UDA Holdings Bhd (UDA) has launched its property carnival U4RIA 2015 to offer prospective buyers a wide array of property products.

The property carnival is being held simultaneously across the country by UDA subsidiaries, mainly in the Klang Valley (UDA Land Central Sdn Bhd), the northern region (UDA Land North), southern region (UDA Land South) and eastern region (UDA Land East).

Various property types are featured, including two- and three-storey link houses and semi-detached bungalows.

Buyers can, for example, look forward to the luxurious Lake Vista Residence in the Klang Valley, while the northern region will see the promotion of Scarlet Villa in Prai, Penang and K-Parc commercial project in Perlis.

Meanwhile the southern region will mark the first showcase of UDA Heights and Neuvo Centro shop offices at Bandar UDA Utama plus Trigon shop offices in Johor.

UDA Holdings Bhd (UDA) has launched its property carnival U4RIA 2015 to offer prospective buyers a wide array of property products.

The property carnival is being held simultaneously across the country by UDA subsidiaries, mainly in the Klang Valley (UDA Land Central Sdn Bhd), the northern region (UDA Land North), southern region (UDA Land South) and eastern region (UDA Land East).

Various property types are featured, including two- and three-storey link houses and semi-detached bungalows.

Buyers can, for example, look forward to the luxurious Lake Vista Residence in the Klang Valley, while the northern region will see the promotion of Scarlet Villa in Prai, Penang and K-Parc commercial project in Perlis.

Meanwhile the southern region will mark the first showcase of UDA Heights and Neuvo Centro shop offices at Bandar UDA Utama plus Trigon shop offices in Johor.

Source: TheStar.com.my

The National House Buyers Association (HBA) is glad that the research report by Khazanah Research Institute (Khazanah Research) released on Aug 24, 2015 titled “Making Housing Affordable” shows that average house prices in Malaysia are more than four times the median income, which makes such properties to be considered as “seriously unaffordable”.

HBA has been raising alarm bells for many years that prices of property in Malaysia have risen beyond the reach of the majority of the rakyat, both in the lower and middle income segments and unless serious measures are taken by the Government, an entire “Homeless Generation” comprising mainly the lower and middle income and the younger generation will not be able to afford to buy their own homes and this can bring about social problems for the country.

For too long, the Government has listened to the advice from business groups with vested interest; that there is no problem with the housing sector in Malaysia and prospective house buyers are still able to buy their dream homes. These business groups have openly touted that property prices of up to RM500,000 are deemed affordable for first-time house buyers and for house buyers who are upgrading their existing property, the price that is deemed affordable is up to RM1mil.

This report also confirms what HBA has been saying in the past that the issue of housing affordability is only a recent phenomenon as there were much less complaints about property affordability compared to say 10 years ago in 2004.

According to Khazanah Research, the Malaysian all-house price had grown at a compounded annual growth rate (CAGR) of 3.1% from 2000 until 2009. However, between 2009 and 2014, it grew at a CAGR of 10.1%, which was almost three times more than the growth from 2000 to 2009. The Government must conduct an in-depth analysis and investigation as to what caused the sudden spike in property prices during this short period.

There is a direct relationship between prices of completed properties (secondary market) and prices of new properties launched by developers. Whenever there is an increase in the secondary market, developers will launch new properties at a premium to the prices offered in the secondary market. Conversely, whenever developers launch new projects at premiums compared to the secondary market, the prices of the secondary market will be further pushed up and this creates a vicious cycle.

Price increase in one area can spill-over to the surrounding areas and cause the prices of such nearby locations to be pushed up. Thus an increase in property prices in central Kuala Lumpur can push up prices in say Cheras, which can push up prices of properties as far as Kajang and beyond. As a result of the sudden spike in property prices between 2009 and 2014, the lower and middle income groups find it very difficult to buy their own homes in many locations, not just in urban Kuala Lumpur.

The Government should also define what constitutes “affordable property” and the type of property. Affordability should be benchmarked against the annual household income of the respective buyers. The international accepted ratings of “Affordability Rating” used by various reputable bodies such as World Bank, United Nations and even Khazanah Research are as follows:

HBA recommends that “affordable property” be priced between RM150,000 and RM300,000 with minimum built-up of 800 sq ft (with two bedrooms ) to 1,000 sq ft (with three bedrooms). This is in stark contrast with what housing developers have been touting as affordable, which ranges from RM400,000 (for first-time house buyers) and up to RM1mil (for up-graders). Whilst there are new properties launched below RM500,000, most of these properties are one-room studio units with built-up of 450 sq ft to 600 sq ft and are not suitable for house buyers who wish to start a family or those with existing family.

The Household Income and Basic Amenities Survey 2014 by the Department of Statistics revealed that Median Monthly Household Income for 2014 in Kuala Lumpur and Selangor was RM7,620 and RM6,214 respectively. Annualised, this translates to RM 91,440 for Kuala Lumpur and RM74,568 for Selangor. The Affordability Rating for property priced between RM150,000 and up to RM1mil benchmarked against the said median annual household income is outlined in Chart 1.

What the developers claimed to be affordable is definitely not affordable. Even HBA’s recommendation for properties costing up to RM300,000 slipped to the category of “moderately unaffordable” to “seriously unaffordable”, albeit slightly. Hence there is a pressing need for affordable properties to be priced at between RM150,000 and RM300,000 to cater to the larger needs of the rakyat, which fall in the lower and medium income groups.

After the main reasons for properties becoming unaffordable has been identified and affordability range determined, the Government must implement concrete, holistic and sustainable measures to resolve this problem. Khazanah Research made the following preliminary recommendations to resolve this issue of property affordability:

(i) Develop measures to improve the efficacy of the construction industry’s delivery system to supply housing at affordable prices.

