property hunter magazine

Car Park Investment: A New Frontier for Sabah

• Bina Puri launches 8 Avenue Commercial Mall & SOVO in KK• Iskandar Waterfront Holdings Plans Sales Offices in Sabah & Sarawak • Chew Sang Hai : A Success Story Built On Traditional Values• Overnight Policy Rate Increased by 25 bps • Penang: From Malaysian Silicon Valley To Strategically Sustainable Property Market

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AUG2014 ISSUE 57RM8.90

Northern Corridor of Kota Kinabalu/// HOT TOPIC

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Green Is In At City Point Complex

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| Cover Story06 07/// Contents www.PropertyHunter.com.my

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CORPORATEWriter (Sabah)Pamela Fletcher

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Marketing & BranchingVictor Yong

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Contributing WritersAhyat IshakChris TanDr. Daniele GamberoEnoch KhooIshmael HoMichael YeohRichard Oon

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20 28Iskandar Waterfront Holdings Plans Sales Offices in Sabah & SarawakIskandar Waterfront Holdings (IWH) Sdn Bhd, Tebrau Teguh Berhad and Ekovest Berhad will jointly tread the shores of Sabah and Sarawak with the hope of wooing locals to become potential investors in two of its latest luxury lifestyle developments in Iskandar Malaysia in Johor. ...

Car Park Investment: A New Frontier for SabahYou have driven around the block for the third time and you still can’t find a vacant parking space. It’s been ten minutes now and you are probably already late for your appointment but you doggedly try for the fourth time to find that perfect spot that is only steps away from your intended destination. ...

Green Is In At City Point ComplexA new development taking shape in Kota Kinabalu is going green to be friendlier to nature while offering all the necessary luxuries of a high-end hotel and retail property.

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Hot TopicInvesting in prime developments may be more worthwhile Prime developments has shown a high degree of resilience by riding out financial crisis and bouncing back to restore investor confidence. What factors contribute to this resilience? And is prime property the investment for you?

Special Feature Sabah Housing and Real Estate Development Association (SHAREDA) is one of the most recognized and respected associations in the property development industry in Sabah. It continues to strengthen its commitment to the industry with its consistent representation, support and accountability to its members and the public. We look at what SHAREDA has accomplished so far and the untiring efforts of the people behind their successes.

Feature InterviewDato’ Abdul Rahman Dahlan, Minister of Urban Wellbeing, Housing and Local GovernmentWhat is in store for the housing and property industry in Sabah in 2015?

Sneak Peek of September Issue

Does Sabah have what it takes to attract overseas investors?There has seen a dynamic push in the property development industry in Sabah to attract overseas investors for its luxurious residential and mixed-development projects. But do sales figures stand up to all the hype about these properties? Are we doing enough to lure more foreign investment?

Cover StoryGreen Is In At City Point Complex

Featured Property EventBina Puri launches 8 Avenue Commercial Mall & SOVO in KK

Feature Property EventIskandar Waterfront Holdings Plans Sales Offices in Sabah & Sarawak

Hot TopicNorthern Corridor of Kota Kinabalu

Exclusive InterviewChew Sang Hai :A Success Story Built On Traditional Values

Hot TopicCar Park Investment: A New Frontier for Sabah

Contributor: Chris TanTrending Up Legally in view of the Property Boom in Malaysia (Part 4)

Contributor: Michael YeohOvernight Policy Rate Increased by 25 bps

Contributor: Dr Daniele GamberoPenang: From Malaysian Silicon Valley To Strategically Sustainable Property Market Location

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/// COVER STORY

Green Is In At City Point Complex

/// Cover Story

A new development taking shape in Kota Kinabalu is going green to be friendlier to nature while

offering all the necessary luxuries of a high-end hotel and retail property.

City Point Complex is a 16-storey development spread over 2.7 acres of land in Karamunsing with a Gross Development Value (GDV) of RM300 million. The project will consist of 318 units of 5-star hotel rooms, four levels of branded retail outlets, a banquet

hall that can accommodate up to 200 tables, a 5-storey carpark with 1,000 parking spaces and offices for the Sabah United Chamber of Commerce (SUCCC) and United Sabah Chinese Communities Association (USCCA).

The project was announced following the official agreement of the joint venture between land owners, the SUCCC and USCCA, and Arah Permai Sdn Bhd, the developer engaged to complete the project. Construction

is expected to start in September 2014 and to be completed within 42 months.

Arah Permai Sdn Bhd itself is a joint venture between Sabah-based Kinsabina Group and Sarawak-based Hock Lee Holdings Sdn Bhd whose impressive credentials and perceptive approach to the project earned them the award to develop City Point Complex and Hotel Suites.

City Point Hotel Lobby Artist’s Impression


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Kinsabina CEO and present President of SHAREDA, Francis Goh is a reputable developer in Sabah with multiple residential, commercial, industrial and integrated development projects under his belt. Francis has been a steadfast proponent of the housing and property development industry in Sabah through his leadership in SHAREDA and this is one of the most meaningful projects he has undertaken as it will benefit the local community through the two associations.

Hock Lee Group of Companies managing director Yek Siew Liong has enormous experience in constructing retail malls and hotels with his most recent completed project being the Plaza Merdeka in Kuching. He has three listed companies on the KLSE and continues to manage the 360 Urban Resort in Hock Lee Center which is adjacent to a retail mall.

Keeping with the green theme, City Point Complex is an impressive demonstration of efficient technology use ranging from its unique contemporary architecture with sun shading capabilities to minimise sunlight penetration to using energy-saving LED lighting for

most of its interior and exterior space. A ‘smart control’ system will be installed at low traffic areas such as walkways and bathrooms where energy is conserved by only the powering of lights for the duration the person is on the premises. Adding to this are high-efficiency glass used to reduce the absorbency of heat to minimise use of air-conditioning thus lowering electricity consumption.

A rainwater harvesting system to collect and recycle rainwater and heat recovery system from air-conditioning compressors to heat up water are some of the other green methods to keep hotel maintenance sustainable with emphasis on improved energy efficiency.

An important element of the City Point Complex construction is its contribution towards community development and welfare. As part of the City Point Complex joint venture agreement, SUCCC and USCCA will have a combined 40 per cent profit sharing from the revenue obtained from the parking lots to generate a sustainable income for both organisations. Revenue

City Point Hotel Grand Ballroom (Multi Purpose Function Hall) Artist’s Impression

City Point Complex Branded Outlets Artist’s Impression

City Point Hotel Grand Ballroom (Multi Purpose Function Hall) Floor Plan

from the carpark rental is estimated at RM500,000 per month which gives the association an expected monthly income of RM200,000.

Another source of revenue for the associations to run their social, welfare and educational programmes would come from rental of the Grand Ballroom. This will guarantee that the associations continue to get returns from its land ownership which is valued at RM40 million.

The HotelCity Point Complex and Hotel Suites will play a pivotal role in addressing the lack of rooms especially in the 5-star category to cater to tourist arrivals in the state which has already surpassed the 3 million mark in 2013. There are two hotel blocks from the 9th to 16th floor consisting of 318 units of superior suites. Each block will have its own full-serviced kitchen and fine-dining restaurant at the open sky roof terrace offering magnificent sea and city views.

A well-known hotel operator will be engaged to manage the 5-star hotel to provide first-class amenities and service to the tourism industry. The air-conditioned and alfresco restaurants at the sky roof will be managed by the hotel and will have the distinction of being the highest sky terrace in the city.

The MallThe 4-storey retail mall from the basement to second floor will have lots for sale with a total of 55 per cent reserved for developer ownership. There will be 130 retail lots of various specifications with a major anchor tenant to be sited in each block. Price of the lots range from RM1,800 to RM2,800 per sq ft.

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City Point Hotel Superior Suite Artist’s Impression

The retail outlets will offer shoppers a selection of high-end products for an exclusive shopping experience. Shoppers can also enjoy a variety of food specialities at the second floor food court or fit in a bit of exercise and pampering at the gym and spa which is open to public.

The Grand BallroomA prime feature of the property will be its multi-purpose ballroom. Once completed, the 3270 sq m Grand Ballroom at City Point Complex will be the biggest in Kota Kinabalu with the capacity to accommodate up to 200 tables.

It will be fitted with quality and elegant fittings, furnishings and equipment to cater to a wide range of functions from weddings to MICE events. The double volume Grand Ballroom will be rented out to the hotel for their use whereas the associations will have free access to the venue for their annual general meetings, seminars, convention and assemblies.

A huge pre-function hall will greet guests at the entrance of the ballroom and provide them with the comfort of space as they socialise and enjoy the evening.

Adjacent to the ballroom will be 10 offices which will be used by the associations as their management office.

The construction and interior design cost of RM56 million for this magnificent ballroom is offset against the original land cost of RM40 million. Ownership of the Grand Ballroom will remain with the SUCCC and USCCA who will obtain revenue from its lease back to the hotel operator for 30 years.

/// East Malaysia Property News

EAST MALAYSIA PROPERTY NEWSKeep track of the latest property and real estate news plus reviews in the property market in Sabah and Sarawak

“Sarawak may not be the most obvious property investment hotspot but it is certainly developing into one.”

This was the key message by Chris Tan, Enoch Khoo and Ho Chin Soon, Malaysia’s renowned property investment experts.

Regularly invited to deliver papers on real estate issues locally and internationally, they will be delivering investment seminars on June 8 at Naim Sales Gallery, Rock Commercial Centre, Kuching starting with Ho at 12 noon (‘Understand Sarawak’s

Real Estate Dynamics’), followed by Tan at 12.30pm (‘Sarawak – The Last Investment Hotspot’) and Khoo at 12.50pm (‘Right Sizing to Condominium’).

Tan, the winner of the Prestige ‘Top 40 under 40’ Top Outstanding Young Malaysian Award (below 40 years of age) and an Ambassador of Iskandar Malaysia, wears many hats, from a lawyer by profession to an author, just to name a few.

He was also part of the Technical Committee under the National Economic Action Council of the Prime Minister’s Department to devise strategies to stimulate Malaysia’s property sector.

‘”A hidden hotspot is always better than popular hotspots where there may be ‘over-heating’,” said Tan.

Enoch Khoo, adjudged one of Malaysia’s top 20 property negotiators for 2013, the founder and managing director of ENK Ventures specialising in Project Marketing with more than 100

negotiators under his wing, shares the same sentiment.

“Sarawak’s property market growth is sustainable, as it is not artificially inflated by speculators as compared to other hotspots within the country.

As a property investor, you just need to know where and what to invest,” Khoo said.

Meanwhile, Ho Chin Soon, a renowned speaker, author of the book entitled ‘Getting Started in the Real Estate Industry’ and property investment expert said that Sarawak’s economic indicators demonstrate the resilience of the State’s economy.

“On the property front, we see the steady increase in property and land prices over the years, with greater quantum of increase over the last few years. This is a good sign as we see a continuous upward trend in this market,” said Ho.

Tan sees property investment as an attractive means for wealth generation.

“If you are familiar with the know-hows of property investment, you will find that it’s a good way to hedge and grow your money. Many have learned the ropes, and you can too,” Tan remarked.

Sarawak’s property market growth is sustainable, as it is not artificially inflated by speculators as compared to other hotspots within the country.

Right Time to Invest in Sarawak’s Property Hotspots

Home Prices Under Pressure

Malaysia is seeing signs of a possible moderation in overall house prices, data from the central bank show.

The growth in the Malaysian House Price Index (MHPI) declined to 9.6% in the fourth quarter of 2013, compared with 12.2% a year earlier, according to Bank Negara.

