakah, Engtex and Matrix Concepts.

BUDGET 2014: A Game Changer for Property Market!

ICBC Banking on Expansion Mode Within East Malaysia The world’s largest bank by market capitalisation and deposits, Industrial and Commercial Bank of China (ICBC), sees its first operation here as a gateway to further expand throughout the state and into Sabah.

The turnout crowd during the property outlook conference The most awaited conference, Property Outlook Conference 2014 organized by Wealth Mastery Academy (WMA) finally made its debut once again, at Hotel Istana Kuala Lumpur on 11& 12 January 2014. This conference presents 13 uplifting, distinguished and experienced speakers who will provide the tips and tricks of Property Investment that you must know this year as well as the next few years to come. As we all knew from the BUDGET 2014, there are few measurements that the Government already implemented starting from 1 January 2014. This has caused many investors to rethink on their investment strategies; what are the strategies to apply next? Many would have stepped back from their initial investing plan due to the changes that occurred in the property market. Therefore, Property Outlook Conference 2014 main objective is to act as an educational hub for those who seek advises and tricks to survive in this volatile year and to guide property investors to absorb and practice the effective property investment strategies. According to Dato’ Terry Ong, Chief Executive Officer of Wealth Mastery Academy, “Property Outlook Conference 2014 is a platform where investors and brand new investors can obtain information that they need to kick start their investment. The reason why we have it in the beginning of the year is to provide the sufficient information about the property market for the first half of the year. The conference took off with the token of appreciation which was given to all the partners that supported this conference throughout. This conference consist of speakers like Veena Loh,General Manager of Malaysia Property Incorporated; Dato’George Stewart Labrooy, Chief Executive Officer & Executive Director Axis REIT Managers Berhad; Elvin Fernandez, Managing Director of the Khong & Jaafar Group of Companies in Malaysia; Vincent Wong,

Best-Selling Author and Lease Option Mentor; KK Wong, CEO of Dynasty View Sdn Bhd and UMLand Berhad; Dato Soo Kai Chee, Executive Director, Finance & Marketing Division of MCT Group and Yap Shin Siang Partner of YYC Advisors who spoke on the Property Outlook Conference stage on Saturday. Whereas, the remaining speakers such as Siva Shanker, President of Malaysian Institute of Estate Agents; Dato Sri Dr Vincent Tiew, Executive Director of Andaman Group; Milan Doshi, Property Guru & Best Selling Author; Prudence Wong, Property Entrepreneur; Renesial Leong, Asia’s Queen of Property and last but not the least is Dr Daniele Gambero, Chief Executive Officer and co-founder of REI Group of Companies delivered their insights on Sunday.

Speaking at the launch of ICBC’s East Malaysia regional branch here, deputy chief executive officer Xie Shaoxiong said the establishment of the bank here would further enhance the economic and trade ties between Malaysia and China. Sarawak economic stability is one of the main reason that attracted ICBC to setup its East Malaysian regional branch here in Kuching that will oversee the Sarawak and Sabah operations, said Xie.

It is also very important for the upcoming generations to have a better understanding on the property market and what are the available investment opportunities that best suit their portfolio before implementing their plans. This will help them to escape the risk of bad investment which will take quite a timeframe to recover from it.

He foresaw Sarawak to be the next economic development centre in Malaysia by 2020 and remained confident the economic boom here would give the group a vast opportunity within the financing cycle.

Many from our past conference participants and group of investors had come again to update their knowledge in property market; market trend for the next 3 to 5 years, where and what are the latest hotspots, 10 CPD hours for Valuers and 15 CPD hours property agents will be provided to those who registered themselves at our counter. Moreover, they too brought in their friends and family to the conference as they too wanted them to be exposed to the property investment industry.

“With support from the Chinese and Malaysian governments, we believe we will be able to deliver much more to the community here, by providing and facilitate the trade in terms of renminbi,” Xie noted.