This involves improving the efficiency and efficacy of the property developers so that it is more cost-efficient and profitable to build affordable properties.

(ii) Developing measures to reduce pressures leading to rapid house-price escalation.

This involves imposing a moratorium period whereby house buyers cannot sell their affordable properties within the first five years of ownership.

(iii) Developing measures to plan for a steady supply of housing at affordable prices.

This is to ensure that the right numbers are built at the right places at the right time. In order to match this steady supply to demand efficiently, detailed information of demand and supply of housing locations will be required.

We understand that the “Making Housing Affordable” report represents the first of a series of reports which aims to investigate and resolve the issue of housing affordability and more recommendations will be put forth by Khazanah Research. Hence we shall refrain from commenting on the proposed measures until we see a more complete picture.

In conclusion, although this honest assessment of the current situation is a few years late, it is never too late and represents a good start. After all, it is said that the first step towards solving any problem is to firstly admit that there is a problem that needs to be fixed rather than suffer the denial syndrome. It is hoped that more recommendations will be put forth and the Government will have the will power and courage to do what it takes to tackle this problem.

Source: TheStar.com.my

A proposed commercial development by Paramount Property Sdn. Bhd. at Batu Kawan, Penang. It is part of the company’s University Metropolis development located located along Persiaran Cassia Barat 3, just a stone’s throw away from the upcoming KDU University College.

This development will consists of the following components:

PLOT 1

• 14-storey hotel (260 rooms)
• 2 blocks of 18-storey serviced apartments (720 units)
• 3-storey shop offices (300 units)

PLOT 2

• 2 blocks of 27-storey serviced apartments (520 units)

This is still pending for approval. Details to be available upon project launch.

Mah Sing Group Bhd is proposing to the Government to bring back the developer interest bearing scheme (DIBS) for first-time home buyers.

The developer is also suggesting a review of the real property gains tax (RPGT) as among several measures to boost the sector.

“The property industry has a larger multiplier effect than other industries. Hence, stimulating the industry should therefore have a larger impact on the wider economy,” group managing director Tan Sri Leong Hoy Kum (pic) said in a statement yesterday.

As part of its wishlist for the upcoming Budget 2016, Mah Sing requested that DIBS be reinstated, but only for first-time homebuyers. This, it said, will make it easier for genuine homebuyers to lock in properties at current prices.

“We laud the Government’s continuous initiatives to encourage home ownership, especially for these buyers,” he said.

The property company also suggested that the Government conduct a review of the RPGT to encourage property investments.

“We are also aware of the government’s concerns about the affordability of properties,” he added.

Leong said total property transactions in Malaysia for the first half of 2015 fell 3.5%, while the value declined 6%.

He said that there was minimal speculation in the market as the number of borrowers with three or more outstanding housing loans made up for only 3% of total borrowers with housing loans.

In Budget 2014, the Government increased the RPGT on properties sold within the first three years of purchase to 30% from 15% previously, and also abolished the DIBS as a measure to curb the speculative market.

“In 2010, the government allowed a flat rate of 5% gains tax across the board and a minimum exemption of RM10,000 gain. Many lauded this move as it has greatly encouraged property transactions,” Leong said.

Mah Sing also urged Bank Negara to relax the lending requirements for first-time homebuyers as well as second-time home buyers looking to upgrade due to bigger families. Easier access to end-financing will assist genuine property purchasers, it said.

It added that the Government should increase the housing grant for youths to compensate for the implementation of the goods and services tax and higher cost of living.

The Government introduced the Youth Housing Scheme in Budget 2015 providing assistance to first-time homebuyers, such as a RM200 monthly financial assistance, 50% stamp duty exemption on transfer documents and loan agreements as well as a 10% loan guarantee.

The company also suggested a full exemption of stamp duty for those buying their first residential property to reduce the transaction cost, compared with the current 50% exemption.

“We would also like to urge the Government to extend the exemption or lower the stamp duty rates for all property transactions,” said Leong.

Furthermore, Mah Sing hopes the Government will consider further reducing personal income tax for the middle income group, so the rakyat would have more disposable income to invest in the property market.

It also suggested changing the status of low-cost housing to affordable housing, in order to allow the lower and middle income groups access to homes with better amenities and facilities.

“Currently it is adopted in Selangor. We hope to see a nationwide initiative towards building homes that meets the rakyat’s needs,” it said.

Source: TheStar.com.my

Taman Rupawan Emas, a residential development by TAA Housing Development Sdn. Bhd. at Kepala Batas. It’s about 5 minutes drive to Sunshine Shopping Mall and the upcoming Tesco in Bertam.

This development comprises of a mix of 2-storey semi-detached bungalow houses, with indicative price starting from RM584,000 onward.

Project Name: Taman Rupawan Emas
Location : Kepala Batas
Property Type : Semi-detached and bungalow
Tenure : Freehold
Land Area: 2,244 sq.ft. onward
Built-up Size: 40 ft x 25 ft.
Total Units: 40 (semi-detached), 5 (bungalow)
Indicative Price: RM584,000 onward
Developer : TAA Housing Development Sdn. Bhd.
Developer : +6012-499 7795

Location Map:

With three major shopping malls being planned for Seberang Prai, the mainland will soon rival the island as a shopping paradise.

The three malls are The Design Village (net lettable area (NLA) 400,000 sq ft), Ikea and Ikano Power Centre, and unnamed mall project by Belleview Goup (1.5 million sq ft).