This was the first time since the third quarter of 2011 that the MHPI was below 10%, and the improvements were recorded across most states and most types of dwelling.

It said sales and new launches slowed in the last quarter of 2013, possibly due to the various measures imposed to cool down the housing sector since 2010.

“It’s possibly due to the wait-and-see attitude of some developers and buyers following the prohibition on developer interest-bearing schemes in November last year, further increases in real property gains tax in January this year, higher minimum purchase price for houses by foreigners, and uncertainties regarding the potential impact of the goods and services tax,” Bank Negara said.

The central bank pointed out that there was no conclusive evidence of a housing bubble in the country. It added that analysts, rating agencies and international organisations, such as the International Monetary Fund, had lauded the pre-emptive and concerted measures taken by the Government and Bank Negara since November 2010 to curb excessive speculative activities in the domestic property market and promote a sustainable housing market.

It also said that the bulk of home purchases continued to be for own occupation or medium to long-term investment.

“This was corroborated by data that showed 84% of home loan borrowers only had one outstanding housing loan account,” it said in an email response to StarBiz.

The central bank said borrowers were less inclined to dispose of their properties in response to a downward movement in property prices as their loan repayment capacities were not depend on the home equity value or expected capital gains. This was considering the medium to long-term nature of their ownership and investment horizon.

This scenario could limit the potential for a sharp increase in default incidences and credit losses to banks in the event of a price correction in the property market.

Based on a single factor sensitivity analysis on the housing loan portfolio of banks with a stressed probability of default (PD) of up to 10% (about four times the current PD) and adverse correction in house prices of 40%, banks’ excess capital buffers stood at more than five times the estimated expected losses.

Bank Negara said although the MHPI had expanded annually by between 10% and 12% since 2011, outpacing income and rental growth, the rate of growth in house prices remained significantly below those observed in some neighbouring economies.

It pointed out that while elements and pockets of speculative activities were present, the upward pressure on house prices was largely explained by structural factors.

“Demand continues to outpace new supply of houses by a large margin, particularly in the low to medium-priced segments and in major employment centres,” it said.

Demographic factors, given Malaysia’s relatively young population and labour force, increasing urbanisation, and general inclination to own a house, are expected to sustain strong demand for affordable residential properties in major urban centres, likely outstripping supply over the near and medium-term.

“Part of the mismatch in the market was due to rising land prices and construction costs that increased the incentive for developers to build high-end properties where the margins are higher,” the central bank said.

On the part of the Government, a number of schemes have been introduced to increase the supply of and access to financing for the purchase of affordable housing via PR1MA, MyHome and My First Home schemes.

In addition, the National Housing Council was set up in 2014 to develop strategies and action plans in a holistic manner, coordinate legal aspects and property price mechanism, and ensure provision of homes in a more efficient and expeditious manner.

Bank Negara said the earlier Government measures had also resulted in reduced credit-fuelled speculative purchases of residential properties where the annual growth in the number of borrowers with three or more outstanding housing loans has declined substantially to about 4%, from a peak of 15.8% prior to the implementation of the measures, to account for only 3% of housing loan borrowers.

There are also improvements in banks’ housing loan portfolio quality and underwriting standards with impaired housing loans remaining low and stable at 1.4% of total bank loans to households (2013: 1.5%; 2012: 1.9%; 2011: 2.3%).

A similar trend was observed in the gross amount of impaired housing loans, which declined further to RM4.7 billion from RM5 billion at end-2013 (2012: RM5.4 billion; 2011: RM6 billion).

It said the proportion of outstanding housing loans with loan-to-value (LTV) ratio above 70% tapered to 46.6% (2012: 50.1%), providing a comfortable buffer for banks against a decline in the value of the underlying collateral relative to the outstanding amount of a housing loan in the event of defaults.

Banks have also demonstrated an increased rigour in the assessment of factors which support property valuations, such as the level of development in a specific location, population density, status of overhang, existing and potential demand, and the number and value of turnover of properties within the surrounding areas.

It was also observed that the lower margin of financing was applied by banks on new housing loans for properties in locations where price increases have been stronger. In the more recent period, valuations used for this purpose have excluded values inflated by incentives offered by developers to house purchasers, which can increase house prices by between 10% and 30% above the intrinsic values.

It’s possibly due to the wait-and-see attitude of some developers and buyers following the prohibition on developer interest-bearing schemes in November last year, further increases in real property gains tax in January this year, higher minimum purchase price for houses by foreigners, and uncertainties regarding the potential impact of the goods and services tax



The Sarawak Housing and Real Estate Developers’ Association (SHEDA) has urged the government to make building materials zero-rated from the Goods and Services Tax (GST) as well as to reclassify residential properties.

SHEDA secretary-general, Sim Kiang Chiok revealed that the association has appealed to the federal government via a joint memorandum with Sabah Housing Real Estate and Developers’ Association (SHAREDA) and Real Estate and Housing Developers’ Association (REHDA) for building materials – such as bricks, cement and steel bars that do not attract sales tax – to be zero-rated from GST.

“Doing so will not add any cost to the materials, thus building costs will be less impacted by the GST,” said Sim during the GST Property Development Perspective Seminar held yesterday.

“Any increase in supply cost will naturally spillover into an increase in building costs…This is simply a case of logical progression and mathematics,” he added.

Aside from this, SHEDA also called for residential properties to be reclassified as zero-rated supply instead of exempt-rated in order that

suppliers and contractors may claim input credit tax and not be forced to significantly increase the cost of building homes.

Sim explained that developers will not be able to claim back the GST imposed on building materials if residential properties are exempt-rated.

“An inability to claim back such tax will also naturally lead to higher building and development costs,” he said.

What the public does not know is that developers have to bear a significant amount of capital to successfully complete a project, said Sim.

“They have to comply with the requirements of over 14 agencies and are liable for severe penalties as well as heavy risks.”

SHEDA’s GST seminar yesterday was held to educate the public on the impact of GST on the property sector. Held in collaboration with IFCA MSC Bhd (IFCA), the seminar was facilitated by Daniel Chow, the chief financial officer (CFO) of IFCA.

PacifiCity welcomed its two anchor tenants for the lifestyle shopping mall which is set to open in 2015.

The two tenants, Everrise Supermarkets represented by chief executive officer Jeffrey Sia and TGV Cinemas represented by chief executive officer Gerald V Dibbayawan attended the signing ceremony at the PacifiCity Sales Gallery today (June 11).

Also present at the ceremony was director general of Kota Kinabalu City Hall, Datuk Yeo Boon Hai, and executive director Kuok Khoon Ping and managing director Jonathan Wheeler of the project developer Pacific Sanctuary Holdings Sdn Bhd.

PacifiCity is a premier lifestyle hub offering fully-furnished sea and mountain-view residences, international standard offices, luxury hotels and an entertainment rich shopping mall spread over 25-acres of land in Likas Bay. The shopping mall will be the first phase of the project to be completed.

PacifiCity represents a new focal point for Kota Kinabalu teeming with a rich mix of local businesses, community centres, top schools and a large catchment of local and expatriate residents which

has contributed to its family friendly positioning and tenancy mix of the shopping mall.

“Reflecting our community centric vision, we have placed a lot of emphasis on creating a family friendly, safe and professionally managed shopping centre. Through dialogue with our target patrons and experienced retail planners, we are crafting a shopping mall that will serve the wants, needs and whims of KK’s population,” says Jonathan Wheeler.

He adds that the two anchor tenants will be bringing exciting new retail and entertainment concepts to Sabah.

Everrise Supermarket, one of the largest and fastest growing supermarkets in Sarawak, opened its first store in 1993 and today offers complete one-stop grocery shopping for all household needs, combined with a value-for-money retail experience across 20 stores to serve a lifestyle oriented customer.

The new 25,000 sq ft Everrise Supermarket in PacifiCity aims to create a new lifestyle and consumer-centric supermarket environment by introducing new lines of products and

services and featuring new store design that appeals to the local community.

The project’s 8-screen 50,000 sq ft Cineplex will be TGV Cinemas’ first establishment in Sabah. TGV Cinemas is one of Malaysia’s oldest and largest multiplex cinema operators with 22 cineplexes and close to 180 screens across the country. Their strategic partnership with IMAX has transformed an ordinary trip to the cinema into a totally immersive movie experience.

The IMAX screen is four storeys high, allowing a picture that is bigger, higher and wider than your field of vision, fully immersing the viewer in the movie. The experience is intensified by a laser-aligned 12,000 watt sound system and a custom designed seating layout to ensure movie-goers are always in the centre of the action.

The design of PacifiCity’s 450,000 sq ft shopping centre draws inspiration from Sabah’s natural beauty, quite literally ‘bringing the outside inside’ with features such as the Kinabatangan River Village, a 90-meter long indoor river spanned by quaint little boutiques and cafes, to a cavernous signature atrium filled with green walls, natural timbers and light wells.

Site progress continues on track with the topping out of the retail podium expected by early next year.

SHEDA secretary-general, Sim Kiang Chiok

Everrise Supermarkets represented by chief executive officer Jeffrey Sia and TGV Cinemas represented by chief executive officer Gerald V Dibbayawan at the signing ceremony at the PacifiCity Sales Gallery witnessed by director general of Kota Kinabalu City Hall, Datuk Yeo Boon Hai, and executive director Kuok Khoon Ping and managing director Jonathan Wheeler of the project developer Pacific Sanctuary Holdings Sdn Bhd

SHEDA: Building Materials Should Be Zero-Rated From GST

PacifiCity Welcomes Shopping Mall Anchor Tenants Bintulu Market to Heat Up in Second Half of 2014 Renewed Call to Increase Sabah Oil Royalty to 20%

Due to upcoming mega projects under the Sarawak Corridor of Renewable Energy (SCORE), Bintulu’s property market is expected to become more vibrant in 2H 2014, according to CH Williams, Tal-har, Wong and Yeo Sdn Bhd (WTWY).

“Most mega projects in Kidu-rong and Samalaju may take off then, and consequently, Bintulu will experience influx of the working community to the town,” said WTWY Managing Director Robert Ting.

The town’s real estate are also rising thanks to existing big projects like Petronas’ gas pipeline, Borneo Pulp and Paper plant, Press Metal’s aluminium smelter plant and Tokuyama polycrystalline sili-con plants.

“From my experience, as com-pared with five to seven years ago, prices have gone up by about 40 percent to 50 per-cent for residential properties,” said business owner Lee Khai Kiong.

“The price for a double-storey intermediate terraced house has gone up from about RM250,000 previously to RM500,000, while for a double-storey corner terraced house, the price has increased from RM400,000 to RM800,000. The prices for commercial proper-ties have also increased, but the increase depends on their locations.”

In addition, Bintulu’s property rental market is flourishing.

For instance, two to three-bedroom fully furnished condos could be rented out for RM2,500 to RM6,000 per month, noted Ting.

Depending on location, the current rents of three-storey shophouses range from RM6,000 to RM10,000 per unit, while fully furnished two-storey semi-Ds are being leased for RM3,800 to RM4,500, added Lee.

The push to increase Sabah’s oil royalties is not something new but with the impending implementation of the GST in Malaysia next year, the urgency to address this issue is being felt more acutely.

Likas Assemblyman Junz Wong has put forward the proposal for the federal government to increase Sabah’s oil royalty from 5% to 20% at the recent Sabah State Assembly sitting in April. He said that Sabah needs to have enough funds to build up its basic infrastructure for industrialisation purposes and appealed to all Sabah representatives regardless of political affiliation to collectively make a united stand to officially demand for this allocation.