Once again Property Outlook Conference 2014 hits the record of full house with more than 1600 participants. The quality of the conference has once again proven through the overwhelming support that it had received this year. We will be back next year with even greater platform for a greater learning!

Sabah and management has visited several areas over the past few months. They are now doing their planning and arrangement,” said one of its senior management staff. “ICBC Kuching branch will be the regional centre overseeing the Sarawak and Sabah operations, while providing training for the new recruitment.” Since the establishment of ICBC Malaysia in 2010, the group reported steady growth over the past three years with products, services, loans and deposits all improved positively. As at end-2012, ICBC Malaysia’s total assets exceeded RM3 billion while deposits and profits stood at RM800 million and RM20 million, respectively. ICBC Malaysia further complements the group operations network covering Hong Kong, Macau, Japan, South Korea, the Middle East and Central Asia, making ICBC one of the few banks capable of providing comprehensive financial services across the entire Asian region.

He further revealed that there are many Chinese entrepreneurs in East Malaysia who have a lot of active transactions in China. While strengthening its footprint in Kuching, ICBC is also eyeing to setup branches in most of the cities and towns throughout Sarawak and Sabah. “In fact, ICBC is already starting to look into

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Now Could Be Time to Snap Up Good Deals and Enjoy the Ride Come 2016 Bhd’s Fennel@Sentul East condominiums, which saw a take-up of 80% soon after it was opened for sale in mid-November, while tower A and B of Sunway Bhd’s Geo Residences were 85% sold within two weeks, HwangDBS Vickers Research noted. Buyers at Tropicana’s booth during Property Hunter Expo in Kota Kinabalu The property market might need at least two years to digest and recover from the various cooling measures that came into effect this month, but expect it to surge again in 2016, say industry officials. According to Malaysian Institute of Estate Agents president Siva Shanker, 2014 is expected to be a tough year for sales, but the market will find its footing next year and catch the next upcycle in 2016. “The market ground to a standstill after Budget 2014. There was a knee-jerk reaction in sales. “It will probably stay in the doldrums for the first half of 2014. The second half may be better,” Shanker, who is also CEO-Agency of property consultancy PPC International Sdn Bhd, told StarBiz by phone. Shanker believes that speculation over the past few years in the primary market, resulting in “far more properties bought than needed”, had been put to a stop by the new curbs. “The days of 20%-40% appreciation in property prices after only a few years is over, ” he said. Even so, Shanker sees the secondary market, which he said had languished for years, regaining its lustre. “A new launch in Bangsar could set you back RM1,500 per sq ft, compared to

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RM800-RM1,000 per sq ft for an existing property. The discount goes up to 50% in some prime areas,” he said. An analyst with TA Research said that unlike previous years, many listed developers have held back on their 2014 sales targets – a departure from their usual forward guidance in December – until a clearer picture emerges from the effects of Budget 2014 and other tightening measures. The exception is Mah Sing Group Bhd, which is aiming for a 20% increase in sales this year to RM3.6bil. According to the analyst, policy uncertainty on several fronts – such as whether Iskandar Malaysia’s Medini is exempt from real property gains tax, or the pricing of bank loans using the net selling price of a property – remains an overhang on the market. “The sector’s fundamentals are intact, but in terms of share prices, the catalysts are lacking,” she said. Property players have noticed a marked slowdown in sales since the various curbs were put in place, although it is unclear by how much. A number of high-end launches were also shelved, as developers switch their focus to the affordable segment of the market, where demand is more resilient. Some of the projects launched postBudget 2014 include block B of YTL Land & Development