PE Land executive director Joanna Ling said in an interview that The Design Village is positioned as a premium outlet and not a conventional mall.

“This is different from conventional malls, which offer groceries and general merchandise, targeting mostly families.

“The Design Village is a premium outlet mall, offering attractive discounts for premium and luxury fashion brand names,” she said.

Ling said the retail industry was evolving rapidly in a globalized economy where consumers demand instant gratification and sophistication but at fair value.

“This has resulted in the emergence of a new trend in retail in the form of premium outlet malls selling premium and luxury branded merchandise at a discount for off-season products that remain attractive to the broad market.

“This is why we have The Design Village in Penang. The Design Village will be the only premium outlet mall in Batu Kawan as the state has granted PE Land exclusivity for this retail concept,” Ling said.

She added that the estimated local catchment comprising residents and the working population of Batu Kawan itself, was projected to be around 250,000.

“This is in addition to the 5.5 million immediate catchment of the northern region, which includes Penang island,” Ling said.

Among the notable projects that are underway include the Eco World Premium Golf Resort, Columbia Hospital, Hull University, Aspen Vision City and the SME Village.

The Penang-based Belleview Group will soon launch its biggest commercial-cum-residential project to-date.

Its managing director, Datuk Sonny Ho, said the RM2.5bil mixed development project, to be located on a 8.09ha site, included the largest shopping mall in the northern region with 1.2 million sq ft built-up area.

“The mixed-development project will also include a four-star hotel, an Olympic-size skating rink, a 20-screen cineplex, and a high-rise residential lifestyle condominium component with 978 units,” Ho added.

The Ikea and Ikano Power Centre Mall to be located in Aspen Vision City in Batu Kawan from Aspen Group is scheduled to start soon.

Aspen Group chief executive officer Datuk M. Murly said earthworks for the Ikea store and the Ikano mall had started.

“The Ikea store, the first of its kind in the northern region, will be completed in 2018.

“The Ikano mall will have the best shopping, dining, and entertainment outlets,” he said.

Is Penang heading towards a glut in retail space?

On the island, there are eight shopping malls coming up over the next five years.

They are Penang Times Square Phase 3 (net lettable area 230,000 sq ft), City Mall Bayan City (300,000 sq ft), Southbay Plaza (424,000 sq ft), Penang World City (1 million sq ft), Sunshine Tower (2 million sq ft), The Light Water-front Mall (1 million) and Mall@Southbay City (750,000).

The new projects on the island and Seberang Prai will add over 7.6 million sq ft of fresh retail space to the market, which will worsen the glut in the local retail space.

The retail space per capita in Penang is 6.11 sq ft, while on the island it is 9.58 sq ft.

“The state has a lower per capita retail space than that of Klang Valley which stands at 7.35sq ft, while Iskandar Malaysia is 6.09sq ft.

“The retail space per capita should not exceed 5sq ft.

“Our opinion is that anything above that is oversupply,” Savills Malaysia managing director Allan Soo said.

Soo said as the competition toughens, malls will certainly need to have a pull factor such as a major difference in price, quality and uniqueness of the tenants and the merchandises.

“We also expect a lower rent regime soon where the mall operator works closely with the retailer and charges rent based on the tenant’s performance.

“The incentive is then for the operator to drive traffic into the mall instead of just waiting to raise rentals at each review period.

“This will differentiate the successful malls from the poor ones.

“The long-term prospects of shopping malls in Penang is moderate on average; albeit with some exceptions.

“Although the malls attract tourists from the region, the spectre of impending oversupply will raise the barrier for new entry malls,” he said.

Current retail space is 9.076 million sq ft from 20 malls, while the impending supply from 12 projects is over 7.4 million sq ft.

Current rentals for ground floor units at premier malls on the island ranges between RM17 and RM35.12 psf.

In the suburbs, the rental is RM24.62 psf for ground floor units.

On the mainland, the rentals for strategically located units in a premier mall starts from RM12.07 psf.

Henry Butcher Retail managing director Tan Hai Hsin said similar to Klang Valley and Johor Baru, oversupply of retail space in Penang had always been the last 10 years.

Tan said that this was evident from the fact that very popular shopping centres during the 1990s had been suffering from poor occupancy rates during the last 10 years.

“Rental rates of these shopping centres have not seen significant growth due to weak shopping traffic.

“They are unable to carry out major refurbishment due to multiple ownership.

“Abandoned shopping malls built during the 1990s remain the same during the last 10 years,“ Tan said.

On rental rates, Tan said popular and well-managed shopping centres such as Gurney Plaza, Queensbay Mall and several others would continue to enjoy healthy growth rates from year to year.

“At the same time, many strata-titled shopping centres will continue to suffer in low rental rates for years to come,” Tan added.

The long-term future for shopping malls is positive because Penang is the retail hub for the northern region, Tan said.

“Penang continues to attract international tourists due to its unique product offerings, while its economy continues to show good prospect in the near future.

“The second bridge has created a new growth area in the mainland, which will boost retail development in this area,” Tan said.

Meanwhile, Penang Institute fellow and head of urban studies Stuart Macdonald said new mall operations would face challenges in maintaining a sustainable business due to a stagnant population with strained purchasing power.

According to Macdonald, the total fertility rate for Penang in 2013 was 1.5, which is below 2.1, the healthy level for women to have children to replace themselves and their partner.

The 1.5 figure is projected to decline to 1.3 by 2040.

The total fertility rate is an important factor in determining population growth.

“The migration to Penang from other states has also dropped to 12,800 in 2014 from about 14,100 in 2013, the number of people leaving Penang for other states remains unchanged at 11,500 for 2013 and 2014.