Wong had also proposed during the assembly sitting for Sabah to receive a 50% share of GST taxation from Sabah contributors to be channelled back to Sabah’s economic and social development funds.

He said, “Since the GST bill has been passed in the lower house on April 7, the next best move it to find an alternative to ensure that Sabah benefits from this national fiscal policy to improve the lives of the people.

Revenue from the GST sharing and oil royalty can be used to implement programmes and measures to buffer the impact of the GST tax especially to those in the bottom 25 percent of the population.”

Across the border and in a similar situation, Sarawak has already made some headway in their own quest for an increased stake in oil royalties. Kota assemblyman and Kuching MP Chong Chieng Jen has announced that he will be moving a motion for the federal government to increase oil royalty to 20% of the gross value of oil and gas extracted from Sarawak and its surrounding waters.

Chief Minister Adenan Satem is currently negotiating to have the demand discussed at the highest level of authority. “Having the Chief Minister meet Prime Minister Najib Tun Razak in a closed door discussion is different from having the August House pass a resolution to demand that the federal government increase our oil and gas royalty,” said Chong.

“I’m moving this motion as there is no other appropriate avenue to make this resolution.”

Aerial view of The Peak Condominium at Bintulu Paragon by Naim Land

Likas Assemblyman YB Junz Wong

An inability to claim back such tax will also naturally lead to higher building and development costs,

Property Buyer Beware – It’s Easier to Identify Real From Fake Now.

Heard of agents who are unprofessional? Some to said has taken the deposit or booking fees and vanished? Michael Geh who’s the Senior Partner of Raine & Horne said, ‘to avoid situations where the agent runs away with your money, you should issue the cheque to the agency name instead of the individual’s name’.

The reason is simple. It is not easy to operate an agency and no one would be running with your money even if it is RM50,000 and lose everything overnight. Recently, the Board of Valuers, Appraisers and Estate Agents (BOVAEA)

started a registration of all Real Estate Negotiators and this exercise saw 10,000 RENs registering.

Now, all the negotiators or even project marketing staffs who are working whether it is in sales galleries, shopping complexes, hotel function room or exhibition halls are required to wear the newly issued tags. These tags have a specially assigned REN number and a QR code, allowing the buyer to quickly get information about the negotiator with just a smartphone.

The identification tags also come with security features to prevent it from being imitated. This is believed to lead to the increase of professionalism of the RENs here in Malaysia. The surprising thing is, I still see many ‘fake’ agents in the shopping malls not wearing such tags.

Seriously, the enforcement has to be stricter. Why not make it clear, what the punishment would be to the agency involved if the RENs under their agency does not follow the procedure? A fine? A suspension? Sometimes, I really hate it when Malaysians complain that the enforcement is not strict but when it comes to all these things, they would prefer to use brokers instead since brokers are giving them ‘special deals’.

Come on, if all of us are also serious, these things would not happen. You are selling a property, you need a service, you pay for that service.



SHAREDA Shares Top Concerning Issues With Sabah Chief Minister

Sarawak Keen on Affordable Housing Joint Venture With China

Sabah Housing and Real Estate Developers Association (SHAREDA) led by its President, Mr Francis Goh Fah Shun made a courtesy call to the Sabah’s Chief Minister and Minister of Finance Sabah, YAB Datuk Seri Panglima Musa Haji Aman at the latter’s office recently on 26 June 2014.

Mr Goh said that, it is an honour to brief YAB Datuk Seri Panglima Musa on his visions to re-image the profile of SHAREDA and Members in-line to complement the Government’s initiatives and Halatuju.

In the pipe-line, SHAREDA will heighten up to perform more CSR programmes through its Youth committee to build 10

units for the hardcore poor and its commitment to build 10,000 units of affordable housing for the citizens.

Mr Goh presented the SHAREDA Property Development Annual Report highlighting its contributions in 2013 with a total gross development value (GDV) of approximately RM7.56 Billion supporting not less than 165 related businesses contributing to the State’s economy.

He also shared the industry’s predicaments over several issues such as:-

1. The strict lending policies resulted in high loan rejection especially to mid to low income group.

2. To review the potential on the removal of 5 years sub-sale restriction imposed on Bumiputera lots.

3. To review the high capital contribution charged by SESB resulted to high development cost.

4. To review the process for submission of Development Plans to the Central Board for better efficiency hence cutting down cost and developer’s risk.

YAB Datuk Seri Panglima Musa in return welcomed SHAREDA’s good relations and rendering co-operation to the Government in a win-win situation. He remarked that SHAREDA plays an important role in the growth of the property development in Sabah and he is happy to note that in the last couple of years the properties were booming.

Nevertheless, the government hopes that SHAREDA members could strike a balance to continue to keep the housing prices reasonable and affordable.

He lauded SHAREDA members for the commitment of providing 10,000 units or more affordable homes in the State and urged developers to be committed to CSR programmes to give back to the community.

Moving forward he wished and urged the call to SHAREDA and developers in Sabah to improve on delivering well planned developments, emphasising on providing quality environment with functional spaces, well designed buildings and public facilities such as open spaces, drainage, etc.

SHAREDA President immediately responded by thanking YAB Datuk Seri Panglima Musa Haji Aman and agreed to hold talks for SHAREDA and developers to inculcate the ethics and values of being a responsible developer and building towards a better tomorrow for the State.

Subsequently at the courtesy visit, SHAREDA President, Mr Francis Goh also presented an official invitation to YAB

Datuk Seri Panglima Musa Haji Aman to be the Guest of Honour for the Opening Ceremony of SHAREDA PropEX 2014 themed “MyHome” to be held on 29 August 2014 at 2:30 p.m. at the Sabah Trade Centre.

The expo is in its 15th edition and will feature 128 booths with a very special corner to showcase the affordable home projects listed with SHAREDA and the registration of First Time Homebuyers for MyHome Scheme Incentive amounting to RM30,000.

The exhibition will run for 4 days from 29 August to 1 September 2014 at Sabah Trade Centre, Kota Kinabalu from 10:00 a.m. to 8:00 p.m.

This year the Organising Chairman is Sr. Chua Soon Ping, a Council Member of SHAREDA.

Everyone is welcome to visit the expo. For more information, please call SHAREDA Secretariat at 088-720848.

Sarawak is keen to collaborate with players of the modular housing system of China by setting up a joint-venture project in Sarawak to reduce the cost of affordable housing in the state.

Housing Minister Datuk Amar Abang Johari Tun Openg said representatives from both Sarawak and China were keen to move forward in discussing the details of the collaboration.

“Taking into consideration the long term development, I would like to suggest that MCC Tianggong Factory collaborate with the Sarawak Government to have a joint venture through private sector initiative to set up a factory and production line in Sarawak.

“This, in the long term, can benefit Sarawakians through technology transfer to boost other local production business and to create jobs for locals,” said Abang Johari in a press statement.

He made the comments after he and his delegation visited MCC Tianggong Factory at Tianjin, China.

He is leading a 43-member delegation to China on a six-day working visit which started on Sunday (June 8) to study the housing industry and look into new and cost-effective

construction methods and materials in the state government’s efforts to reduce the construction cost of affordable houses.

He said if the state were to import the modular system all the way from China, it would involve costly shipping fees and time.

He believed that by setting up a factory in Sarawak, it would become a good platform for MCC Tainggong Factory to venture into other Southeast Asia markets.

He added that Sarawak has a large Chinese population and this would certainly make the Chinese investors from China feel at home.

Meanwhile, a spokesman of MCC Tianggong Factory also expressed interest to collaborate with the state government and its entrepreneurs to

ensure the success of the endeavour.

The delegates included key government officials and industry players from the private housing sector.

Accompanying Abang Johari are assistant ministers of housing Datuk Francis Harden Hollis and Datuk Abdul Karim Rahman Hamzah, Permanent Secretary to the Ministry of Housing, Wan Lizosman Wan Omar, SHDC chairman Datuk Dr Abang Abdul Rauf Abang Zen, its CEO Wan Mohd Yusof Wan Moss, Sarawak Chamber of Commerce and Industry president Datuk Abang Abdul Karim Tun Openg, Sheda advisor Dato William Wei, prominent businessman Dato Hii King Chiong and Land Custody and Development Authority (LCDA) general manager Datu Dr Sulaiman Husaini.

The Peak Condominium towering at 34 storey

The Peak Condominium Launched in Bintulu

‘The Peak’ condominium project as launched by Naim Land Sdn Bhd, a wholly-owned subsidiary of Naim Holdings Bhd, here yesterday.

The 34-storey condominium will have 131 units up for sale, and thus far about 50 per cent has already been sold. The price per unit starts from RM288,000.

There are four types of units available. Type A is studio; Type B (2 bedrooms, 1 bathroom), Type C (2 bedrooms, 2 bathrooms); Type D (3 bedrooms, 2 bathrooms); and Type E (3 bedrooms, 3 bathrooms).

According to Naim’s chief operating officer (Property) Yong Kei Seng, this mammoth project represents the first residential component within the iconic Bintulu Paragon integrated development, and it will be the tallest condominium in the state.

“The Peak is also part of our exclusive property brand – Naim Signature Collection,” he said.

“Signature Collection customers will get to enjoy products with branded finishes, multi-tiered security, benefits of integrated development and value-added services,” he added during the soft launch at Naim’s Bintulu Sales Gallery at Bintulu Old Airport.

As it would be the tallest condo in the state, buyers would have the chance to ‘live the high life’, literally.

“Imagine having unrivalled view right at your doorstep. It gives you the space to get away from it all, the ultimate freedom of mind.”

He said The Peak is the epitome of resort and chic urban living, with a contemporary tropical minimalist concept.

With a range of suites, studio units and duplexes, he said buyers would definitely be spoilt for choice.

In addition to modern living space, Yong said The Peak offered an array of lifestyle facilities from wellness-related facilities such as gym, adult and children pools to BBQ areas and function rooms.

Will Malaysia Rise From the Property Humdrum of 2014?

Recently the International Monetary Fund (IMF) has said that house prices in many countries are still well above their historical average relative to income and rent.

Malaysia like some of these countries has seen a rapid increase in property prices over the past four to five years with the excessive speculation in the property market driving property prices to an artificially high level. However, the property market is still resilient and with the market cooling measures introduced by the Government last year, the market will correct itself and see growth in the coming years.

According to the Knight Frank Global House Price Index, released earlier, it shows that while Malaysia’s housing prices have risen by 8% in the first three months of 2014 (1Q14) compared to the previous corresponding period last year where the rate of growth had slowed down.

Continued Growth

The first half of 2014 has been relatively quiet as predicted earlier, as the property market has been absorbing the market cooling measures.

Siva Shankar, President of the Malaysian Institute of Estate Agents (MIEA), explains, “2012 and 2013 saw a 6% to 7 % drop in transactions in the market and that this downwards slide will reduce, making next year (2015) somewhat flattish and there on continue to rise upwards

slowly beyond 2016 and 2017. The market appears to be self-correcting slowly.”

Generally prices for properties with good infrastructure and amenities will continue to climb however, transactions for condominiums will drop slightly as well as the rental market due to oversupply, but this is seen to be only a short term effect.

BNM Rulings Taking Effect

The Bank Negara Malaysia (BNM) rulings announced last year are taking effect causing banks to be more cautious in their loan criteria and to tighten property financing to buyers. Therefore, buyers are seeing up to 60% to 70% in rejection rate at the first instance of application.