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In Iskandar Malaysia, however, the response to UEM Sunrise Bhd’s Almas Suites and WCT Holdings Bhd’s Medini Signature Tower 2 have been lukewarm, Maybank Research said in a report last week. The brokerage’s only “buy” call is Glomac Bhd, even though the firm has cut its own sales target for the year ending April 30, 2014 by 18%. CIMB Research is more upbeat. It expects buying interest to return in the first half of this year, albeit gradually, when potential homeowners realise that prices are unlikely to fall, and that inflationary pressure from the impending goods and services tax, along with other subsidy cuts, leads to higher prices. “As these macro prudential and policy measures are meant to curb speculation and not restrain genuine demand, the impact (though negative in the short term) should be positive over the longer run because they should help to remove froth from some segments of the market. “Also, affordability remains close to its highest ever. Robust sales by developers should provide impetus for a re-rating of property stocks,” the research house told clients earlier this month. Hong Leong Investment Bank Research, which believes the market will stage a recovery in the second half of the year, advocates a buy-onweakness strategy for shares amid trough valuations.

How to Determine Liability in Condo Water Damage

Water damage in a subject condominium Before filing an insurance claim, condo owners must determine who is liable for water damage. Determining who is liable for condo water damage can be a tricky task, as it depends on the precise cause of the damage. Condo associations maintain insurance to cover common areas in the complex, while individual condo insurance policies cover the interiors of individual units, such as the walls, flooring and contents. Condo owners should familiarize themselves with the building’s master policy, so they understand precisely what is covered and what is not. Some policies cover fixtures in each of the individual units, while other policies provide coverage only for the building exterior, basement, roof and other common areas. 1 Review both the master building policy and your individual condo insurance policy to see what each policy covers. If you don’t have a copy of the building policy, it can be obtained from a member of your condo association. 2 Determine the cause of the water damage. If the water damage occurred because your toilet overflowed or a pipe in your kitchen burst, the claim will likely go through your personal condo insurance policy. If the water damage resulted from an overflow in an adjoining unit, however, the situation can get sticky. According to the

American Homeowners Resource Center, condo associations are often reluctant to get involved in such unit-to-unit issues. 3 Contact your condo association to let them know of any water damage that originated outside your unit-whether it was due to a leaky roof or a neighbour’s overflowing washing machine. This will allow you to gauge their response to your problem so you can determine whether it is an issue they will have fixed. Toxic mold growth can begin within 48 hours of the water damage, so be persistent and request an immediate response--particularly if the damage has made your unit uninhabitable. 4 File a claim with either the insurer of the master building policy or your individual policy, depending on who is liable for the damage. If neither insurer accepts the claim because the damage occurred in an adjoining unit, discuss the issue directly with your neighbour. Make sure to collect all the details regarding his insurance policy so the issue can be dealt with promptly. If the neighbour is uncooperative and denies responsibility, litigation might be necessary. TIP Contact a professional plumber to have the situation evaluated if the exact cause of the water damage can’t be located. A plumber can search for leaky pipes and assess the hidden cause of damage.

OCBC Bank Now Offers Singapore Property Financing in Ringgit

EXPOSED! ‘Investor Clubs’ Behind Sky-Rocketing Property Prices but No Action From the Authorities Chang said property gurus openly advertised, even showing off who “their” developers are. “They say they ‘front for them (developers)’ which means the clubs already have deals with the developers,” he told SunBiz. “Such clubs have been mushrooming in the housing industry, manipulating prices by representing an average of 100 to 200 purchasers, even up to 500 buyers.

Chang Kim Loong OCBC Bank (Malaysia) Bhd (OCBC Bank) is expanding its ringgit loan facility for residential properties in Singapore in line with its positioning as a global premier mortgage provider for overseas properties. OCBC Bank already offers overseas financing in two other major countries, Australia and United Kingdom, and the Singapore financing facility is expected to be similarly well received by the Bank’s premier banking customers. According to Charles Sik, head of consumer financial services, OCBC Bank, the introduction of the “OCBC Overseas Property Financing – Singapore” is a natural progression of the facility since Asian investors have always had an eye for Singapore. “Singapore is a global city and a natural ‘magnet’ for investors. According to research, the country has always been one of the top three choices for investors from Malaysia, Indonesia and Hong Kong. “We view this finding as fundamental to our decision to offer the OCBC Overseas Property Financing – Singapore scheme. “I am happy to include that our Australia and London property loan schemes, launched in recent years, were popular and did well to meet the demands of our customers,” he said. With the OCBC Overseas Property Financing schemes, customers can now easily take advantage of the ringgit-based loans, hence mitigating the effects of fluctuating foreign exchange risks.