“This has resulted in a net migration of 1,300 for 2014, which means that 1,300 stayed back in Penang after taking into consideration the difference between the immigrants and emigrants, compared to the net migration in 2013 which was 2,600.

From 1992-2013, the net migration for Penang was around 9,372 per annum.

“Without a strong population growth, it would be hard to imagine how the retail business in Penang could be sustainable,” he said.

Source: StarProperty.my

In an effort to improve the accessibility while stimulating the affordable housing development in Penang, the state government has introduced several new measures to ease the current market situation.

Increase in household income ceiling

With the hope that more applicants will be able to obtain bank loans, the household income ceiling for the application of affordable housing has been revised as below:

New category of affordable housing

Taking into consideration those who earned RM6,000.00, the state government has also introduced a new category of affordable housing, namely units priced at RM150,000.00. These units are also sized at a minimum of 750 sq.ft., but without finishing (unlike the RM200,000.00 units).

Widen the pool of eligible buyers

In order to stimulate the sale of affordable housing units so that it is viable to be executed with at least 60% take up rate, it has been decided to enlarge the pool of eligible buyers to include those who already own a property. But the applicants must met the following criteria:

• The property that he/she currently owned must not exceed the price of the affordable housing unit intended to be purchased.
• The property currently owned has to be purchased after 2008.

30% of the affordable housing may be sold to the open market

In order to stimulate the development of affordable housing, it has also been decided that 30% of the units in any particular 100% affordable housing project may be sold to the open market, with the following condition:

• The units are to be sold at 10% above the controlled price in South West, SPU, SPT and SPS districts.
• The units are to be sold at 20% above the controlled price in North East district.
• The purchaser has to be a registered voter in Penang
• The purchaser can only purchase one such affordable housing unit
• The said unit cannot be sold within 5 years from the date of vacant possession.

The developers for this new open market category will have to contribute to the Penang State Government the top up in price, not in cash but in kind, namely in actual affordable housing units in the said particular project, which will enable the State government to have its own affordable housing stock, which can be allocated to those who are on their list.

* Click here for a complete list of affordable housing in Penang *

From its beginnings in plywood production and manufacturing, Penang developer Asia Green Group has become a diversified business entity with a fast-growing property development business.

The group will launch its upcoming QuayWest Residence, a mixed-use development project with a gross development value of RM600 million, early next year.

Located just five minutes from Queensbay Mall at Persiaran Bayan Indah, QuayWest Residence will sit on 7.4 acres of commercial land with a sea frontage and a view of the 362ha Pulau Jerejak.

The development will have 1,235 freehold condominiums in two 24-storey towers, offering various unit types ranging from typical units and SoHos to duplexes and dual key units. There will also be some 253 affordable SoHo units available for first-time homebuyers.

Creative director Tan Li Mei, who is one of group managing director Tan Boon Huat’s daughters, talks to City & Country about the upcoming development and shares her ambitions for Asia Green.

“I am trying my best to bring out Asia Green Group in Penang, or at least rebrand ourselves and slowly venture beyond Penang,” she says.

From mostly boutique developments, she says the company is now ready to bring bigger developments to Penang with several projects in planning stages.

Source: TheEdgeProperty.com (Read more)

The Retreat & The Reserve, a strata development scheme by Techware Enterprise Sdn. Bhd. at Bukit Tengah. It is strategically located along Jalan Indah, just a mere minutes drive away from Maju Jaya Business Center.

This development comprises a mix of 27-storey condominium and 10 units 3-storey terrace houses. Indicative price starts from RM478,000 onward.

More details to be available upon project launch.

Property Project : The Retreat & The Reserve (to be confirmed)
Location : Bukit Mertajam
Property Type : Landed and condominium
Tenure : Freehold
Indicative Price: RM478,000 (condo), RM918,000 (terrace) onward
Total Units : 110 (condo), 10 (terrace)
Developer : Techware Enterprise Sdn. Bhd.

The RM350mil Subterranean Penang International Convention and Exhibition Centre (SPICE) project in Bayan Baru is 80% done and should be completed by the end of next year.

Among the components already up are the SPICE Aquatic Club (RM16mil), SPICE Canopy comprising F&B retail outlets (RM28mil) and the upgrading of the SPICE Arena formerly known as Penang International Sports Arena (RM22mil).

Still under construction are a 2.8ha public park on the rooftop, a convention hall, function rooms and exhibition areas totalling RM284mil.

So far, the basement and lower ground structural works have been completed. On-going works include the building of a multi-storey car park and the installation of steel trusses for the green roof.

SP Setia general manager (north) Ng Han Seong said an iconic structure would be erected at the entrance to welcome the guests.

“We will have a world-class convention centre, hotel, aquatic centre and retail outlets.

“It will be a place for family outing, be it recreational or sporting activities.

“They can also visit our retail outlets,” he said during a site visit and dialogue session with representatives of Penang Island City Council yesterday.

Ng said there would be a hotel to complement the MICE (meetings, incentives, conventions and exhibitions.

SP Setia, through its subsidiary Eco Meridian Sdn Bhd, was given a 30-year concession by the council to run and develop the place.

Earlier, SP Setia technical senior manager Tang Song Teik, in his briefing, said the SPICE Canopy, with 98,000 sq ft of rentable space for retail outlets, was completed in September and targeted to open for business in December.

He said among the tenants were Everyday Supreme Chinese restaurant and Coffee Smith cafe.

He added that SPICE Aquatic Club, with facilities such as badminton courts, squash courts, kids water theme park with party corner and an Olympic-size swimming pool, was completed this month.