According to BNM’s Monthly Statistical Bulletin for March 2014, in 1Q14, some RM25.4 billion in property loans were approved from RM47.6 billion applied for, translating into a 46.6% rejection rate in terms of loans value. In comparison, 1Q13 saw higher rejection rate at 54.6%.

However some markets like Kuala Lumpur and Selangor are seeing less overall transactions yet higher total transacted value. This marks a trend that reflects the nationwide property market trend — total number of transactions dropping but an increased transaction values for the past three years, based on the annual Property Market Reports published by the National Property Information Centre (Napic), Ministry of Finance.

Growing Interest in Secondary Market

Interest has peaked in the secondary market as the primary market slows down due to the cooling measures. Developers are also holding back their launches amid weaker market sentiment and revisiting their development plans to cater to current market demands and trends.

Currently the secondary market is becoming slightly more active and prices in select locations are

now looking relatively attractive. Buyers, are now turning their attention to this secondary or sub sale market, though there is hefty down payment and higher costs to acquire these properties their prices are still comparatively lower than newer launches. In other words there is a shortage of supply for secondary properties making it attractive in terms of capital appreciation.

Speculative Buyers a Threat to the Market

The most worrisome factors for the market are the speculative short term thinking investors. These are speculators who bought directly from developers with the intention of flipping when the property is ready.

However, with the new ruling where a 30 % real property gains tax (RPGT) is being implemented on first year disposals as well as an oversupply, it seem that it is them who are now at risk as they have no holding power. They will try to dispose their properties either at a lower price or try to rent it out, in either case they will be competing with others in the same location, creating a price war.

In the worst case scenario they cannot afford to pay their mortgage instalments and the banks are forced to auction off their properties, affecting the industry to a certain extent.

Serious investors won’t be worried as they usually plan for between three to 10 years, hence they have holding power and will not face such problems.

Overall Market Sentiments

Overall investors’ sentiments looks to be very cautious; some share the feeling that this year is not a good year to invest or buy properties as there are too many uncertainties and are taking a wait-and-see attitude.

On the up side, generally the property market looks to be stable, and will continue to grow as it has proven itself resilient and there is a constant demand for properties.



Bina Puri launches8 Avenue Commercial Mall & SOVO in KKOpening its showroom for viewing is the newest exclusive and versatile development, 8 Avenue Commercial Mall and SOVO developed by Bina Puri Properties Sdn Bhd and Kensington Properties Sdn Bhd.

The 13-storey structure is strategically located at KM14 along Jalan Tuaran Bypass with every convenience imaginable nearby. Built to inspire and connect to every lifestyle, the property boasts a total of 259 versatile SOVOs (Small Office Versatile Office) – the latest rave of office space in many major cities – and 55 commercial lots. There are five types of SOVO suites and three Duplex SOVO variants to pick from to give you that perfect space to start and run your business.

A commercial mall offers convenience and access to services ranging from health checks and consultations to beauty salons, spa, fashion, banks, travel agency,

bookstore, supermarket, restaurants and cafes to education centres.

8 Avenue understands the needs of busy business executives and has included a rooftop deck for some much needed rest and recreation after a hard day’s work. Workout at the gym, take a yoga or Zumba class, dive in the infinity pool for a few laps, or just relax at the Style Lounge. Other recreational facilities include a barbeque area, poolside cabana, and children’s playground. And if you still have work on your mind, there are meeting rooms and a business centre on the same floor.

Security and a sense of peace is also a priority with amenities like 24-hour security, CCTV, unit access card, landscaped gardens and ample car parks.

/// Featured Property Event

/// FEATURED PROPERTY EVENT


Iskandar Waterfront Holdings Plans Sales Offices in Sabah & Sarawak

Kuching

Kota Kinabalu

/// Featured Property Event

/// FEATURED PROPERTY EVENT

Iskandar Waterfront Holdings (IWH) Sdn Bhd, Tebrau Teguh Berhad and Ekovest Berhad will jointly tread the shores of Sabah and Sarawak

with the hope of wooing locals to become potential investors in two of its latest luxury lifestyle developments in Iskandar Malaysia in Johor.

Their first foray into Sabah and Sarawak ended on a high note with outstanding response and sales at their roadshow in both Kota Kinabalu and Kuching.

The Peninsular Exclusive Properties Roadshow was held from July 5 – 6 at the Magellan Sutera Harbour Resort and from July 12 - 13 at Four Points by Sheraton in Kuching.

The roadshow featured two luxury properties in Iskandar Malaysia, namely the Aquaint Danga Residensi and Botanika, and EkoCheras in Kuala Lumpur.

Kelvin Kam, Iskandar Waterfront Holdings (IWH) Head of Sales, Marketing and Asset Management, said that the roadshow achieved its objective in establishing a firmer foothold in the Sabah and Sarawak property investment market with a high turnout of visitors and keen buyers during the two days in their respective locations.

“Our first roadshow in Sabah and Sarawak has been very successful with a better than expected response from the public,” he adds.

“One of the main objectives of the roadshow is to create more awareness in Sabah and Sarawak of the investment potential in IWH properties. I believe we have managed to convey the message that we can be as competitive as other overseas properties with our own portfolio of high-end luxury offerings. The strong demand and encouragement from the locals was a good indication of this success.”

He pointed out that these developments are in fact even more affordable than some properties in Sabah. And this would be a good enough reason for Sabah investors to explore the investment potential with IWH.

However, he added that it might still take time for many to digest the prospect, considering that the property developer’s foray into East Malaysia has just started.

Kelvin, who is also in charge of Marketing & Asset Management of the Danga Bay Group, said while there has been no engagement with any local agencies yet, the property group is considering plans to set up an office in East Malaysia.

“Of course, this would happen depending on the response from locals and if the numbers that turn up is good,” he said, adding that there might be a ‘Malaysia Iskandar Tour’ in the pipeline.

IWH is offering investment opportunities for Aquaint Danga Residensi, a mixed development project consisting of residential towers, and retail shop units; and Botanika, a low-density residential development project fronting the Tebrau Coast.

Kelvin said the projects aim to develop the area into what would be described as a “21st century world-class waterfront city”, its main selling point, which is approximating about 4,300 acres of land.

Both projects are located in Iskandar, Johor, otherwise known as the Southern Special Economic Zone, which in the first three months of this year alone, has attracted over RM4 billion in investments.

Thus, IWH is encouraging locals to fly over to experience the projects themselves.

He said that the projects are slated for completion, estimated in the year 2025, and hoped that with more players, both local and global at hand, this will cut short the development time.

IWH, which is the master developer of prime waterfront land in Johor Bahru, has attracted top local and foreign companies to acquire land parcels for property development.

(6th & 7th from left) Kelvin Kam (Head of Sales, Marketing & Asset Management-Danga Bay/Group Sales & Marketing) and Macy Tan (Senior Manager Group Sales) of Iskandar Waterfront Holdings pose with their sales team after a successful outing in East Malaysia

Nestled in Flagship Zone “A” of Iskandar Malaysia in Johor, Iskandar Waterfront is today one of the largest integrated waterfront urban development projects in Malaysia. Spread over 250 acres along the Johor Bahru coast and often referred to as “the waterfront vision city of the South”, Iskandar Waterfront, when fully developed will be complete with iconic buildings designed by world-renowned architects. It is

destined to eventually become the new lifestyle destination of choice in Malaysia and the world over. Conceived to encompass elements of the Gold Coast in Australia as well as Toronto’s Waterfront, Iskandar Waterfront is designed for public enjoyment and is bolstered by a myriad of world-class infrastructure. Today, it is the most sought-after location and premium waterfront land in Iskandar Malaysia. Strategic

partnership for the development of this prime site have been established between IWH and Kumpulan Prasarana Rakyat Johor (KPRJ), a Johor State Government entity. In addition, Khazanah Nasional Berhad and Employee Provident Fund (EPF) have also bought stakes in the development company – Iskandar Waterfront Holdings Sdn Bhd – which is the master development of the entire JB waterfront site.

ABOUT ISKANDAR WATERFRONT (DANGA BAY):

22 www.PropertyHunter.com.my

Commercial and residential properties are filling up both sides of Jalan Sulaman heading north of the city

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Northern Corridor of Kota Kinabalu

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If you look at the population growth of suburban Kota Kinabalu over the last decade

or so, you will see that a large percentage of it has occurred north of the city. The steady pace of development has transformed the once rustic countryside into clusters of small and medium sized industries and residential areas targeting the lower- and middle-income groups that make up a sizeable number of the population here.

Population growth, job growth and development have followed this pathway to the north and

out from the urban core of Kota Kinabalu. While the city centre continues its trajectory of becoming a waterfront city with a host of modern facilities to cater to its financial, service and tourism-related industries, the northern corridor has been earmarked to fulfil its predetermined role as the industrial centre of Kota Kinabalu.

Several factors have contributed to the exponential growth of the northern corridor as compared to the southern corridor which had been handpicked for several mega projects that unfortunately did not come to fruition. The relocation and

construction of a new international airport and seaport in Kimanis were shelved due to geographical and logistical reasons. The eventual construction of the deep-sea container port at Sepanggar Bay in the northern corridor, coupled with the implementation of one the biggest state-owned industrialisation projects in Sabah would signal a change in strategy and focus in the expansion of the city’s boundaries.

A New Age Of Industrialisation And DevelopmentThe 8,320 acre Kota Kinabalu Industrial Park (KKIP) was launched in 1995 and has played a pivotal role

in the development of the northern corridor. As of 2013, it has been reported that around 6,300 job opportunities have been created from a total of 232 factories and plants that are operating in the area. Investment value in various industry clusters, mainly small and medium industries (SMIs), has already breached the RM2 billion mark and the spill-over effect has created a convincing uptrend in the development of residential properties, retail shops, food and beverage outlets, finance services and other business activities to meet the demands of the increased populace in the area.

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Main developments along the southern corridor

A sizeable number of residents in the northern corridor are from the lower- to middle income group as they supply the necessary workforce for the many commercial and industrial businesses that have set up operations in KKIP and its

surroundings. The establishment of Universiti Malaysia Sabah (UMS), Universiti Teknologi Sabah and a host of training and research institutions in the area has also multiplied the number of residents within the same income category.

This ready-made consumer base has created the impetus for new and exciting developments in the retail, residential and tourism development sectors that will make their debut in the next couple of years.

Grand Merdeka, being developed by the Merdeka Group, is a RM1.2 million suburban mall in Menggatal that is set to give local entrepreneurs a sustainable business platform to foster their trade. Almost every aspect of the

condominiums, apartment and lifestyle conceptual retail shops to overtake demand for landed properties which are getting more costly. Land cost that was at RM13 sq ft about 10 years ago is now well into the RM45 sq ft to RM150 sq ft range. The price for a standard terrace house has almost doubled within this period from an average of RM300, 00 to RM570,00 per unit today.

First time home buyers are now keener to purchase apartment or condominium units that are still more affordable than landed properties. A mid-range condominium such as Canggih Heights located along the Tuaran Bypass was priced between RM350 – RM550 sq ft when it was launched last year but prices are expected to

rise for newer condominiums as the booming job market in the northern corridor continues to attract more people into the area.

Road And Sea ConnectivityThe positioning of the Sepanggar Bay Container Terminal, a Royal Malaysian Navy base and the Sepanggar Bay Oil Terminal in the northern corridor has also accelerated the population growth in the area. The inherent traffic congestion as a result of these developments puts residents in a daily gridlock during rush hour which has impeded efficient transportation of goods and people. The two highways and one bypass built to alleviate this problem has lost much of its initial impact and purpose as more vehicles fill up the roads every year.