“Some even dominate 50% of housing units and commercial development.”

OCBC Bank currency economist Emmanuel Ng said OCBC has an end-2014 Singapore dollar to ringgit forecast of around 2.6365. “Moving ahead, the currency universe may be preoccupied with the prospect of the US Federal Reserve tapering and we think this may grant inherent support to the broad dollar in the coming year.

Investor clubs are buying new houses en-block from developers, leading to the sky-rocketing of house prices. Comprising groups of individuals, they are usually led by self-proclaimed property gurus who use their numbers to secure huge discounts from developers.

“To this end, we would expect the Singapore dollar to marginally outperform the ringgit in this landscape and would expect the Singapore dollar to ringgit to trade in the upper half of a 2.5500-2.6500 band by the end of 2014,” he said.

National House Buyers Association (HBA) secretarygeneral Chang Kim Loong claims some even get discounts as high as 25% on purchase prices.

Developers, for example, fall in with the plan in order to drawdown on bridging loans from banks, where, in most cases, they will only be allowed once 50% of the project is taken up.

This has resulted in developers passing on the “losses” sustained in those purchases to the average buyer in subsequent phases of the project to compensate for the reduced profits in the first phase.

“So here, they’ve got these purchasers who say they will buy en bloc, up to 50% or 60% of the units with a certain discount.

According to DTZ Research, via their Property Times Singapore Q1 2013 report, property prices in Singapore are expected to remain resilient despite the cooling measures being introduced by regulators. Barring further government measures and with interest rates still remaining low, purchase demand is expected to be sustained, especially from the firsttime buyers unaffected by the cooling measures. Prices of new projects are expected to hold up, especially for those that are well-located, such as near transport hubs and amenities. The OCBC Overseas Property Financing – Singapore facility offers a margin of financing of up to 70% and a loan tenure of up to 35 years or up to the time the borrower turns 70, whichever is earlier.

Chang said that to his knowledge, there are at least seven such clubs in the Klang Valley. The HBA wants the authorities to investigate the growing number of such clubs in the Klang Valley area. As at press time, REHDA had not responded to SunBiz’s queries while the Minister of Housing and Local Government did not respond to calls for comment.

“The modus operandi of the operators of these clubs is to negotiate as a block purchaser with cash-strapped developers and bargain for pre-launch discounts of up to 25%,” he said.

“They may ask for a 25% discount, which is a lot, and the developer may agree, but the property ‘gurus’ may not tell their members they have got a 25% discount. They tell their members that they got a 15% discount, even better than the bumiputra discounts of 7% for housing and 10% for commercial (units).” Chang said buyers get excited when they see the discount but they do not realise that the other 10% has been pocketed by the property gurus.

Bank Negara declined to comment on the issue. Closing an eye? Specific measures needed to counter syndicates

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MBSB Taps Into Plantation, Property and O&G Sectors children to learn more about savings and support children’s activities in shopping malls in the Klang Valley.

Palm Oil Industry Cluster, Lahad Datu Malaysia Building Society Bhd (MBSB) is expanding its financing business to include contract financing for plantation, property as well as oil and gas projects to sustain its revenue and earnings growth. The company’s chief executive officer Datuk Ahmad Zaini Othman believed that the shift towards more corporate businesses will propel the company to diversify its assets base – which are currently concentrated in the retail segment, focusing on personal financing. “For our corporate business, we are looking into palm oil plantation financing and industrial hire purchase. We will also increase our concentration on project and contract financing for the oil and gas sector.

