StarProperty.my Edition 19 April 2015 by StarProperty

SUNDAY 19 APRIL 2015

the best elements of living, entertainment and commerce come together The award-winning The Light Waterfront Penang is a dynamic destination. P04

> An aerial view of the commercial and residential developments in Gurney Drive and Kelawei Road, where the value of the properties has escalated substantially in recent years.

Is there a glut ON the office market?

INSIDE THIS ISSUE

Huge investments in infrastructure and the setting up of a series of strong marketing programmes to promote GKL/KV are seeing results today.

P02

Perception and reality of GST

we will see a shift in the type of products developers will be offering within the next two to three years.

P12-13

Reinventing postretirement living

Home Farm seeks an alternative proposition that encourages participation in a safe and secure environment.

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VIEWPOINT

STARPROPERTY.MY SUNDAY 19 APRIL 2015

Is there a glut on the office market? “We shape our buildings; thereafter they shape us.” - Winston Churchill

HE landscape of Kuala Lumpur has changed quite rapidly since independence but only in the last 10 years have we seen a burst of office and residential developments that have radically altered the skylines of the city. If we sit back and analyse what is happening, it makes for very interesting reading. Here are some facts to digest: As at the end of 2014, the total supply of office space in Greater KL (comprising 10 local authorities of Kuala Lumpur, Klang, Kajang, Subang Jaya, Petaling Jaya, Selayang, Shah Alam, Ampang Jaya, Putrajaya and Sepang) was 96.6 million sq ft (this excludes office spaces in Putrajaya and Cyberjaya). KL City accounts for 43.5 million sq ft or l 45% of the total office built-up space. KL suburban accounts for 32 million sq ft l or 33% of the total office built-up space. Selangor accounts for 21.2 million sq ft l or 22% of the total office built-up space. Singapore, on the other hand, has only 80.2 million sq ft of total built-up office space as of the first quarter of 2014, and the addition of space is carefully controlled by the planners. Another key difference is that many of the office towers are largely owned by institutional investors be it through REITs (Real Estate Investment Trusts), Sovereign Wealth or Property Funds. The amount of Grade A office space in Singapore’s CBD (central business district) stands at nearly 50% (21.4 million sq ft) of available supply compared to KL’s 18% (7.91 million sq ft). In both cities, the Grade A offices have occupancies within the 95% range. The problem today is that despite the perception of a present glut, KL City’s office stock is ageing. Close to 75% of KL City’s stock is more than 16 years old, and 40% of the stock was built between 1990 and 1999. Only 15% of the existing stock is less than five years old. Just remember that these older buildings were completed when there was no Green Building Index (GBI) or lifestyle options for tenants, and thrived on old air conditioners and lift technologies with a high carbon footprint. Poor security, mismatched car park allocations and dated finishes were oftentimes the end result. The building owners have serious problems matching the newer offerings in the market and have only lower rents to compete. Their advantage is that their historical costs are low and they can survive at a much lower price point. It is no surprise that the new office buildings, which are part of integrated developments with residential and retail elements as well as green credentials, are attracting many of the multinational tenants from the older office towers (often seen as a result of corporate global mandates). Research shows that Grade A buildings have

More than 2.5 million sq ft is scheduled to be completed in KL city with 3.5 million sq ft dedicated to Greater KL in 2015. A total of 18 million sq ft is being planned to come on stream in 2017. However, although the current occupancy statistics are encouraging, we will definitely see a drop in occupancy as well as the rental rates as these new offices spaces are coming on stream later. Having a modern skyline with wonderful new offices is great for positioning KL as an international hub for business, but with the impact of technology on office design coupled with the recent fall in oil prices affecting the sector's expansion plans as well as the banking sector looking for savings to improve their profitability, we witnessed for the first time a sudden drop in the Grade A office take up in 2014 by 85% as compared to 2013 which is quite alarming. I think that a rise in the investment of the new single owner Grade A office capacity is a positive sign as it places our buildings head and shoulder with many of the international cities of the world but at a much lower cost. In comparison, Singapore’s Grade A office rentals are priced at approximately RM23.30 per sq ft compared with KL’s pricing at approximately RM8 to RM10 per sq ft. The Economic Transformation Programme’s (ETP) investments and ongoing promotions for GKL/KV will help in filling up these new towers over time. However, we need a better approach in coordinating the roll out of new office spaces and have to take a breather in order to absorb the existing stock before embarking on more supply.

AN OPINION DATUK STEWART LABROOY

Datuk Stewart LaBrooy is the chief executive officer of Axis REIT Managers Bhd.

1 An artist's impression of SP Setia KL Eco City which is located adjacent to Mid Valley Megamall. 2 An artist's impression of the Damansara City Project @ Bukit Damansara.