In a bid to improve access, reduce traffic congestion and increase efficiency, a tunnel is being constructed to cut the travelling time and distance between the seaport in Sepanggar Bay and the industrials clusters. Dubbed the Sepanggar Tunnel, the RM66 million project consists of a 2.5km dual carriageway, including a 600m twin-tunnel that will shorten the stretch from the container terminal at Sepanggar Bay port to the Kota Kinabalu Industrial Park by 3km, compared to the previous 10km via the Sulaman Road-Sepanggar Bay route. Construction of the tunnel has begun and is expected to be completed by April 2015.The northern corridor of Kota Kinabalu has proven itself to be a significant contributor to Sabah’s economic growth in the

current millennia. Improvements in road connectivity, availability of affordable housing, and build-up of basic infrastructure, services and facilities will further augment the northern corridor as a preferred destination to do business and to live. New lifestyle projects such as the suburban shopping mall, restaurants, recreational areas and tourist resorts will add to the integrated surroundings where industry, residential, educational and leisure activities can thrive.

mall is geared towards attracting the lower- and middle-income group that has built up in the northern sector over the years. Anchor tenants are all local brands and rental rates are kept at a very competitive level. The decision to build a suburban mall away from the city centre where the population has a perceptibly higher level of spending power is not lost on the developer.

Chew Sang Hai of the Merdeka Group notes that the target market for Grand Merdeka may be those who spend on lesser priced goods because of their income generating power but they tend to spend more often because of the price affordability range. Unlike 1Borneo Hypermall that is integrated with hotels and condominiums which provides a ready market for its upmarket retail brands, Grand Merdeka will have to depend almost entirely on the average income populace which is in the majority and in bigger numbers here.

To attract shoppers to the mall, access and ample parking space is essential. To this end, Grand Merdeka will be constructing additional lanes to add to the existing road access and up to 1,200 car parks for the ease and comfort of its shoppers. These amenities are also crucial to compensate for the lack of an effective public transportation system to the area.

Apart from commercial industries, the northern corridor is also one of the premier resort destinations in Sabah. There are four luxury beachfront resorts along its west coast with only two having got its own natural beach frontage. Both these resorts – the Nexus Karambunai Resort & Spa and Shangri-la’s Rasa Ria Resort – are located north of the city. Soon to join in the fray is the Alila Dalit Bay, Tuaran which is scheduled for completion in the third quarter of 2016. The 152 suites hotel and 74 units of one and two bedrooms luxurious villas will be constructed on a parcel of land with conspicuous

/// Hot Topic


Sepanggar Port, Oil and Naval Base

UUC - University Utama Condominium 1Sulaman under construction

University Malaysia Sabah (UMS) aerial viex - photo credit: John Kong

Grand Merdeka Mall


view of the vast South China Sea. This will be the first resort in Sabah to be built by a local developer, Tekun Cemerlang Sdn Bhd, under the Malaysian Economic Transformation Programme (ETP) and managed by one of Asia’s most dynamic luxury hotel management brand, Alila Hotels and Resorts. The increased number of luxury hotel rooms and international branding

will uplift the profile of the northern corridor as a preferred destination in the global tourist market.

The increase in lifestyle standard and availability of higher salaried jobs in the area has also caused shift in the property development sector. The northern corridor has become the new residential development hotspot with high expectations for

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/// Exclusive Interview

He built his three-decade long career in the property development industry on

the principles of loyalty, diligence and obligation. These qualities may seem antiquated for the current Generation-Y that is flooding the job market where if you don’t like what you do, then do something else. Self-satisfaction whether at work or at play takes precedent over most things including holding down a job.

Getting involved in the property development industry wasn’t a calculated career choice but was a job opportunity that presented itself as something stable and safe. Born and raised in Kuala Lumpur, Chew Sang Hai had a very traditional upbringing where hard work and perseverance was the key to success. And success itself was gauged by one’s ability to put food on the table and provide for the family’s needs.

He was working as a site clerk with a construction company when he was going through Form 6 at TARC (Tunku Abdul Rahman College) in 1979. The company sponsored his further education as a chartered builder at TARC which bonded him to the company for the next three years. He was transferred from Kuala Lumpur to Penang before he eventually set his eyes on Kota Kinabalu. By then he had already graduated with a chartered builder’s licence, fulfilled his bond obligation and ready to take the next step in his career.

“It was my first flight ever and I didn’t enjoy it very much,” he reminisced about his arrival in Kota Kinabalu. “Once I got over that, I just got down to the business of working and making a living.”

The year was 1982 and the property industry, fuelled by a flourishing timber sector in Sabah, was booming. Within a few years, Chew would take up a job with a company that would shape his long-standing career in the property development industry. The Merdeka Group was embarking on a trendsetting development plan to transform the shopping culture in Sabah and Chew was at the right place and at the right time to capitalise on this.

James Voon who was Sabah’s first accountant general and founder of Merdeka Group realised the shortcomings of shop houses built during that period were holding back progress. They lacked proper maintenance with no focus on supporting activities or business community relationship. Individual tenants would open and close their stores at different times which gave the area a disorganised feel.

“Segama Shopping Complex was the first mixed development commercial project on reclaimed land in Kota Kinabalu in the 1970s. It presented a departure from the traditional where you have your shop on the ground floor and you stay above the shop. Some old shop houses also had an internal staircase that leads to the first floor,” Chew explained.

The new approach saw the ground and first floors dedicated to commercial lots instead of residential. Corridors in front of the first floor lots and linking bridges between blocks made is easy for shoppers to move around and maximise their shopping experience.”

Riding on the success of Segama Shopping Complex, the Merdeka Group would embark on yet another ambitious project that would revitalise the shopping culture in Kota Kinabalu. Built in 1985, Wisma Merdeka was the first multi-storey shopping mall in the city with offices and parking bays. The mall was inspired by Lucky Plaza in Singapore and Sungai Wang in KL where shopping was developing into an important part of the urban lifestyle. Shops had standard operating hours, there was more variety, it was air-conditioned and you could park your car in the building itself.

As more malls began to take shape and establish themselves in the city, the consumer profile had begun to change too.

“Initially, Wisma Merdeka and then Centrepoint were built to cater to the middle-income group. But because the city has grown, more branded goods have found their way into these malls to attract the more affluent city

folks as well as tourists,” says Chew.

Despite this inevitable change, we realised there was still potential to develop malls that cater to the needs of the lower and middle-income groups. But these groups of people are not living in the city. They are in the suburbs and this is where we needed to be.”

At a GDV of RM1.2 million, the Grand Merdeka mall in Menggatal will be a testament to Chew’s faith and confidence in taking on what many considered a high-risk gamble. Detractors viewed the move as highly speculative considering its distance from the city and having no reference to gauge the success potential of a suburban mall in Sabah.

Chew shows no sign of doubt or hesitancy when talking about this new venture. Or perhaps he hides it well.

“No one had the confidence to give it a try and wanted to stay in their comfort zone,” he enthuses.

But this project is not just about building a suburban mall. It is also about giving the third generation the opportunity to prove their mettle. The young project managers in our company need a platform to learn and progress with their ideas. And most importantly, they must know how to maintain and sustain the project after it is completed. This will be their training ground to inspire and mould them into exceptional individuals in this field. ”

Chew’s daughter, Fei Sean is the project manager for Grand Merdeka and will undoubtedly be tested to the limit. She has her father’s resilience with perhaps a little bit more gumption in wanting to explore new horizons in Sabah’s mall development industry. She made a strong case for the setting up of a suburban mall and is ready to face the challenges ahead as much as her father did when he first stepped into the business.

This is what Chew Sang Hai has worked so hard for. To leave a legacy as a good learner, a successful project executor and an inspiring educator. His work ethics and commitment to the job did not go unnoticed.

“I was the first person outside of the family circle to be appointed to the Merdeka Group board of directors,” he says with a perceptible touch of pride.

“I am just an employee, not an investor with deep pockets. But I believe my strongest point is my knowledge which has kept me competitive and focused throughout my career. The company saw this and being acknowledged as a person valuable enough to sit on the board of directors is indeed an achievement.”

Chew Sang Hai A Success Story Built On Traditional Values

/// EXCLUSIVE INTERVIEW

Photo by Louis Pang Studio

Chew Sang HaiDirector of Grand Merdeka Development Sdn. Bhd.

Chew’s vast knowledge of the industry has also seen him as a council member and sitting on the committee of SHAREDA over the last 12 years. He is currently the association’s deputy president and is focused on policy and economic development matters. He spends much of this time in SHAREDA advocating for the industry, and representing the developers in talks with the government regarding policy matters.

“The local property development industry in Sabah is not a sunset industry. Challenges are still there from government policies and competition from Peninsular Malaysia and overseas investors but local developers are very resilient.”

Deep rooted traditional values of hard work and commitment to family and career has guided Chew Sang Hai thus far and a little bit of struggle and competition will certainly not deter him from achieving success in his current and future projects.

But this project is not just about building a suburban mall. It is also about giving the third generation the opportunity to prove their mettle. This will be their training ground to inspire and mould them into exceptional individuals in this field.


You have driven around the block for the third time and you still can’t find a vacant

parking space. It’s been ten minutes now and you are probably already late for your appointment but you doggedly try for the fourth time to find that perfect spot that is only steps away from your intended destination. Exasperated, you decide to park your car at an undesignated parking space and silently hope that you don’t get fined. Or, you head for the nearest multi-storey car park or a pay-per-entry open parking lot.

While this scenario may be a source of annoyance to drivers, it can be quite a lucrative business potential for investors. Malaysia has one of the highest percentage of private vehicle ownership in the region and as more jobs are created in the cities, parking spaces to accommodate this increase in vehicles will be scarcer.

Developers Chuah Swee Guan and Eric Wong, together with two other friends Ahamad Latib and Ng WyMin, formed SCP which stands for Systematic Corporate Parking in 1999. The Asian financial crisis had dealt a blow to the country’s economy but unfazed by the situation, Chuah and Wong jumped at the opportunity to venture into a business that not many had given much serious thought.

Chuah spoke about the company’s first venture into car park investment in a recent interview with Star Property where he recounted how they had bought the parking bays at Phileo Damansara I and II, Megan Phileo and Phileo Promenade for about RM15,000 per bay, or RM99 million for 6,600 bays.

“When we acquired this business a lot of people asked why we paid RM100 million for basement car

parks which nobody can see? RM100 million can buy an office high-rise tower,” said Chuah.

“They thought that parking was a RM1, RM2 thing, but we felt that there was a future here. The population in cars is growing and everybody needs to park.”

Their investment paid off handsomely with earnings ranging from RM400,000 to RM500,000 per month on an investment of about RM15,000 to build each basement bay.

Today, SCP owns and manages 12,000 car parking bays in locations throughout Kuala Lumpur, Petaling Jaya and Ampang. It also manages about 30,000 bays in various other locations, such as the Pantai Hospitals and for AmBank group’s buildings. Its two investments in Kota Kinabalu are the car park at

KK Times Square and Karamunsing Capital.

The have been consistently making a profit of RM25 million a year for the last 10 or more years. The average cost of construction has however ballooned up to about RM50,000 per bay which means that SCP Parking is gleaning a yield of about 6% based on current investment costs, which is still pretty good.