In the meantime, he said MBSB is targeting corporate loan growth of 15% to 20% this year in line with previous years estimate. For the present business model, he noted that most of its products are being sold on fixed rate basis and most of the financial institution’s customers are public sector employees, thus translating into good margin for the financial institution. On another note, he said the company’s personal financing’s business has not been severely impacted by the new ruling on lending by the central bank. Although he observed that there was a slight decrease in its personal financing portfolio growth, Ahmad Zaini believes that it was just a ‘knee-jerk’ reaction and it is still early to gauge the impact on its personal financing business. “We need a couple of months to study the impact of our personal financing business. We are still looking at what is the comfortable level of our personal financing portfolio,” Ahmad Zaini said.

“For our new business, our commercial and Bumiputera Development Division has been established to provide financing to the small and medium enterprises (SMEs) and Bumi companies which is below RM20 million.

He pointed out that its existing financing business continued to enjoy growth adding that its earnings for the nine months ended September 2013 has surpassed that of September 2012.

“For our wholesale banking, we will focus on new areas such as healthcare and infrastructure financing,” he told reporters at the Spotlight on Malaysia event organised by Bursa Malaysia.

At the same time, he said one of the challenges that MBSB is facing, is the ability to meet the expectations for its shareholders, customers as well as providing the reasonable amount of return and yet still be able to grow consistently.

He revealed that the company is also going to enhance its retail business which include introducing new wealth management products and new business model for instance, training up its workforce as individual financial advisors. Ahmad Zaini said that MBSB is targeting to open nine personal financing express kiosk this year from six and setting up new auto finance hubs in the northern and southern regions of Peninsular Malaysia. Additionally, Ahmad Zaini said MBSB is aiming to open 13 new branches this year and set up niche branches known as “Kids’ Fun” branch to enable young

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He explained that the non-bank financial institution will also look into providing more fee-based income services to enhance the turnover of the company. He noted that the company will also be lean in its operations and maintain the right level of cost to income ratio to further sustain its earnings growth. Other challenges which he foresees in the company’s business are compliance with the regulatory framework and to have greater capital requirements to preserve and add more value to the company.

New Rate Framework to Spur Stiff Bank Competition The new reference rate framework proposed by Bank Negara to replace the base lending rate will spur stiff competition in the banking industry, AmBank Group chairman Tan Sri Azman Hashim said today. “Competition will get stiffer as customers will be exposed to more transparent pricing,” he told a media briefing after handing over a multipurpose vehicle by the diversified banking group as its contribution to the Malaysian Islamic Women’s Welfare Council. Also present was the Tunku Ampuan of Negeri Sembilan, Tuanku Ampuan Najihah, who is also the council’s president. The new reference rate as proposed by the central bank via an industry consultative paper to the financial industry on Jan 16 will be determined by the respective financial institution’s funding cost. Under the proposal, every financial institution should have a specific funding structure and strategies, and its compliance with the statutory reserve requirements will be reflected in the pricing. Other pricing components such as borrower credit risk, liquidity risk premiums, operating costs and profit margins are also proposed by Bank Negara to be reflected in the spread to the reference rate. The current base lending rate minus will be replaced with a new style of reference rate, plus a spread. Therefore, the basis for introducing the reference rate will be simply to eliminate negative spreads to the reference rate, going forward. Azman, a veteran banker, agreed with the central bank that the proposed changes in the reference rate framework would have no major impact