“It is expected to be open in December. We are investing RM4mil on a solar PV system on the roof, which can generate 984 MWh yearly,” he said.

State Local Government Committee chairman Chow Kon Yeow said he was happy to witness the progress of the project which began in 2012.

“Our team of consultants will continue to assist the developer to complete the project as scheduled.

“It will promote Penang as a MICE centre once everything is ready. We are also curious to know how the rooftop park will look like,” he said.

Ng said a final component of the project — a RM300mil SPICE hotel consisting of 25 storeys with 453 business class rooms — will be built in the first quarter of next year.

It is scheduled for completion in 2018.

Source: TheStar.com.my

Upcoming 43-acre mixed development by Hunza Properties Bhd., with an estimated gross development value of RM6bil.

Hunza Properties Bhd is buying 9.7 acres of freehold land in Penang for RM57.02mil to develop affordable houses for qualified buyers.

In a filing with the local stock exchange yesterday, Hunza said its wholly-owned unit, Diamaward (M) Sdn Bhd, had signed a sale and purchase deal with property developer WLB Properties Sdn Bhd to buy the land, located next to Hunza’s 43 acres in Bayan Baru.

Diamaward is also primarily involved in property development.

The group said the rationale for the deal was to build and develop affordable homes, in line with the Government’s call for more of such housing.

Under the proposed terms, Hunza is required to build and sell the affordable homes in the area to qualified buyers.

However, the number of such homes to be built has yet to be finalised.

“The proposed acquisition is not expected to have any material effect on the group’s earnings for financial year 2016.

“The total development cost and expected profits can only be determined once the development plan is finalised,” said the group, adding that details on funding the acquisition would also be finalised at a later date. The total consideration of RM57.02mil was arrived at on a willing buyer-willing seller basis, after considering the land’s market value, it said.

Source: TheStar.com.my

The federal government’s 1Malaysia People’s Housing Scheme (PR1MA) in Penang may see projects by other developers being taken over, Penang Federal Action Council chairman Datuk Seri Zainal Abidin Osman said yesterday.

He said PR1MA was looking at projects that had run out of funds, and even completed projects, so as to provide affordable housing to buyers in the state. “Now, maybe there is a developer [unrelated to PR1MA] that has an approved plan, and has completed its project or is having trouble getting loans or funds to implement the project.

“We can negotiate with the developer to [let PR1MA] take over and finish the project,” Zainal told a press conference at the KTM (Keretapi Tanah Melayu) station in Bukit Mertajam yesterday. Zainal said he could not go into specifics yet, but announcements would be made “when such a project is finished and the keys are ready to be handed over”.

“What is for sure, is that, as far as PR1MA in Penang is concerned, the government-linked corporation is not sleeping. There are PR1MA staff going around doing studies and site visits every day … it is all ongoing.”

Zainal was also asked what he thought about the Penang government’s move to “stimulate accessibility” by raising the net household monthly income ceiling for eligible house buyers. This means, for example, that a household with a net monthly income of RM8,000, instead of RM6,000 previously, can now be eligible to buy a unit priced at RM200,000.

“I welcome the move because it will open up the units to a larger market. There are many affordable units in the market now, including those by private developers.

“If you set the limit too low, your pool of buyers will be small. It won’t make the units inaccessible to those with lower income because there will still be enough units to go around … such a move is good for buyers and developers,” he said.

Source: TheMalaysianInsider.com

The median home value in Malaysia has hit the RM300,000 mark in the first half of 2015 (1H15), with Selangor, Penang, Sabah and Sarawak continuing to exceed the average price since 2004.

Preliminary data for the second quarter of 2015 showed the Malaysian Housing Price Index registering 220.2 points, which indicates that the country’s home values have more than doubled since 2000, according to the Economic Report 2015/16 released today.

Median house prices of RM242,000 in 2014 exceeded the median annual household income of RM55,020 by 4.4 times, vis-à-vis the global norm for housing affordability at three times.

Meanwhile, residential property transactions in the country declined in first half of 2015 (1H15) by 2.6% to 119,604 units, while the value of transactions fell by 9.7% to RM36.4 billion.

In comparison, 1H14 recorded a 2.3% increase to 122,830 transactions, with a value growth of 19.4% to RM40.3 billion, according to the report.

“Residential property transaction accounts for 64% of total property transactions,” it added.

For 1H15, residential transactions declined in four major urban areas, namely Kuala Lumpur (-6.4%), Selangor (-1.8%), Johor (-17.9%) and Penang (-14.2%).

New launches were down by 44.1% year-on-year to 27,231 units in 1H15, compared with a 56.3% year-on-year growth of 31,155 units in 1H14, amid cautious sentiment among property developers.

New housing approvals for 1HFY15 also saw a 32.9% decline to 66,770 units compared with a 37.3% growth of 99,461 units in 1H14.

On the supply side, the incoming supply of properties continued to grow at 13.8% in 1H15, up from a 10.3% year-on-year increase in 1H14. The Klang Valley continued to dominate the incoming supply, accounting for 29% of the total supply.

Housing supply starts rebounding by 38% to 100,712 units, compared with a 1.8% decline to 72,935 units in 1H14, supported by service apartments and condominiums/apartments, which accounted for 28.3% (28,541 units) and 22.5% (22,673 units) respectively, of the total starts.

Take-up rate for residential units increased 31.4% to 8,542 units in 1H15, compared with a 23.8% increase of 11,588 units in 1H14.