Car park can be an attractive and lucrative business venture as proven by the SCP example. They are low-maintenance, can be open 24-hours a day, can operate automatically and have low refurbishment costs. There isn’t much in the way of finishes that become dated over time and they are very easy to manage. But is this investment option viable in Sabah?

Street level parking is at a premium anywhere in Kota Kinabalu.

/// HOT TOPIC

Car Park Investment: A New Frontier for Sabah

/// Hot Topic

Undeveloped land in the city centre is often used as a temporary car park to address the city’s lack of ground level parking space

And while multi-storey car parks often struggle to keep up with the spill over, there are times when parking bays are left empty as they are reserved for seasoned card holders. The percentage of car parks reserved depends on the management and, to a certain extent, parking habit of the drivers who frequent the area. Unless drivers stop parking indiscriminately to get away from paying parking fees, car parks would have to find a way to maximise profit from their

car park investment. On the flip side, car parks that display the number of vacant car park space available would still see drivers circling on the lookout for a ground level parking.

A few months ago, a video went viral on the social media depicting a scene where an irate driver smashed the window of a car that was parked behind him, effectively preventing him from leaving his properly, and legally, parked car. The offending car was pushed out

of the way but the discovery by its owner was certainly unpleasant. The disturbing footage elicited a chorus of “serve her right” and “I-told-you-so” comments from netizens who had probably been in the same position as the irate driver and had secretly harboured the urge to react in the same way.

Not too far from where the incident occurred is the multi-storey Damai Point car park that charges RM0.60 per hour. Which begs the questions:

If you are going to park your car for 20 minutes (which was apparently how long the unfortunate car was double-parked), wouldn’t it make more sense to pay RM0.60 for a proper car park instead?

The fees charged at most car parks in the city and its surroundings are very reasonable if you factor in the amount of time you are going to spend running an errand. Here’s a quick look at rates around Kota Kinabalu:

KOTA KINABALU Rate per hour / subsequent hour

Damai Point Car Park RM0.60 per hour

Karamunsing Capital RM2 (first 3 hours) RM1 (subsequent hour or thereof)

KK Times Square RM2 (first 3 hours) RM1 (subsequent hour or thereof)

Lintas Station RM1.50 (first hour) RM1.50 (second hour) RM3 (subsequent hour)

Wisma Merdeka RM3.50 (first 3 hours) RM1 (subsequent hour or thereof)

City Mall RM1 (first 2 hours) RM1 (each subsequent 2 hours - weekday) RM2 (each subsequent 2 hours - weekend)

KUALA LUMPUR Rate per hour / subsequent hour

Suria KLCC RM4 (first hour) RM3 (after every hour or part thereof) RM4 (after 4 hours or part thereof)

Berjaya Times Square RM2.50 (first hour) RM6 (first 3 hours)

Sungai Wang Plaza RM4 (first 2 hours) RM1 (subsequent hour or part thereof)

Starhill Gallery RM2.50 (first hour) RM2.50 (subsequent hour or part thereof)

The chart also makes a comparison to car parks in a few popular shopping centres in Kuala Lumpur which is almost double on a per hourly rate.

It can be argued that even though it is cheaper to park in Kota Kinabalu, there is not enough car park space to accommodate all those who need it. But if drivers are still insistent on ground level parking to the extent of double parking, the need to build more car parks would be moot.

Chew Sang Hai of the Merdeka Group that manages Wisma Merdeka commented that drivers in Sabah are still not fully accustomed to parking in multi-storey car parks even though it has been in existence for almost 30 years.

“Multi-storey car parks have been in existence in Kota Kinabalu since 1985. One of the earliest shopping malls, Wisma Merdeka, had a multi-storey parking lot attached to the building. But drivers still preferred to park on the street,” he said.

This attitude will have to change as ground level parking bays get scarcer and like everything else in the city, parking space is on its way up.”

He added that low occupancy of cars parked at a multi-storey carpark is mainly due to the lower rates charged for street carparks.

“In order to encourage drivers to park at multi-

storey carparks, and to further improve the demand management of carparking system, the government should hike up the street parking rate or restrict the parking duration on each parking lot, for example 15 minute parking bays. Of course this comes with good enforcement too in order to be effective.”

Evolution Of The Car Park ExperienceSeveral elements are involved in addressing the car park issue. Attitude change and car park management has to be in tandem with each other to make it a tolerable experience for the driver.

The lack of preference to park in a car park building has also meant a lack of technology advancement in car park management. One of the gripes of car park users is the long lines queuing to exit a car park.

Thomas Ng, COO of SCP Parking Sdn Bhd commented: “Customer parking habits actually involves culture, attitude, and preference among others. For example, we learned that some customers in Kota Kinabalu are still not that receptive of autopay system. Many still prefer manual handling of the parking payment.”

This situation is still prevalent because many of the older building in Kota Kinabalu are equipped with exit cashiering system (pay at exit). However, new auto pay systems being installed or upgraded in newly completed developments, especially

shopping malls, will make the car park experience more convenient.

He adds, “Of course, we see that more efforts such as prominent and informative signboards are now being implemented in the autopay car park. All these will be part of the transition and educational process.”

Is It Worth The Risk?Investing in car parks can be a profitable venture if the location and population number is optimum. The risks that you have to consider when deciding on an investment like this is – is there reasonable capital growth to make it worthwhile? To achieve such growth, the car space would generally have to be as close as possible to a CBD where car spaces are scarce.

Price and return of investment are the two other important criteria in deciding on car park investment. Unless drivers change their attitude about parking in designated car parks and paying for the service, then paying premium price for a piece of land in Kota Kinabalu to build a car park would be an unconvincing proposal for now.

Reserved car parks - and especially when they are empty - can be a deterrent to other drivers to park in a basement or multi-storey car park

/// Hot Topic



Jagdeep was responding to Malaysian Institute of Estate Agents (MIEA) president Siva Shanker who said in his speech earlier that despite having a law passed against unlicensed estate agents in 1981, no one has ever been charged for the offence.

WEST MALAYSIA PROPERTY NEWSSharing news and information about various issues related to the property industry from Peninsular Malaysia.

/// West Malaysia Property News

The Penang government urged house buyers and realtors today to help crack the whip on unlicensed agents, citing concern that despite countless complaints against the illegal business, no one has been hauled to court before.

Jagdeep Singh Deo, state executive councilor in charge of housing, said those who encounter such bogus agents must immediately lodge reports to the police to prevent them from cheating more home buyers.

“Please do lodge a police report if you come across unlicensed estate agents to send a clear message that they have broken the law and that they are not tolerated,” he said in a press conference today (June 20).

Jagdeep was responding to Malaysian Institute of Estate Agents (MIEA) president Siva Shanker who said in his speech earlier that despite having a law passed against unlicensed estate agents in 1981, no one has ever been charged for the offence.

Unlicensed estate agents who broker properties illegally could be charged under the Valuers, Appraisers and Estate Agents Act 1981.

Under Section 30 of the act, offenders are liable to a fine not exceeding RM300,000 or imprisonment not exceeding three years or both, upon conviction.

Siva said many home buyers have complained to MIEA of these bogus estate agents accepting down payments for properties from them and then absconding with the money.

“We have come across many such cases of these illegal estate agents profiteering through misconduct practices such as charging

commission that are higher than the maximum three per cent we are allowed,” he said.

He also declared a “war against illegal estate agents” during his speech at the opening of the Malaysian Secondary Property Exhibition (MASPEX) Penang 2014 here.

He said these illegal estate agents have been a thorn in MIEA’s side due to their illegal activity as they are not regulated by any formal body unlike licensed estate agents.

“We are not talking about going against one-off deals such as when someone helps a friend to sell his property for a fee but we are talking about structured groups conducting real estate businesses that are not legally registered,” he said.

Siva said these illegal groups conduct the real estate business adhering to any regulation, such as taking higher commissions than allowed, refusing to refund deposits or miscalculating assets valuation.

“This is why we started a nationwide RM1 million awareness campaign to tell house buyers to beware of illegal estate agents,” he said.

He added that the MIEA had previously forwarded its complaints

to Putrajaya but no action was taken against these illegal agents.

All qualified and licensed estate agents are currently required to register with the MIEA to get an official tag to prove that they are legal.

“More than 10,000 tags have been issued so home buyers must be careful to only purchase properties through agents who have valid tags,” he said.

House Buyers Urged to Take Action Against Bogus Realtors

Real Estate Negotiator ID tag issued by The Board of Valuers, Appraisers and Estate Agents Malaysia


State Housing and Local Government Committee chairman Datuk Abdul Latiff Bandi said the state government needed a month to get the documents ready for the ruler.

The state government and Barisan Nasional assemblymen will meet the people to explain about the Johor Housing and Real Property Board Enactment.

This will be done while the documents on the matter are prepared to be presented to Sultan Ibrahim Sultan Iskandar for his royal consent.

State Housing and Local Government Committee chairman Datuk Abdul Latiff Bandi said the state government needed a month to get the documents ready for the ruler.

“The documents must have the full details before being presented to the Sultan for royal endorsement,” he told reporters yesterday (June 12).

It was reported that Sultan Ibrahim had advised the state government to first explain the role of the board to his subjects so that they can understand the Bill that was passed by the state assembly on Monday.

“There has been much confusion about the Bill among the rakyat,” Abdul Latiff said, adding that the state government will also brief the Johor Real Estate and Housing Developers Association on the matter.He stressed that the role of the board was to ensure that the rakyat were able to get low-cost and affordable homes in the state.

“Under the Bill, current or future developers who want to have projects in the state must first build affordable homes before starting on high-cost houses,” he said.

“In the last 12 years, there were 180,000 abandoned housing units throughout the state.

“When this board starts, at least 40,000 of these houses will be saved in the first quarter of next year.

“The board’s role is to get developers to build such houses not only in prime areas but also in districts where many are reluctant to build low-cost houses, such as in Muar,” he said.

More mega infrastructure and property developments are expected to be launched in the second quarter of this year, said Works Minister Datuk Fadillah Yusof.

He said that construction sector growth remained firm at 9.6%, led by the civil engineering and residential sub-sectors.

He added that this growth was supported by the progress completion of many construction works awarded in 2012 to 2013, particularly the Klang Valley Mass Rapid Transit Line 1.

“In the second quarter of 2014, we would expect more mega infrastructure and property developments to be launched that will support the sector’s growth,” he said in his speech before launching the Asean M&E (Mechanical, Electrical and Engineering) Show 2014 at Kuala Lumpur Convention Centre recently.

He noted Malaysia’s economy was expected to grow at a stronger pace between 5% and 5.5% this year on firm domestic demand and recovery in exports.

He said private investment was expected to continue its double-digit growth supported by accelerated implementation of ongoing Economic Transformation Programme projects.

On the Asean M&E Show 2014, Fadillah said the event provided ample opportunities for regional mechanical and engineering industrialists to meet with global suppliers of raw materials, machinery, packaging solutions and contract services.

He noted that Malaysia served as a meeting point between Asia, South-East Asia and Europe to promote and market effectively products related to new technologies and innovation.

Roadshow on Johor Real Estate Enactment to Start Soon

More Mega Projects Expected in Second Quarter


/// Contributor

Chris Tan is the founder and now Managing Partner of Chur Associates, a boutique legal practice that thrives in delivering business friendly solutions for its clients and having a niche positioning of ‘Everything Real Estate’ serving the entire value chain from the upstream to the downstream. Chur Associates is a boutique legal firm founded in 2004, specialising in designing legal solutions catered to our clients’ needs. Chur Associates’s brand promise is “We Deliver!” To that end, they offer clientsthe necessary means and methods to ensure their requirements are met.