on effective lending rates charged to retail borrowers. Once the new reference rate is implemented, both new and existing borrowers can expect to easily compare a more transparent pricing mechanism between financial institutions for better informed decision-making. In this transparent scenario, banks will have to add more value to loan packages to attract customers, with the latter benefiting the most. Banks are given until Feb 14, 2014 to provide feedback to Bank Negara on the suggested reference rate. Azman also did not deny that competition might lead to another round of bank mergers in view of the government’s stand to allow market forces to decide on the consolidation. In July 2007, the government said that it had no plans for further consolidation of banks after they were reduced from 44 to 10. As of now, there are eight local commercial banks, with 19 others under foreign ownership. On the outlook for the banking industry this year, Azman said in jest: ” Since this year being the year of the “horse”, (industry) players will keep on “cantering”, so (that) the economy will keep on moving which was good although the pace might not be that fast.. Azman expected banks to retain profits this year even though the loan growth might be flattish on the back of a possible hike in interest rates. “AmBank will remain strong and will continue to grow in the ever-competitive market as we will always add value to our products. “Our next growth area could be in the insurance segment,” he added.

Bank Negara to Issue Consultative Paper on New Reference Rate That Will Replace BLR

Maybank IB Maintains

strengthen the link between retail lending rates and the reference rates that financial institutions used to manage the risk of future changes in the funding costs incurred by the financial institutions in providing the loans. The new reference rate will be used for the pricing of new retail loans and the refinancing of existing loans after the effective date of the new framework. Bank Negara says the proposed changes in the reference rate framework will not have an impact on effective lending rates charged to retail borrowers. Bank Negara will issue an industry consultative paper to the financial industry on a new reference rate framework to replace the base lending rate (BLR) regime quoted by financial institutions in the pricing of retail loans. The central bank said in a statement that under the proposed framework, the new reference rate would be determined by the respective financial institution’s funding costs, which reflect its specific funding structure and strategy, and the statutory reserve requirement. “Other components of pricing such as borrower credit risk, liquidity risk premiums, operating costs and profit margins are proposed to be reflected in the spread to the reference rate,” Bank Negara said. “Currently, there is insufficient transparency in the basis adopted by individual financial institutions for setting the BLR, which reduces the sensitivity of the BLR to changes in an

institution’s funding costs and comparability across institutions,” it added. The central bank justified that this was necessary, given that in the recent period, retail lending rates on new loans offered by financial institutions have been at a substantial discount to the BLR. This had resulted in a divergence between changes in the retail lending rates on new loans and the BLR of financial institutions, suggesting that the BLR had become less relevant as a reference rate for the pricing of retail loans, it added. “The new reference rate aims to improve the transmission of monetary policy to both new and existing borrowers, and promote a transparent pricing of floating rate retail loans that is more reflective of market conditions,” Bank Negara said. The proposed changes in the reference rate framework will not have an impact on effective lending rates charged to retail borrowers, which are determined by a range of factors, including the financial institution’s assessment of a borrower’s credit standing.

“Existing loans will continue to be referenced against the BLR. However, when a financial institution makes any adjustments to the new reference rate, a corresponding adjustment will also be made to the BLR,” it said. It is important to note that the changes in the reference rate framework did not represent a change in the monetary policy stance, said Bank Negara. The central bank has given financial institutions until Feb 14 to provide feedback pertaining to the proposed reference rate framework.

Maybank Investment Bank has maintained its “underweight” rating on the property sector and expect the market to be hit by the new cooling measures of Budget 2014.. The investment bank said developers had expressed caution on the property market outlook over the next six months and are switching their product focus to affordable housing as the demand is still resilient and supported by the young demographic. “Stricter mortgage lending by the banks will also slow down new transactions,” the bank said in a note. Competition is also intensifying with the entry of developers from China into Iskandar Malaysia, said the investment bank. At end-2013, China-based Guangzhou R&F Properties acquired 46.94 hectares in Johor Baharu from the Sultan of Johor for US$1.4 billion. “We are concerned that these developers will deluge the market with a massive supply of high-rise mixed development projects, inducing price volatility, if there is no synchronised planning and control by the authorities,” it added.

...developers had expressed caution on the property market outlook over the next six months and are switching their product focus to affordable housing as the demand is still resilient and supported by the young demographic.

The statement said these changes mainly served to

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