Source: TheEdgeMarkets.com

By National House Buyers Association

In our article last month, we highlighted the report by Khazanah Research Institute on ‘Making Housing Affordable’, which showed that the Malaysian all-house price index grew steadily at a compounded annual growth rate (CAGR) of 3.1% from 2000 to 2009, and suddenly accelerated at a CAGR of 10.1% between 2009 and 2014.

Many existing property owners are overjoyed to see steep price increase in their properties compared to the cost of acquisition. These gains are referred to as ‘paper gains’ as the gains have yet to be realised and only exist on paper. However, we at the National House Buyers Association (HBA) are of the opinion that steep price escalations especially within a relative short span of time are not necessarily a good thing. For purpose of case study, we use the real life stories of some of our volunteers who were willing to share some data of their property purchase.

An overview of the type of properties bought by our volunteers together with their income levels and current property values are outlined in Table 1.

Based on Table 1, it would be reasonable to assume that Deepak, Ismail and Rachel should be happy with their ‘paper gains’, but looking at it deeper will reveal a very different situation.

Shrinking target market

In 2004, Deepak, Ismail and Rachel managed to buy their first home based solely on their salaries and the price was within the three-times annual income, which was considered as ‘affordable’.

However, just 10 years later and despite climbing up the corporate ladder, all three of them would find it ‘seriously unaffordable’ to ‘severely unaffordable’ to buy the same property based on their current salaries. This would also mean that other executive level wage earners to the senior management wage earners will also find it ‘unaffordable’ to buy the same property.

This will effectively mean that the target market for Deepak, Ismail and Rachel should they want to sell their current house has shrunk significantly. With a median annual household income of RM91,4402 in Kuala Lumpur for 2014, Rachel will discover that half of the population in Kuala Lumpur cannot afford to buy her modest apartment. Rachel can only hope to find joint-buyers in the middle management position with annual household income of at least RM166,667 to buy her apartment to be deemed as ‘affordable’.

The situation is equally bleak for Deepak and Ismail who could afford to buy their landed property just a decade ago whilst only in middle management position. Deepak and Ismail must also hope to find joint-buyers in senior management position with combined household income of at least RM183,333 and RM266,666, respectively, to buy their intermediate link house.

New purchase is also out of reach

We have ascertained that based on their current salaries, Deepak, Ismail and Rachel will find it ‘unaffordable’ to buy their current properties. This would mean if they want to acquire another property, they would have to dispose of their current property and hopefully, with the gains and cash from selling their current house, be able to afford something bigger and better.

The Household Income and Basic Amenities Survey 2014 by the Department of Statistics revealed that the Median Monthly Household Income for 2014 in Kuala Lumpur was RM7,620 or RM91,440 per annum.

However, based on our calculations in Table 2, even after disposing of their current properties, Deepak, Ismail and Rachel still cannot afford the ‘upgraded property’ that they desire.

From Table 2, we can see that back in 2004, the loan instalment was about 16% of their respective salaries. This is well within the range that Bank Negara’s ‘rule of thumb’ that the maximum single loan instalment is a third of the borrowers’ income and maximum combined loan instalment is half of the borrowers’ income.

From the above table, we find that despite disposing of their current property which has enjoyed steep gains, the new loan instalment as a percentage of their respective incomes is much higher than before, ranging from 43.47% to 55.07%. This would imply that to buy their upgraded property, buyers like Deepak, Ismail and Rachel will have to spend a larger chunk of their income and reduce on other spendings and possibly have no spare cash or savings to weather any sudden emergencies.

Increase in market value does not equate to increase in built quality or living quality

Without insulting any house buyer, a property that cost RM140,000 to buy from a developer will always be a “RM140,000 property”. Just because the market price has increased to RM500,000, it does not mean that the quality has suddenly improved, giving the new buyer a RM500,000 ‘built quality property’. This is the situation faced by many prospective house buyers; that the prevailing prices of properties, both existing and new properties offered by developers, do not reflect their built quality and living environment. Basic ‘bread and butter’ properties that were affordable for the lower- and medium-income earners just 10 years ago are now even unaffordable for the high-income earners.

As a result, many younger house buyers are willing to settle for smaller but cheaper units. Capitalising on this new trend, developers are building more smaller units that are actually studio-styled shoe-boxes with one or two bedrooms of no bigger than 650 sq ft, and priced them at around RM500,000 so that joint middle-income earners can afford it. But is it really worth paying so much for something so small? In the long run are such small units conducive for family living?

Is there a magic number?

Conventional wisdom has taught us that investing in properties is the best hedge against inflation in the long run. Many prospective house buyers want to invest in properties as a retirement fund or to fund their children’s education and hope that the returns from investing in properties are higher than merely keeping their money in the bank. Hence, every house buyer wants to see healthy appreciation in the value of their property.

However, when property prices escalate too fast within a short span of time, it can be harmful even to current owners, as shown above, when it is difficult for owners to sell their current property or upgrade to a larger property. Paper gains are only paper gains until the property is sold, but when your ‘bread and butter property’ is no longer affordable to half of the population, something has gone terribly wrong somewhere. Existing property owners cannot afford to upgrade their current properties and buy something ‘bigger and better’ and are stuck with their current homes. Clearly, such a situation does not benefit even existing property owners.

There is no real magic number per se on what is the acceptable or maximum annual increase in property prices. So long as the annual property increase is higher than the inflation rate and the rate of fixed deposits offered by banks, and still affordable to its intended target market, house buyers who buy for their own stay and for long term investment should be contented.

Source: StarProperty.my

First-time buyers of affordable houses not left out too

Various house ownership programmes for all levels of income have been allocated for in Budget 2016.