“The problem today is that despite the perception of a present glut, KL City’s office stock is ageing.

the highest occupancy levels despite their high rents, showcasing the flight to quality. Driving demand for new offices is the goal that the Greater KL (GKL)/Klang Valley (KV), being designated as a National Key Economic Area (NKEA) under the Economic Transformation Programme, will transform the nation into the top 20 most liveable metropolis globally in terms of economic growth. Huge investments in infrastructure and the setting up of a series of strong marketing programmes to promote GKL/KV are seeing results today. However, the office segment still has a sharply bipolar pattern of ownership, be it for the single or strata ownership of each office tower. Strata ownership will always command lower rentals as they lack scale and are unable to attract the Grade A tenants. These developments feature SOHO (Small office home office) units, SOVO (Small office versatile office) units or office suites which are purchased by investors or end users and are not of the investment grade. More interesting are the single owner investment Grade A offerings that are currently emerging as part of the KL skyline.

Offices completed from 1997 to 2014 Building Name

Zone

Year of Completion

NLA (sq ft)

Lembaga Tabung Haji @ Platinum Park

KLC

2014

348,267

Menara CIMB

SUB

2013

609,000

Menara Shell

SUB

2013

538,617

Integra Tower

KLC

2012

777,000

Menara Darussalam

KLC

2012

189,000

Menara Felda @ Platinum Park KLC

2012

689,273

Menara 3 Petronas

KLC

2012

840,000

Menara Binjai

KLC

2012

330,000

Platinum Sentral

SUB

2011

487,124

Menara Prestige

KLC

2011

515,000

G Tower

KLC

2009

500,000

The Gardens North Tower

SUB

2008

425,327

The Gardens South Tower

SUB

2008

408,314

Menara Maxis

KLC

1998

528,011

Petronas Twin Tower 1

KLC

1997

1,597,768

Petronas Twin Tower 2

KLC

1997

1,597,768

Sunday 19 April 2015

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STARPROPERTY.MY SUNDAY 19 APRIL 2015

Innovative projects to attract buyers Penang's softened property market has become a signal for developers to be more caring and innovative. This year sees more affordable, innovative and value-added housing schemes in line with the state government's policy.

By DAVID TAN davidtan@thestar.com.my

HE current challenging situation in the property market plagued by high rejection rate of bank loans, inflationary concerns and prospects that bank interests will hike, is pushing developers to initiate new products and sales strategies to sell their products. Since late last year, Penang and Kuala Lumpur-based developers have devised various strategies to counter the dampened property market. These strategies include launching affordable properties in prime areas, tagging innovative projects at around RM800 per sq ft, and building new projects within integrated mixed-developments or green environment. Penang-based developers, Ideal Property Group and BSG Property Group are responding with plans to build affordably priced residential properties in prime areas, changing the landscape of affordable homes. Affordable property projects in Penang, according to the state government’s guidelines, are priced between RM200,000 and RM400,000, targeting the first-time buyers’ market. Until about a year ago, Penang island’s south-west district was known as the locality for affordably priced properties. As an example, since 2008, Ideal Property has developed over 4,000 units of such housing worth some RM3bil in gross development value (GDV) there. But since late last year, Ideal and BSG started looking at building affordably priced properties in Tanjung Tokong, a prime residential neighbourhood in the north-east district. “There is a (mis)perception in the market that affordable projects are similar to low-medium cost houses. “Our affordable schemes, marketed under the I-Condo brandname, are priced around RM300,000 to RM400,000. “We provide quality finishes and a wide range of recreational facilities. All the units come with a free car park,” Ideal executive chairman Datuk Alex Ooi discloses. BSG Property also plans to launch 998 affordable condominiums in Tanjung Bungah in mid-2015. The state government’s new incentives for developers involved in affordable property schemes are spawning the trend towards the building of more affordable housing in prime and strategic locations. Under the state’s affordable housing guidelines introduced last year, developers are allowed to build 2.8 times or a total of 122,000sq ft of built-up area on an acre of land, all comprising affordable homes.

2 1 An aerial view of the Gurney Drive and Kelawei Road neighbourhoods, an upmarket commercial and residential areas in the North-East district. 2 The completed Lagenda@Southbay landed properties by Mah Sing in Batu Maung. 3 Ideal Property executive chairman Datuk Alex Ooi. 4 Penang REDHA chairman Datuk Jerry Chan. 5 IJM Land Bhd (Northern Region) senior general manager Datuk Toh Chin Leong.