You can get in touch with him at

Facebook: Chur AssociatesEmail: [email protected]

Chris Tan Lawyer Specialising in Real Estate

While the author makes reasonable efforts to present information which he believes to be reliable, the author makes no representation that the information or opinions contained in this article is accurate and complete. Readers are advised to seek specific professional advice before acting on the views.

Along with the ever expanding population in Malaysia, the growing need for individual privacy and inclination of the younger generation towards moving out from their growing up nest has inadvertently contributed to the vast demand of residential properties in today’s market. This

is also evident from the multiplication of new residential properties being launched and offered in the market in addition to the “second hand” properties (sub-sale) market. And the core of all property transactions, for both the purchaser as well as vendor, is the Sale and Purchase Agreement (SPA).

The norm for purchasing from Developer nowadays is the Sell then Build model i.e. you purchase your future home-to-be prior to any physical viewing or completion of the residential property. In other words, the SPA has been signed between you and the Developer on the basis that you will get the set of keys to your unit two to three years down the road. There is also the Build then Sell model where the property has been completed and good to sell to you.

Most of the time, you will hear that the SPA is STANDARD for purchasing from Developer because it is governed under the Housing Development (Control and Licensing) Act 1966 (HDA), thus you sign the SPA and the unit is yours. However, has your curiosity of the same led you to study the terms in the SPA, especially on your monetary obligations?

Trending Up Legally in view of the Property Boom in Malaysia (Part 4)


Trend No 4: Understanding yourmonetary obligations under the standard SPA in HDA1. Manner of Payment

This is also known as the second determining factor in the SPA, falling right after the Purchase Price. It is worth to take into consideration that Developer Interest Bearing Scheme or any similar scheme is no longer allowed and the initiative of the Government to promote transparency in property transactions has made it clear that the manner of payment has to be consistent with the HDA. Below is a simple comparison on manner of payment in different types of SPA under the HDA.

2. Loan

Unless you are cash rich, you will secure a loan when purchasing your property and here is what you need to be aware of to prevent unnecessary losses:-

3. Payment and Interests

Attention ought to be given to the due date of the payment towards the purchase price especially if your loan sum does not fully cover your balance purchase price else interest will kick in upon late payment. It was prescribed in the HDA that upon the expiration of 21 working days after Purchaser’s receipt of the notice of payment, the late payment interest at the rate of 10% per annum will be imposed on the unpaid amount and to be calculated on daily basis until the full settlement thereof.

4. Outgoings and Stamp Duty

The Developer shall furnish their confirmation that all the payment of outgoings such as quit rent, rates, taxes, assessment and other charges have been settled upon the delivery of vacant possession. Thus, you shall pay the above outgoings from the date you get your keys from the Developer. In addition, you shall bear the stamp duty and registration fee of the SPA and subsequent transfer of the property unless the same is waived by the Developer as incentives.

5. Purchaser’s Default and Termination

In the utmost unfortunate event that the SPA transaction does not proceed as planned due to any default on your following obligations:-

a) Fails to pay any installment or interest;b) Fails to pay any sum payable under SPA; c) Fails to perform any material terms or conditions of the SPA; ord) Becomes bankrupt before full payment of purchase price,

the Developer is entitled to terminate the SPA, i.e. to deal with the property at their own discretion. Furthermore, Developer can forfeit 10% of the purchase price when 50% of the purchase price is paid or 20% of the purchase price when more than 50% of the purchase price is paid.

Upon understanding of the above, you are able to plan your finance better and also avoid any unnecessary losses due to ignorance of the SPA terms, particularly its monetary terms.

NOTES

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

The core of all property transactions, for both the purchaser as well as vendor, is the Sale and Purchase Agreement (SPA)

SCHEDULE G & H SCHEDULE I & J

“Sell then Build” housing develop-ment

“Build then Sell” housing develop-ment

10% of purchase price when signing the SPA

10% of purchase price when signing the SPA

90% of purchase price is paid pro-gressively throughout the construc-tion period according to the stage of work done

90% of purchase price is paid after delivery of vacant possession

SCHEDULE G & H SCHEDULE I & J

Purchaser to make written application for loan to the Financier within 14 days from the receipt of the stamped SPA

In the event of failing to secure a loan,

1. Penalty of 1% purchase price;2. SPA subsequently terminated; and3. Developer to refund the balance paid by Purchaser within 21 days from date of termination.

In the event of failing to secure a loan,

1. 10% deposit forfeited; and2. SPA terminated subse quently.


Conditions for a privatisation agreement between the government and S P Setia Bhd which will see the latter secure a 21.2ha land in Jalan Bangsar has been fulfilled, reported The Sun Daily.

SP Setia said its subsidiary Setia Federal Hill Sdn Bhd (formerly known as Sentosa Jitra Sdn Bhd) (SFHSB) has satisfied all conditions precedent set out in the privatisation agreement and that the

effective date of the agreement is on June 17, 2014.

Under the agreement, in exchange for 21.2ha of land in Bangsar SFHSB will build a new integrated health and research institute and 1National Institute of Health (1NIH complex) in Setia Alam, Selangor. The total contract value for the 1NIH project is RM845 million.

S P Setia will pay the government RM217.1 million as minimum guaranteed profit (MGP) for the planned mixed development at the Bangsar land to carrying out the 1NIH project.

“In the event 20% of the actual profit before tax for the relevant phase of the development is higher than the MGP, SFHSB shall pay the government the sum representing the difference thereof,” the company said in its filing in 2012.

S P Setia said it plans to develop luxury residential apartments and integrated commercial products such as boutique and strata offices, which will appeal to buyers seeking upmarket properties within the affluent Bangsar and Federal Hill areas.

S P Setia Seals Deal for Bangsar Land

Ekovest Bhd has entered into a facilitation fund agreement with the Government and Bank Pembangunan Malaysia Bhd, which could see it receiving RM117 million in grant for its The Gateway @ KL Bund project.

The company said in its filing with Bursa Malaysia that the Government, through the Public Private Partnership Unit in the Prime Minister’s Department, would provide its unit, Ekovest Properties Sdn Bhd a grant of not more than RM117 million or 5% of the actual construction costs of the project, whichever is lower.

The grant is to facilitate the development of the project, which comprises planning, designing, financing, development, construction, completion, testing and commissioning of a commercial development, namely, The Gateway @ KL Bund.

The project will consist of 300 1Malaysia People Housing Programme affordable homes, 320 units of Riverfront service apartments, hotel and offices, executive small-office-home-office suites, a lifestyle shopping mall, and Riverfront residences.

There are also the necessary facilities and infrastructure, including water canals and a central lake plaza, underpass and ramps. “The grant shall be used solely for the purpose of funding such costs and expenses relating to or in connection with the project,” said Ekovest.

The facilitation fund is an initiative provided by the Government to encourage implementation of private sector projects.

The grant will only be disbursed once the project is completed, hence Ekovest does not expect any immediate effect to the group’s earnings for the financial year ending June 30, 2014.

“Nonetheless, the overall infrastructure development cost of the project is expected to be reduced upon disbursement of the grant to Ekovest Properties and this is expected to contribute positively towards the earnings and net assets of the group,” it said.

The facilitation fund is subject to Ekovest fulfilling several conditions including proving that it has the capacity to finance the project. It also has to show that it has received the approval for the alienation of four pieces of land spanning 19,736 sqm situated in Mukim Setapak in Kuala Lumpur.

Ekovest to Get Grant for the Gateway @ KL Bund

The grant is to facilitate the develop-ment of the project, which comprises planning, designing, financing, devel-opment, construction, completion, testing and commissioning of a com-mercial development, namely, The Gateway @ KL Bund.

In the event 20% of the actual profit before tax for the relevant phase of the development is higher than the MGP, SFHSB shall pay the government the sum representing the difference thereof,” the company said in its filing in 2012.

Mapping of 3 project sites


Setia City Mall in Setia Alam, Shah Alam, bagged the gold award in the retail category at the Federal of International Real Estate (FIABCI) Prix d’Excellence Awards held in Luxembourg recently.

The mall, co-owned by S P Setia Bhd and Asian Retail Investment Fund, a fund managed by a leading international integrated property and infrastructure group Lend Lease, was recognised for its sustainable development model, innovative concept and social benefits. The award also marks the developer’s sixth win in the annual awards.

“Winning our sixth FIABCI Prix d’Excellence Award, [this time for] Setia City Mall, our first foray into retail development, is indeed rewarding and an exemplary showcase of a successful cross-nation partnership enabling the convergence of S P Setia’s local expertise with the global credentials of Lend Lease,” said S P Setia’s acting president and chief executive officer Datuk Voon Tin Yow in a statement.

S P Setia was ranked first in The Edge Property Excellence Awards in 2013. It also marked the eighth year the developer has earned the coveted top spot, from 2005 to 2008

and again from 2010 to 2013.

“Showcasing [numerous] international flagship brands and new-to-market retailers, Setia City Mall has not only transformed the retail landscape of its catchment area with city sophistication, but most importantly it’s also an environmentally responsible place to shop,” he said.

Lend Lease head of Malaysia Dinesh Nambiar said: “Setia City Mall is the perfect showcase of Lend Lease’s commitment to champion the next generation of innovative and sustainable property solutions.

“Among the mall’s green features are energy-efficient lighting and air conditioners, water-saving fittings, rainwater harvesting, high-performance chillers and a dedicated recycling centre,” Dinesh said.

About 600 winners and guests from all over the world attended the annual awards ceremony, which was held in conjunction with the FIABCI 64th World Congress. The winners were shortlisted by an international panel of 61 judges from 31 countries.

Setia City Mall Wins FIABCI Award

A Million Dollar Question constantly asked by the property investors in the market: - “What is the new trend of the market? ”Those who are able to answer this question, are the ones who are capable of making the right decision for their investment in the property market.

“The Future of Property Market. Where Do We Go From Here?” the theme of Property Investment Convention 2014 (PIC 2014) organized by Wealth Master Academy (WMA) intends to help their participants understand the market and assist them to find the answer to the Million Dollar Question.

In the current uncertain time, investors are in need of clarity. WMA has lined up various Property Investment Gurus from a pool of Local and International Investing experts to provide clarity to the public about the current market. Participants surely can discover their winning and highly profitable strategies to unlock their financial freedom dreams!

Some of the very interesting selected topics include “How You Can Profit from These Uncertain Time?” by Milan Doshi; “Making BIG Profit via Land & Commercial Investment”, by Mr. Tan Hwa Chuan; “Will 2014 be the Year of Rising Interest

Rate? How Will This Affect Property Prices?” by Veena Loh, the General Manager of Malaysia Property Incorporate; “How to Buy Houses 20% off the Market Value in Malaysia?”and “Making Extraordinary Profits in Property Using Derivative Strategies” by the UK Property Investment Gurus John Lee and Vincent Wong; and “How You Can Generate Impressive Cash Flow and Profit from Your Property?” by Prudence Wong.

PIC 2014 is segmented into 4 Sections: Property Conference, Property Exhibition, Public Seminar and Forum Section. Whether one is a new investor who is keen in learning about property investment or one is an experienced investor who constantly seeks for more opportunities, PIC 2014 is the right event for everyone.