Prime Minister Datuk Seri Najib Tun Razak said PR1MA would build 175,000 houses, which will be sold at 20% be­low market prices, with an allocation of RM1.6bil.

He said Syarikat Peru­­­mahan Negara Berhad would build 10,000 units of Rumah Mesra Rakyat with a subsidy of RM20,000 for each house through an allocation of RM200mil.

First-time house buyers of affordable houses were also not left out with the establishment of a First House Deposit Financing Scheme under KPKT to pay the deposit.

“For this, RM200mil is alloca­ted,” he said.

Najib also announced that hou­ses for the second generation of settlers comprising 20,000 units would be built by Felda, 2,000 units by Felcra and 2,000 units by Risda.

“For houses built by Felda, the maximum price is reduced to RM70,000 from RM90,000 pre­viously,” he said.

He also said GLCs would build affordable houses in the vicinity of the MRT station in Ban­dar Kwasa Da­­man­sara in Sungai Buloh.

Master Builders Association of Malay­sia president Mat­thew Tee said the construction sector was expected to be the recipient of the highest growth of about 8% next year among other sectors like manufacturing and services.

“A lot of upcoming projects such as houses, schools, clinics and public transportation are included in the Budget,” he said.

Real Estate and Housing Developers’ Association Malaysia president (Rehda) Datuk Seri F. D. Iskandar saw Budget 2016 as positive and helpful for homeownership, especially for the middle income earners.

He said the allocation of RM200mil as deposit for first-time house buyers was good news for the industry especially in this current challenging times.

“Payment for deposit has always been the biggest barrier to house entries and we fervently hope that the deposit will help spur homeownership among the rakyat,” he said.

He said Rehda lauded the Government’s move to provide a special fund to encourage the adoption of the Industrialised Building System (IBS) in Malaysia.

“The RM500mil promotion fund for developers and contractors will not only help to accelerate project delivery but also reduce development cost as well as depen­dency on foreign workers.

“We hope such an incentive will encourage more developers and contractors to adopt IBS in their projects,” he said.

Orando Holdings Sdn Bhd mana­ging director Datuk Dr Eng Wei Chun (pic) said the 20% reduction in stamp duty for Syariah-compliant housing loans would be good for the property sector.

Eng, who has been in the property industry for 20 years, said the RM50mil loan for SMEs could also revive the country’s economy.

“By spending the funds in the market, it will help to stimulate business and our economy to revive,” he added.

Civil servant Izzul Fikry, 45, hopes quality will not be compromised in the houses built under the Perumahan Penjawat Awam 1 Malaysia (PPA1M) projects expected to be completed by 2018.

“It is true that you cannot get houses ranging from RM90,000 to RM300,000 easily but I hope the Government will look into the space and quality of the houses,” he said.

The father of four said they did not want to end up with homes that needed constant maintenance, adding that there should be at least three rooms per unit for growing families.

Another civil servant, Kasmadi Jumaat, 33, was happy with the offer of affordable homes for civil servants.

“I will go for it, even if it’s far from Kuala Lumpur; at least I will have a roof over my head once I retire,” he said.

Engineer Janice Lee, 28, said with the high cost of living, a three-bedroom apartment of RM550,000 would be fine if both husband and wife were working with a household income of RM12,000 and two children.

“We must be close to the Kuala Lumpur city centre and a walking distance from urban conveniences, shopping malls and restaurants.”

Source: TheStar.com.my

Several of the squatters visiting the Bayu Nyaman low-cost project in Bayan Lepas.

A developer has offered four compensation options to residents of 823 squatter units in Sungai Nibong Kecil and Sungai Nibong Tengah, Penang, who have to make way for a mixed development project.

The options given by Hunza Properties Berhad are cash, cluster houses in Bertam and low-cost flats in Bertam and Bayan Lepas.

Hunza Realty Sdn Bhd director Gee Su Lyn said they bought the site concerned, a 73.4ha plot in Bayan Baru, six years ago, adding that owners of 750 squatter units on the land had agreed to one of the four options.

She said 31 squatters were still undecided while 30 squatters were issued with notices for failing to respond. The remaining 12 have been served with court summonses.

Gee said it took the company six months to come up with a sound compensation formula.

“A six-month survey was carried out at the site as we needed detailed information before coming up with a good compensation formula.

“Some of the squatter units were already empty and dilapidated. There were also units rented out to foreigners.

“Our main objective is to provide shelter for those in need,” she said in her speech during a topping-out ceremony at the Bayu Nyaman low-cost flat project in Bayan Lepas yesterday.

The 28-storey project is one of the four compensation packages offered.

It has 690 units measuring about 680sq ft each. The project is scheduled for occupation in February next year.

Gee said those who occupied a squatter unit measuring more than 800sq ft were entitled to a free low-cost flat either in Bertam or Bayan Lepas.

“If the owner prefers to own a landed unit, he or she may opt for a low medium-cost cluster house in Bertam.

“Those who lived in squatter units between 400sq ft and 800sq ft can opt for a low-cost flat either in Bertam or Bayan Lepas.

“This group can also choose a low medium-cost cluster house in Bertam but a small amount of top-up is required,” she said.

Gee said owners of empty squatter units and those who rented out their units would be given cash compensation only.

“We also give out cash compensation to owners of units smaller than 400sq ft.

“However, we will give out a free low-cost unit in Bertam to those who are really hardcore poor,” she said.

At the same ceremony, Hunza Properties Berhad group managing director Khor Siang Gin said the cost of building each low-cost unit in Bayu Nyaman was around RM100,000.

He said the cap price of a low-cost house set by the state government was only RM42,000 per unit.