Under the old guidelines, the plot ratio was also 2.8 times, but developers had to make sure 30% of the units have low-medium cost price tag of RM72,500, and another 35% in the RM200,000 to RM400,000 price range. “For example, they can build 144 condominiums of 850sq ft in built-up, or a mix of 750sq ft, 900sq ft, and 850sq ft units as long as the total built-up area of the units did not exceed 122,000sq ft on one acre. “This is why you can see developers getting involved in the affordable home projects in prime locations. “These affordable properties will put pressure on mid-range houses priced between RM500,000 and RM700,000,” says Real Estate & Housing Developers’ Association (Rehda) Penang chairman Datuk Jerry Chan. Inflationary concerns and fear of an interest hike are also influencing developers to plan for innovative value-added schemes priced around RM800 per sq ft, according to Raine & Horne Malaysia senior partner Michael Geh. From market surveys conducted, developers are aware there is still strong demand for properties tagged at about RM800 per sq ft, provided the homes are

well designed and fitted with the essentials of modern-living, and located within a mixedintegrated development or in a secured and green environment. “Some of these schemes are IJM Land Bhd’s RM220mil Waterside Residence Condominium project in the business hub of The Light Waterfront Penang, located next to the Penang Bridge. “It is a smart way of selling residential properties, as the commercial environment will create demand for the homes from those working in the business hub. “Even if the buyers do not want to stay there, they will also have no problem renting out the properties,” Geh observes. Eco World’s EcoTerraces in Paya Terubong are fitted with essentials such as cabinets and wardrobe, air condition, vanity top and water heater for each of the units to attract buyers. “Eco World is also allocating at least 70% of the 13 acre site for green space, which is an unusual sizeable green space for a project in the suburb of the island. “This is another way to sell properties during challenging times like now,” he says. The secondary property market provides an alternative for house buyers looking for homes on strategic locations in Penang.

“It is still a very vibrant market, as a significant percentage of transactions in the local property market are in the sub-sales segment, due to the fact that the homes are ready and there are more choices in terms of location for the buyer to choose,” Geh adds. According to Chan, there has been at least a 30% decline in property transactions so far this year, compared with the same period last year. “Moving ahead, we can expect to see little or no appreciation for high-end condominiums. “The mid-range high-rise properties with price tags of RM400,000 to RM500,000 are likely to see appreciation. “We can also expect to see lower demand for landed residential properties priced between RM3.5mil and RM5mil,” he adds. On bank loans, Rehda Penang deputy chief Datuk Toh Chin Leong says for some projects, the rejection rate is as high as 50%. “It is very common nowadays for developers to return the deposit payment when the loan facility is turned down. “This is something you don’t see three years ago, but is happening more and more often in the past 18 months,” Toh says.

Sunday 19 April 2015

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STARPROPERTY.MY SUNDAY 19 APRIL 2015

sizeable properties with attractive pricing

Developers in Penang are planning over RM5bil worth of projects this year despite the current economic challenges. House buyers can expect more affordable properties in prime locations.

2 1

By DAVID TAN davidtan@thestar.com.my

HE who's who of the property development fraternity in Penang have plans for over RM5bil worth of new residential and commercial property projects this year. They include IJM Land Bhd with RM486mil in gross development value (GDV) worth of new projects, Eco World Development Group Bhd (RM600mil), Mah Sing Group Bhd (RM1.005bil), Sunway Bhd (RM150mil), Ivory Properties Group Bhd (RM1.156bil), Ideal Property Group (RM1.8bil) and BSG Property Group. Meanwhile, Berjaya Land is marketing sizeable bungalow lots measuring 5,000sq ft and 10,000sq ft in its Jesselton Villas scheme, located next to the Penang Turf Club. Mah Sing plans to launch the Ferringhi Residence 2 in Batu Ferringhi and a highrise residential development project in Southbay City later this year, which together come up to RM1.01bil in GDV. “Properties priced at around RM800,000 and above will continue to attract interests, due to the scarcity of land on the island. “Southbay City is located next to the second Penang Bridge, while Ferringhi Residence 2 is located at the famous Batu Ferringhi tourist belt. Both projects will be priced within this range and are expected to do well in sales because of their prime locations,” says Mah Sing group managing director-cum-group chief executive Tan Sri Leong Hoy Kum. Eco World is launching the EcoTerraces (RM350mil) and EcoMeadows (RM250mil) projects in Paya Terubong and Batu Kawan respectively this year. “EcoTerraces is a low-density, luxury condominium project conceptualised to showcase a stunning landscape of cascading pools and abundant greenery, priced at RM800 per sq ft.

“EcoMeadows comprises three-storey terraces in a guarded and gated scheme in Batu Kawan, priced at around RM700,000 to RM800,000 a unit,” he adds. IJM Land plans to launch The Waterside Residence (RM220mil) and The Terraces Condominium (RM266mil) projects in the second half of the year. The Waterside Residence condominiums, designed for working executives with built-up areas ranging between 1,050sq ft and 1,250sq ft, are priced around RM800 per sq ft, according to IJM Land (North) senior general manager Datuk Toh Chin Leong. The Terraces Condominium, comprising 410 condominiums in Bukit Jambul, will sell between RM600 and RM650 per sq ft, says Toh. “The pricing is very attractive for a thriving residential upper medium income neighbourhood, which is close to the Penang International Airport, Penang Bridge and the Free Industrial Zone,” he says. Sunway Bhd will soon launch the Sunway Cassia double-storey semi-detached houses in Batu Maung and the SkyVilla Condominium project in the Sunway Wellesley mixed-development scheme in Bukit Mertajam. “Both projects have a combined GDV of RM150mil. The sales of both projects are expected to achieve 70% by end-2015,” says Sunway senior general manager Tan Hun Beng. Ivory Properties Group Bhd executive chairman Datuk Low Eng Hock says Ivory plans to launch a shopping mallcum-hotel project (RM998mil) in Penang Times Square and a residential condominium (RM158mil) in Penang WorldCity with its partner Tropicana Corp Bhd. Ideal Property will launch this year the I-Santorini@Tanjung Pinang in Tanjung Tokong and I-Condo@One Foresta in Bayan Lepas, with a collective RM1.8bil in GDV, targeting the first-time house buyer's market.

The I-Santorini and I-Condo comprise 2,155 and 2,685 condominium units respectively, priced within the RM300,000 to RM400,000 bracket. Affordable property projects are priced between RM200,000 and RM400,000, also targeting at the first-time house buyer's market. BSG is expected to launch soon 1,218 units of condominium in Tanjung Bungah and in Minden Heights, Gelugor. Of the 1,218 units, 998 units are affordable range condominiums in Granito@Permai scheme in Tanjung Bungah, while the remaining 220 units are in the Middleton project in Minden Heights, Gelugor. The Granito@Permai units have builtup of 864sq ft and access to a full fledge of facilities. The Middleton, comprising high-end condominiums of 1,409sq ft in built-up, are priced at around RM800 per sq ft. The key attraction of the project is that it is located next to the hills and the Raffel Park, a recreational green lung area, as part of BSG Property's corporate social responsibility initiative. The Jesselton Villas bungalow lot project, located on 58 acres, is enveloped within a guarded precinct surrounded by magnificently landscaped parks and a pristine hillside, which enjoys round-theclock security. It is flanked by affluent neighbourhoods such as Jesselton Heights, Pulau Tikus and Western Gardens. Given its prime location, the company is confident that Jesselton Villas will enable investors to enjoy excellent returns and high capital appreciation. On the local property market, Mah Sing's Leong says the developer is confident of clocking in satisfactory performance backed by strong unbilled sales of RM5.264bil. “Properties that are priced around RM800,000 will continue to attract interest. The group’s mid- and long-term business

6 1 An artist's impression of The Light Waterfront project by IJM Land where The Waterside Residence is located. 2 An artist's impression of the landscaped garden for EcoTerraces. 3 Mah Sing Group chief executive officer Tan Sri Leong Hoy Kum. 4 Ivory Properties chief executive officer Datuk Low Eng Hock. 5 Sunway Bhd senior general manager Tan Hun Beng. 6 Raine and Horne Malaysia senior partner Michael Geh.

plan for Penang will be to continue focusing on expanding and identifying excellent landbank to expand our presence in the state, supported by quality product offerings which meet the demand of consumers for property products in strategic locations and with strategic pricing points,” Leong explains. Sunway’s Tan says the property market is anticipated to be flattish this year. “Buyers are expected to hold back on purchases in the aftermath of the Goods and Services Tax. “The property market in the Klang Valley and Penang will be more resilient compared to other locations. “We will build integrated communities, where we are co-investors with our buyers, as this is an area of our expertise. “Sunway strives to own 30% to 40% of the mixed development communities to assure the property owners that the group will perpetually grow the schemes,” Tan adds. Ivory’s Low says while the property market has softened, the local hospitality industry has grown steadily in the last few years to meet rising demand for hotel rooms. “Therefore, our group is planning to kick off our proposed hotel development in Penang Times Square in the near future. A few residential and commercial projects are also in the pipeline,” Low reveals.

Sunday 19 April 2015

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Sunday 19 April 2015

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STARPROPERTY.MY SUNDAY 19 APRIL 2015

FEATURED DEVELOPMENT

Everything IN one township

A spectacular metropolis within the Greater Klang Valley conurbation vicinity has sprouted and blossomed into a formidable development with everything one could ever need under one address. 1 Artist's impression of Dextora comprising elegant and spacious double-storey link homes.

By MANGALESRI CHANDRASEKARAN

mangalesri@ocision.com

atrix Concepts Holdings Bhd's flagship development, Bandar Sri Sendayan, is a self-sustainable township that is packed with a myriad of infrastructures and amenities. This 5,233-acre neighbourhood comprises residential, commercial, institutional, industrial and leisure developments, ensuring a wholly integrated township for the dwellers. "At Matrix Concepts Holdings, we believe that everyone should have the opportunity to live comfortably within a safe environment with ample space to experience the beauty of life together as a family and a community. Our track record over the years demonstrate our commitment in bringing this vision to reality," says Matrix Concepts managing director and chief executive officer Datuk Lee Tian Hock. In 2013, Bandar Sri Sendayan was bestowed the World Sense Of Place award for "Sustainable Township Of The Year", for its remarkable plans on the township as a whole. Located in the key area of Seremban within the Greater Klang Valley corridor, Bandar Sri Sendayan is now 57% completed with a total of 5,833 units of homes and shop offices built to-date since 2006. The entire township is designed to cater for 10,000 units of residential and commercial developments.