“To date, we have spent about RM100mil in compensation over the resettlement of these squatters,” he said.

Also present at the topping-out ceremony were Penang Deputy Chief Minister I Datuk Mohd Rashid Hasnon and Hunza Properties Berhad founder Datuk Seri Khor Teng Tong.

Source: TheStar.com.my

A proposed high-rise commercial development by Paricon Corporation Sdn. Bhd. in Butterworth, Penang. Strategically located along Jalan Chain Ferry, walking distance to Econsave Hypermarket, just a short drive to Harbour Place integrated development by PJD Group.

This development will consist of a 27-storey commercial building with 154 units of service suites.

This is still pending for approval. Details to be available upon project launch.

(From right) Jagdeep Singh and Ong going through the details of the Penang Property Summit 2016 to be held from Jan 8 to Jan 10.

A string of innovative housing packages to counter the high rate of bank loan rejections will be introduced in Penang soon.

State Housing, Town and Country Planning Committee chairman Jagdeep Singh said details of the packages, which would be introduced in stages, would help to cushion the loan rejections of most housebuyers.

He, however, declined to reveal the package details during a press conference on the upcoming Penang Property Summit 2016 at Jen Hotel in Penang on Monday.

“This is part of the state government’s initiative to help housebuyers acquire property under the affordable housing scheme.

“The recently introduced RM150,000 affordable housing scheme to allow housebuyers to secure bank loans by purchasing property of lower value is part of the package.

“We introduced this scheme as we found that loan rejection for these categories was much lower compared to the RM300,000 or RM400,000 affordable housing,” he added.

Jagdeep said he would be meeting with Bank Negara officials next week to discuss the high rejection rate issue.

Earlier, Penang Property Summit 2016 event director Ong Ban Seang said the three-day summit from Jan 8, to be held at the SPICE Arena in Relau, would feature some 200 participants.

The Penang International Property Expo (PIP) will also be held during the summit with 30 exhibitors promoting their projects.

He said the event, which is into its second year, would feature a ‘premier lecture series’ by state executive councillor Chow Kon Yeow, Penang Island City Council mayor Datuk Patahiyah Ismail and Seberang Prai Municipal Council president Datuk Maimunah Mohd Sharif.

“The lecture series will also have Penang Institute chief executive Dr Lim Kim Hwa and Penang Invest director Datuk Lee Kah Choon providing insights into Penang’s strategic plan to be a ‘high income’ state.

“The lectures will be attended by 100 guests comprising corporate leaders, senior government officials and trade associations’ executive committee members,” he said.

The property summit is organised by International Real Estate Federation (Fiabci) Penang Chapter in collaboration with the state housing committee and PenEvents.

Source: TheStar.com.my

Eastern & Oriental Bhd (E&O) has awarded a contract to China Communications Construction Co Ltd (CCCC) to undertake land reclamation works for Seri Tanjung Pinang Phase 2 (STP2) in Penang.

In a filing with Bursa Malaysia, E&O said its subsidiary Tanjung Pinang Development Sdn Bhd had issued a letter of award (LoA) to CCCC (M), a wholly owned Malaysian subsidiary of CCCC, to undertake the land reclamation works.

E&O group managing director Datuk Seri Terry Tham Ka Hon said the group had gone through an extremely rigorous tender process that included the pre-qualification of potential contractors prior to the tender submission.

“We believe that in terms of technical competency, track record, local project experience as well as contract competitiveness, the shortlist of reputable international firms has led us to finalise the award to CCCC (M),” Tham said in the statement.

He added that efforts to secure the financiers for the project were being pursued concurrently and would be finalised soon.

“With the reclamation contractor identified and financing arrangements soon-to-be firmed up, we look forward towards operationalising STP2 and bringing the project to fruition with mobilisation and commencement of works targeted by year-end,” Tham said.

He added that all relevant requirements and authorities’ approvals were already in hand, including the approval of the project’s Detailed environmental impact assessment study by the Federal Department of Environment, the endorsement of the STP2 masterplan and granting of the planning permission for STP2 reclamation works by the Penang state authorities.

CCCC is listed on the Shanghai Stock Exchange and the main board of the Hong Kong Stock Exchange. The group is the largest infrastructure construction and dredging company in China and the world’s largest dredging company in terms of both total capacity of trailing suction hopper dredgers and total cutter section dredgers, the key machinery in the reclamation dredging process.

The LoA comprises two parts. The first part involves the acceptance of the tender to reclaim Phase 2A of STP2 (Package 1) for a contract price of approximately RM1.035bil. Phase 2A of STP2 measures 384 acres comprising 253 acres to be reclaimed off Penang’s north-east coast and 131 acres on the Gurney Drive foreshore.

The second part of the LoA covers the conditional award for the proposed reclamation works for Phase 2B and Phase 2C of STP2 (Package 2) to CCCC(M) for a contract sum of RM1.285bil, subject to adjustments for exchange rate and fuel price fluctuations, and changes in cost if applicable.

Phases 2B and 2C measure 507 acres in total.

Source: TheStar.com.my

A newly proposed affordable housing project by Villa Acres Development Sdn. Bhd. at Bukit Mertajam, Penang. If approved, this will be one of the very strategic affordable housing location in the mainland that I have known so far. It is strategically located along Jalan Betek, easily accessible via the ever bustling Jalan Song Ban Kheng. Amenities such as schools, market, banks, shopping malls and eateries are only a few minutes drive away.

This development comprises a 19-storey highrise building with 281 affordable units. Being an affordable housing project in the mainland, it is expected to be priced below RM250,000.

This is still pending for approval. Details to be available upon project launch.

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