2 Artist's impression showing the overview of Merchant Square. 3 The Matrix Global School with state-ofthe-art facilities. 4 Artist's impression of Elymus, exquisitely designed high end semi-detached homes. 5 Artist's impression of Sendayan Merchant Square which provides boutique retail outlets for added conveniences.

Creating success stories

Comfortably holistic lifestyles There are ample amenities included in Bandar Sri Sendayan to provide extra conveniences for its residents. One example is the d' Tempat Country Club, a premier business and family-oriented country club. The club offers full fledge facilities with wholesome recreational activities such as sporting facilities, food and beverage outlets, retail stores and a banquet hall. Bandar Sri Sendayan includes a 26-acre park dubbed The Sendayan Green Park which promises a stress-free environment for the residents. The beautiful park boasts a serene themed garden with gazebo, viewing tower and platform, yoga, tai chi lawn as well as fitness stations for fitness enthusiasts, a huge football field, skating area and an amphitheatre area feasible for some quality leisure time. The Matrix Global Schools comprises private national and international schools located on a 20-acre land, fully equipped to cater to up to 2,100 students. The school strives to offer a holistic and experiential learning experience for the pupils by providing state-of-the-art facilities which incorporate auditoriums, lecture theatres, multi-purpose hall, rugby and football

fields, music room and a performing arts centre. The Sendayan Merchant Square, which is a 100-acre central business hub, further enhances the township by offering boutique retail outlets and dining facilities, coupled with a 4H centre which serves hypermarket, hardware, household and home improvement needs under one roof. As a part of the integrated township, the Sendayan Tech Valley, a high-tech industrial

park, has successfully attracted a high number of foreign direct investment (FDI) that increases job opportunities. Bandar Sri Sendayan boasts high accessibility as Kuala Lumpur International Airport 2 (KLIA 2) is located just 35 minutes away. Meanwhile, Seremban will be one of the stations for the Express Rail Link (ERL) which connects Kuala Lumpur and Malacca, shortening the travelling time to 50 minutes from Kuala Lumpur.

Established in 1996, Matrix Concepts Holdings has evolved in the propertybased industry as the group's focus is set on property development, construction, hospitality, education and property investment. Besides setting a new benchmark in excellence and professionalism, the firm also emphasises on its marketing strategies. "Delivering end products ahead of the scheduled time, reliable customer service as well as a committed workforce are among the strengths that contribute to the group's triumphs," says Lee. To date, the group has successfully completed numerous projects with a gross development value (GDV) of RM2.5bil and its two major flagship projects, Bandar Sri Sendayan (Negri Sembilan) and Taman Seri Impian (Johor) have a combined GDV of RM8bil. Matrix Concepts Holdings Bhd's current focus is on its flagship development, including Bandar Sri Sendayan, for the next 10 years as the company is looking forward to complete the self-sustainable township and to turn it into a tremendous success.

Sunday 19 April 2015

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STARPROPERTY.MY SUNDAY 19 APRIL 2015

VIEWPOINT

Perception and reality of GST A PRIL 1, 2015, came and went without too much damage. The Goods and Services Tax (GST) has been implemented and Malaysian businesses and Malaysians in general are surviving the anticipated tsunami. The changes, or if you prefer, the impact on our monthly spending, will be more visible in the long run, say probably in another four to six months. Hopefully, the Consumer Price Index (CPI) related to inflation will not be showing a spike. We do not need it and GST should not be provoking it. Let’s take a look at some of the possible comments on some of the general “perceptions and realities” commonly shared by most of the people and, in this way, we can try to arrive at a better understanding of the future impact.

Most analysts think that GST, which is also known as Value Added Tax (VAT), is the best form of general consumption tax available due to its nature of raising revenue in a neutral and transparent manner. This is 100% true and I fully support a proper implementation of GST, which at the end, will result in a more transparent and fair taxation system as it will charge only on the added value between each transaction. Malaysia has been facing a chronic budget deficit problem for over 43 years since 1970. The Government blamed this mainly on tax evasions and tax revenue from import levies that has fallen over time due to trade liberalisation. Hence, the Government decided to implement GST as one of the measures to rein in the budget deficit. For sure, the implementation of GST will contribute to a reduction in tax evasion. We have seen this in most of the countries which have implemented GST or VAT within the last 30 years. Italy, my home country, is surely a good example and if properly carried out in Malaysia, with the Government giving proper tools to the enforcing and controlling agencies, there will be a guaranteed positive impact in the fight against tax evasion. For example, Singapore has implemented a cross checking software which allows the enforcing authorities to have an instantaneous picture of the tax evasion of a fiscal subject and the same has been happening in many other countries. Talking about the point arising from budget deficit, GST is only one of the available tools. The most important ones include a more efficient public administration in terms of actual enforcement of existing laws, reduction of corruption and a higher transparency pertaining to all public transactions. Germany is the country most frequently referred to when researchers wish to show that the introduction of

REAL ESTATE INSIGHTS DR DANIELE GAMBERO

REI Group of Companies CEO and co-founder Dr Daniele Gambero gives presentations on the property market and welcomes feedback at daniele.g @reigroup.com.my

GST/VAT does not necessarily cause inflation. This is because the introduction of VAT in Germany is widely ascribed to as being implemented at the right timing of the tax changeover. So the question as to whether now is the right time for Malaysia to have GST implemented will be addressed. Malaysia is possibly five to 10 years late compared to other countries in the region. As a matter of fact, Malaysia is the only country in the South-East Asia (SEA) region other than Singapore, which is at stage three of the process, which is in a transition stage between being a country with an efficiency-driven stage two level and an innovation-driven stage three level of growth. It is surely time for Malaysia to enforce this new tax system. There is much more that can be done by the authorities in terms of public education, anti-profiteering agency control and sanctioning powers besides the support coming from Small Medium Enterprises (SME) with the update of the accounting system and staff education. When GST is implemented, usually the greatest concern about it is the possible inflationary effect. Will this be a primary concern with the implementation of GST in Malaysia? There was a generally voiced out concern as a good 80% of the population did not understand in full the application of GST or, in other words, how GST works. In my previous experience in other countries, what I have seen and what I am expecting to see occurring in Malaysia also is a sharp increase of CPI in the next three to six months following the GST implementation with a subsequent realignment of values down to more appropriate rates. As I have mentioned, a critical factor of the smooth implementation of GST in Malaysia lies with how the anti-profiteering

A notice pasted on a wall stating 10% service charge and 6% GST at a restaurant in Kuala Lumpur.

agencies will actually monitor value trends and enforce sanctions for the many who will surely try to avoid the burden of the newly implemented tax. It is known that under the current Sales and Services Tax (SST), basic building materials that fall in the First Schedule Goods category will not be subjected to sales tax. However, under the implementation of GST, all building materials and services will be subjected to the tax. Will this invariably raise the “production costs” for developers? In a residential development, we have multiple cost-generating factors of which some are subjected to GST while others are not. From the first analysis done a few

months ago on behalf of the Real Estate and Housing Developers’ Association Malaysia (Rehda), my forecast is for a final value increase for the purchaser of no more than 3% to 3.5% compared to the current property price. Looking at the current price trend for properties in all the major areas, prices have dropped between 4% and 8%. However, I am of the opinion that the 3% to 3.5% expected increase should not be borne by the public. Experts predicted that there may be a rush to buy property ahead of GST implementation, due to inflationary fears and many see property as a hedge against inflation. Did this happen between the

STARPROPERTY.MY SUNDAY 19 APRIL 2015

13 VIEWPOINT Chart 1

second half of 2014 and now? Too many other factors have been influencing house prices in Malaysia during the last 12 months for us to be able to confirm or deny the above. From a general point of view, I have seen a reduction in terms of transactions (especially in the affordable residential segment) falling within the range of between 25% and 30%. There has not been any “rush to buy”. In general, I would conclude that the shared feeling of the public is translated into a “wait and see” type of behaviour as most of the ordinary people are concerned about how the GST implementation will affect their personal budget. Fear of not being able to repay the monthly instalment of the bank loan has been primarily slowing down residential transactions during the last quarter of 2014 and the first quarter of 2015. Property developers predicted that confusion over the implementation of GST will lead to a cut back in new developments since most of them will adopt a “wait and see” approach. If this is true, will it greatly dampen the housing production in the short term? It is a normal market reaction and a consequence of perceptions. The public is buying less so consequently, developers will reduce the rhythm of new launches. One thing that has to be taken into consideration is the fact that Malaysian developers have been delivering an average of 150,000 to 160,000 units of residential space every year for the last 10 years. Demand for houses within the same time frame has been and still is, far above this figure. Consequently, developers shouldn’t be affected by this new “wait and see” general behavioural pattern. I am not expecting a massive reduction in terms of house supply, but for sure, we will see a shift in the type of products developers will be offering within the next two to three years. Most of the residential offerings will be directed towards affordable homes for first-time homebuyers. The Government has taken multiple measures to cool down property prices such as increasing the Real Property Gains Tax (RPGT), banning the Developer’s Interest Bearing Scheme (DIBS), etc. Are the above cooling measures effective in their contributing roles? Most of these curbing measures have been quite effective but a bit late in terms of their implementation. Budget 2013 and 2014 have introduced them but unfortunately, for the greater part, these have only been implemented recently. However, of late, all these measures together with the GST cooling effect as mentioned above, have contributed to normalising the market which is now showing clear signs of heading towards a more sustainable direction in terms of the types of products and demand driven developments. This is in contrast to the past in which there were too many conceptdriven developments. Following the Government's decision of upholding the imposition of RPGT, it means that investors will be more unwilling to release their properties into the secondary market. Based on the current market situation, and taking this into consideration, will this indirectly result in a deterioration of the situation in term of housing supply?

Indexes

Vietnam

Indonesia

Thailand

Malaysia

Australia

Singapore

GDP growth

6.19%

2.96%

0.60%

5.60%

2.70%

1.50%

Gov debt as % of GDP

54.98%

26.11%

45.70%

54.80%

20.48%

106%

Gov deficit as % of GDP

-7.10%

-2.30%

-2.50%

-4.50%

-3.10%

1.10%

Balance of current account in US$ Bil

-1.17

-0.43

-0.078

8.9

0.6

1.2

Per capita income at constant prices - US$

5,124

1,810

3,438

6,990

37,493

36,898

Inflation

1.20%

8.36%

1.22%

3.20%

2.30%

0.30%

Unemployment

2.14%

5.95%

0.55%

2.70%

6.10%

Population (Million)

89.71

249.9

67.01

23.13

5.47

34 (38)

31 (37)

20 (24)

22 (21)

2 (2)

Stage 2 efficiency driven

Stage 2 to 3 Stage 3 Stage 3 efficiency to innovation innovation innovation driven driven

Global competitiveness 68 (70) index World Economic Forum (WEF) 2014-2015 Stage of development (WEF 2013-2014)

Stage 1 factor driven

Chart 2

GST AT

MANUFACTURER

WHOLESALER

RETAILER

CONSUMER

claims back GST

pays only 6% GST

This will not deteriorate but redirect the situation. During the 2010 to 2014 period, most of the products released in the market by Malaysian developers were mostly seeing selling values of above RM800 per sq ft, which was especially prevalent in the hot spot areas. Since the middle of 2014, the majority of developers have repositioned their offer of residential properties with offered net prices ranging between RM250 per sq ft up to a maximum of RM700 per sq ft. These represent affordable values which should be looked at by the banks in a more “financeable-friendly” way. Refer to Chart 1.

“I am not expecting a massive reduction in terms of house supply but for sure, we will see a shift in the type of products developers will be offering within the next two to three years.

STARPROPERTY.MY SUNDAY 19 APRIL 2015

SPACE DESIGN

Reinventing post-retirement living Spark Architects’ Home Farm concept aims to make the latter years of the ageing Singaporean population fruitful through the use of vertical gardens and greens grown on the fertile ground.

ERTICALLY planted, edible greenery dresses the buildings and rooftop gardens of the specially planned residential development while plots of land on the grounds below take pride of place in a profusion of deep green and lush shades of red. The flowering plants, vegetables and fruits displaying a healthy kaleidoscope of colours also make their presence felt on the agricultural plots of land found peppered within the sprawling development. Amid this setting, residents happily tend to the daily watering of the vegetation while deliberating on their choice selection of greens for their daily cooking needs. Fast forward to the not-so-distant future and this may likely be the scenario that will depict the Singaporean green lifestyle for the elderly. Welcome to the Home Farm model inspired by the architectural imagination of Spark, an award-winning international design studio that works to contribute positively to the experience of the city while addressing pragmatic issues that govern each project by creating layered experiences amid meticulously thought-out, engaging architectural places. Speaking to Spark project director Stephen Pimbley at Kuala Lumpur's maiden Cityscape symposium, he credits the Home Farm concept as being suitable for the next elderly generation's retirement housing needs. According to him, the bold conceptual project hinges on the proposed idea of combining apartments and facilities for seniors with the workings of vertical urban farming. “Seniors should be treated with the respect they deserve. I feel that this is especially true of a country like Singapore, whose current generation of seniors lifted the country out of the colonial Third World mire to the wealthy First World status it now enjoys. "Home Farm seeks an alternative proposition that encourages participation and engagement in a safe and secure environment. We can and should be doing better to reinvent the typology,” he maintains. Using this model, the firm’s aim is to generate possible discussions about the viability that can emerge when these “typically separate realms” come together with the view of realising the vision of addressing a rapidly ageing population demographic in the bustling island city – a phenomenon that is also prevalent in many other Asian countries.

Harvest of plenty amid growing concerns Conceptualised to combat the concerns plaguing the island with its limited land and growing elderly population, the Home Farm idea cleverly doubles up its versatility as a “vertical and horizontal” flexible vegetable farm. These concerns are real as Singapore currently imports over 90% of its food requirements. In fact, statistics indicate that by 2030, one in five Singaporeans will be 65 years and above. The swelling population of seniors will thus place significant demands on the social, economic and infrastructure systems.

DESIGNER BLOCK

Birthing the blueprint

YVONNE YOONG

yvonneyoong@thestar. com.my

3 1 An artist's impression of Urban Farm, a new high-rise modern farm design concept banking on a socially and environmentally sustainable typology that hopes to fashion housing for seniors with vertical urban farming within one development. 2 An artist's impression depicting the elderly residents at Home Farm engaging in social interaction and gardening. 3 An artist's impression of the multi-storey residential retirement home complex that aims to provide elderly residents with part-time income via light farming activities to keep them active to enjoy the fruits of their labour. 4 Spark director Pimbley mooted the idea of Home Farm with the intention of meeting the needs of the next elderly generation requiring retirement housing.

Besides providing a fresh vista of greenery for the elderly residents, the harvest of vegetables represents a source of food and part-time income while providing residents with meaning as they keep active tending to the crops. At the same time, the light farming activities facilitate healthy social interaction by enabling the elderly residents to mingle with other retirees. The rooftop and interior gardens, including the vegetable plots on the farming grounds below, thus echo one harmonious tune of being one with nature. The high-rise development that will be able to accommodate a huge number of residents will feature vegetables grown vertically on the buildings based on aquaponic farming while waste produced by fish will be channelled to the vegetation, ensuring a properly thought-out system that should run like clockwork to feed the plants which will in turn become food. “The whole life cycle of the aquaponic system sits seamlessly with the ethos of the Home Farm. The 360 degree nutrientenriched water story is historic passive technology reinvented and transferred into the 21st century to facilitate lightweight, high volume vertical farming. "In a country where land is at a premium because of massive urbanisation, aquaponic farming is perhaps the most appropriate and sustainable model,” he says. Residents who tend to the easier aspects of the farming activities would benefit from the light physical activities that will keep them glowing in the prime of health. At the same time, the vegetables can be sold by retirees engaged in voluntary, parttime work where random tasks such as

planting, harvesting and delivery will enable them to earn extra income. Income subsistence to those who work on the farm can take shape in subsidised or free medical care, accommodation and other types of social and community facilities. In fact, Pimbley suggests that income from the Home Farm could be used to fund research into new types of urban farming in collaboration with Singaporean universities. “The intention is to provide a different sort of environment capturing what is best from the micro-urban ideas of the HDB (Housing and Development Board) projects covering the great social spaces, streets and courtyards in the sky, including the ‘void decks’ – and to combine these with green facades that are not superficially planted for effect but which will also carry an economic and social imperative,” he asserts. According to Pimbley, the residential development will also incorporate care facilities for seniors on the lower levels of the buildings. This will include the workings of a social centre, hawker food court or a shopping mall and a fresh food market selling produce. “Home Farm will be a far cry from the typical dense Asian housing developments. It is a reflection of a different, lower density development pattern utilising a more dispersed and open environment. "The feeling of space in a very green and active park will create an extraordinary atmosphere and environment. This will represent a new model of development that celebrates all that is best about Singapore and perpetuates its 'City in a Garden' status,” he concludes.

Elaborating on the question of affordability, Pimbley says that the viability of the development would hinge on government-led initiative and support. He envisions the use of cost-effective, local skills with concrete as the main construction material. The alumni of the Royal College of Art London who has worked with Richard Rogers and Partners as well as Alsop and Lyall before establishing Spark, reiterates that the Home Farm concept need not be executed in a new project and can be retrofitted in existing, high-rise residential developments. Since the South-East Asia climate is perfect for growing plants on the surfaces of buildings, he believes that Singapore’s lack of farmland combined with its conducive climate for plant growth make it a viable role model for this type of unique residential enclave as opposed to varied economies of vertical farming in other countries that boast an abundance of space and a mature farming industry. The concept hopes to embrace the future with a “more robust modular architecture imbued with a social conscience” reminiscent of the late 1960s and 70s when the island city’s identity was birthed with the Singapore Government’s HDB programme. Facilities will be located at the lower levels of the Home Farm development land which will be open to members of the public. Meanwhile, the housing will be stacked above in a curvilinear terrace formation reminiscent of the land’s natural contours. He envisions Home Farm could surpass all current Green Mark requirements and the government's city greening ambitions to create a development that sets a global precedent. “The building’s environmental life cycle has been well considered, including the use of waste bi-product from the farming activity to power a biomass power plant that will create free energy for the public areas of the development.” He says that the socially and environmentally sustainable typology, plus the inclusion of urban farming activity into a residential enclave makes perfect sense in dealing with the problem of ageing in relation to the issue of city densification. Thus, it is a realisable solution to “real and pressing problems faced by many of the world’s growing cities”. Beyond boosting the resilience of Singapore’s food supply, it would be a platform for community education to help reduce the Lion City’s high carbon footprint by closing the gap between producers and consumers. Home Farm is the second conceptual project to emerge from Spark’s Singapore studio, following the Solar Orchid floating hawker centre conceived in the interest of “imagining untried responses to real urban problems”. The firm has synergistically achieved integrated design solutions from its offices in London, Beijing, Shanghai and Singapore to deliver projects in Asia, Europe, the Middle East, Africa, India and Australia. Among its award-winning projects are Clarke Quay in Singapore, the Shanghai International Cruise Terminal (MIPIM Asia Awards 2011, “Best mixed-use development award”) and the Raffles City projects in Ningbo and Beijing, China.

Sunday 19 April 2015

Starproperty.my

Sunday 19 April 2015