Forums topics that will be discussed by the property experts are: “The Transition of Property Purchasing Behavior Over the Years” leading by Gerard Kho, the Country Manager of Property Guru; “Is it Still Worthwhile to Invest in Iskandar Malaysia?” moderated by Gunaprasath Bupalan, the Head of Operations/Marketing of Property Times; “Property Bubble: A Myth or Reality?” moderated by Ahyat Ishak,

the renowned Property Investor; and Ernest Towle, CDO of Bestloanpackage.com will moderate the forum with the topic “What are the criteria that banks are looking for?”

If one is only looking forward to 1 property event to attend in year 2014, PIC 2014 is the one that should not be missed. Join the gurus and experts in PIC 2014 and discover how Property Gurus are doing to make year 2014 their most profitable year and find out the critical steps you need to take for duplicating their results!

This two days convention will also comprise an Exclusive Property Exhibition that is open for public admission featuring notable developers showcasing their selected projects for visitors.

Property Investment Convention & Exhibition 2014



I think most of you have got the latest news where Bank Negara Malaysia (BNM) raises the Overnight Policy Rate by 25 basis points (bps). Many are anxious to know what will happen next.

Well, when OPR increases by 25 bps you will expect the banks to raise Base Lending Rate (BLR) by the same margin. I have said in all my seminars previously that BLR has no other way but to go up this round looking at our increasing inflation rate. This is the first increment since May 2011. We should not be panicking as economists, including myself, have predicted it will go up by at least 25bps.

Now, let’s look at two scenarios that will impact your loan installment when BLR increases.

1. Increase in Loan Tenure, Maintain Loan Installment

Most of you will notice that even with BLR increase you will still pay the same loan installment. Don’t think the bank is making a mistake in your account. The first action that the banks will take when BLR increases is to lengthen your loan tenure to the maximum. Almost all banks will not send a letter to you to ask you whether you would like to lengthen your tenure or increase your loan installment. You will need to go to the bank and sign the instruction form if you wish to increase your loan installment instead.

Many loan borrowers complain that why after many years of loan repayment, the principal reduction on their original loan is very minimal. Well, increment in tenure and maintaining your original loan installment would mean you will be paying more towards the interest and lesser principal.

2. Maintain Loan Tenure, Increase Loan Installment

Let’s look at the impact of BLR increase to your loan installment. I have calculated a few scenarios.

With over 15 years of experience in the mortgage and investment industry and working with prominent companies such as Standard Chartered Bank, Hong Leong Bank, HSBC and Hwang DBS Unit Trust, Michael has helped thousands of loan borrowers by providing comprehensive mortgage advisory and solutions.

Michael regularly conducts mortgage courses and has produced many graduates. He is also a regular columnist and also has being featured in New Straits Times Press, The Star, Property Guru and also Property Hunter magazine. He speaks regularly in Property Exhibitions, Seminars and also for developers.

You can get in touch with him atWebsite: www.michaelyeoh.com.my

Michael Yeoh The Mortgage Expert


/// Contributor/// Contributor

What’s next?

#1

#2

Overnight Policy Rate Increased by 25 bps


From the above calculation you can see that the impact of 25 bps on your loan installment for a RM300,000 loan is only an increase of RM46.52. Let’s be realistic here. You should be able to cover the difference by sacrificing 3 cups of Starbucks or Coffee Bean coffee. The Impact is not that much and I think most people will be able to absorb the difference. If BLR were to go up to 100 bps or 1% than the difference will be larger at RM190. Again I feel that with proper adjustment to your spending habits this should not pose a problem to most people.

For those of you who are thinking of buying or investing your property, I know you are of two minds now whether to buy or not to buy.

If my research and instinct are right the interest spread will adjust by itself. Remember the time when BLR was at its lowest at 5.5%? The spread at that time was around minus 1.2 and you got a net interest rate of 4.3%. At 6.6% the banks adjusted the spread to minus 2.2%- 2.4% and you still got a net interest rate of around 4.3%. Thanks to competition among the banks for business, they reduced the spread and we the consumers benefited. I hope this time round the banks will adjust the spread again to stay competitive. If this happens, it will not affect your borrowing and property transactions will still be active.

Don’t get too worried about this as the market will adjust by itself as it always does. With this increment I do not think it will affect the property market overall.

NOTES

Come and join me at my one-day seminar in Penang and Kuala Lumpur in August to learn more about Mortgage Financing in Malaysia. For more information visit www.gmtrainingacademy.com.my/seminars/mortgage/

Many loan borrowers complain that why after many years of loan repayment, the principal reduction on their original loan is very minimal. Well, increment in tenure and maintaining your original loan installment would mean you will be paying more towards the interest and lesser principal.

Mortgage Comparison Calculator

* BLR = 6.6 %minus Interest Spread 2.2%

Original (6.6% - 2.2%)

Increase 25 bps (6.85% - 2.2%)

Increasa 50 bps(7.10% - 2.2%)

Increased 100 bps (7.6% - 2.2%)

LOAN AMOUNT $ 300,000 $ 300,000 $ 300,000 $ 300,000

INTEREST RATE 4.40% 4.65% 4.90% 5.4%

LOAN TENURE 35 35 35 35

MONTHLY INSTALLMENT $ 1,401.25 $ 1,447.77 $ 1,494.98 $ 1,591.44

TOTAL INTEREST $ 288,524.00 $ 308,062.00 $ 327,893.00 $ 368,406.00


The governor of Penang has called on Putrajaya to approve the state’s application for tram and Light Rail Transit (LRT) systems at his opening speech at the state legislative assembly. The Yang di Pertua Negri Tun Abdul Rahman Abbas said the state needs better public transport systems to resolve growing traffic congestion and needs the cooperation of the federal government.

“Putrajaya needs to show a clear commitment to assist the state in implementing these systems by either funding these systems or allowing the state to run these systems on its own,” he said.

The state government had demanded that the federal government fulfill its promises to implement effective public transportation systems, namely the promised LRT.

The state has applied to the federal government for licences to run any of these public transportation systems together with the private sector but is yet to receive any response to its applications. The proposal to implement

the tram and LRT systems in the state is in line with Penang’s Master Transportation Plan. Despite the lack of approvals from the federal government, Penang has called for proposals to conduct feasibility studies for a tram system.

On other matters, Abdul Rahman said that the state government will be focusing on Seberang Prai to enhance its tourism portfolio with 36 locations already identified as tourist spots which include historical buildings, eco-tourism packages and recreational areas.

He commended the state government’s ability to maintain Penang’s standing as the top draw for foreign direct investment which accounted for RM19.7 billion between 2010 and August 2013, roughly 20% of the country’s total FDIs.

He also commended the Penang Water Supply Corporation for not implementing any water rationing despite the recent drought and supported its proposal to increase water tariff to encourage consumers to save water.

The problem of abandoned houses is being addressed through legal means with owners being hauled to court by the local authorities.

The situation has become so rampant and widespread that the Petaling Jaya City Council (MBPJ) has formed a task force under the Abandoned Houses Committee to look into the issue.

The task force, established last year, has identified 299 houses which have been left vacant in the municipality while seven bungalow owners have been taken to court.

One owner paid the RM350 fine while the court dates for the other six have been set for later this month and July.

“Those who fail to show up may be arrested for disobeying a court order,” said MBPJ councillor Jeyaseelan Anthony who heads the task force.

Jeyaseelan explained that under Section 74 of the Local Government Act 1976, the owner or tenant found guilty of abandoning their properties or leaving the land in an unmaintained state, can be fined not more than RM1,000, face a jail term of not more than six months, or both.

In addition, owners served with a court order will be fined an extra RM100 per day on top of the RM1,000 fine if they do not clean up the premises.

Although MBPJ would like to take more owners to court, they face many road blocks in tracing them, said Jeyaseelan.

The process is a long one as first the committee has to identify the abandoned house, usually based on public complaints.

Apart from it being home to creepy crawlies and pests like snakes and rats, abandoned houses are also sometimes used as a hideout for criminals and drug addicts. They have also contributed to dengue outbreaks in their neighbourhoods.

MBPJ will first try to trace an owner through the land office, which most of the time does not have complete or updated information.“Sometimes all we get is a name, no address, not even their MyKad number.

“Without that, it is difficult to trace them in the National Registration Department (JPN) database,” he said.Meanwhile, others who could be traced have either died or migrated to another country.

For those who can be traced, MBPJ will issue a notice to the owner to clean their property within 14 days.

To date, MBPJ has issued a total of 416 notices advising owners to clean and maintain the cleanliness of their abandoned houses.

Only 135 owners responded and cleaned up the house while MBPJ cleaned up 101 houses which were in critical condition.There were 154 repeated notices issued to those who failed to respond, with 26 notices recently sent out.

Failure to respond to these notices will result in legal action.“We are in the process of tracking down more owners and will take them to court, if necessary,” said Jeyaseelan, adding the committee also tries to trace the owner through the payment of their assessment fee.

If the owner cannot be traced, MBPJ will clean the abandoned houses immediately.

“We will send the bill for the clean-up to the owner once we locate them. This will include other expenses for tracking them down, including the postage fees,” he said.

“If the owner fails to pay three or more bills, then we will take them to court,” said MPSJ assistant corporate director Azfarizal Abdul Rashid.

As a final resort, the property will be forfeited.

MPSJ took legal action against four owners of abandoned properties between 2007 and last year.

So far, 354 notices had been issued to owners of abandoned houses while a total of 1,334 houses have been cleaned by MPSJ’s task force from 2011 to September last year.

“We will only clean the house as it is our policy not to demolish abandoned houses,” said Azfarizal.

Approve Tram and LRT Systems for Penang, State Governor Tells Putrajaya

Owners of Abandoned Houses to Face Court Action or Have Their Properties Forfeited

The historical success of Melbourne’s tram system


The property slowdown in China and Hong Kong is not a deterrent for China’s property developer Country Garden Holdings Co Ltd.

The company, together with Johor’s economic development arm, Kumpulan Prasarana Rakyat Johor (KPRJ), have planned for a development over 5,000 acres (2,023.43ha) of reclaimed land in a project spanning more than 30 years.

The project, which will include a man-made island, will be near the second link in Johor and a study on the matter was done more than a year ago.

In an interview with StarBiz, Country Garden’s regional president for Malaysia project Kayson Yuen said the China-based company had studied the mega project, known as “Forest City”, for more than a year before it decided to invest in it.

“We decided in the investment because the land cost was reasonable. I cannot remember the exact price but we have committed towards the project,” he said.

Yuen also stressed that the slowdown in China did not have any impact on their overseas ventures.

“This is because we are able to collect a bigger deposit for our projects in China and this helps with cash flow,” said Yuen.

In March this year, StarBiz reported that the Hong-Kong listed company was joining hands with KPRJ to build a massive man-made island near Pendas, Johor, for luxury homes.

“This will be a massive mixed development and the investment and commitment shows our confidence in the Malaysia market,” he said, adding that it had hired local contractors for the reclamation works and engaged an Australian consultant who had reclamation experience at Sentosa Island, Singapore.

The man-made island that had started works, however, raised eyebrows due to environmental concerns, among others.

Country Garden intended to announce the project in March but held it back due to the incident of the missing flight MH370.

Yuen conceded that the aviation mishap, which involved many passengers from mainland China, had affected sentiments of home buyers from that country but he was quick to acknowledge that the political rapport between China and Malaysia was

strong and would help bring back relations to normalcy in time.

“It is only a matter of time before the confidence level of Chinese buyers recovers. We are still very confident with Malaysia’s fundamentals,” he said, adding that the company had studied this new market for a long time before penetrating into the country.

Malaysia is Country Garden’s maiden overseas venture. But it is no stranger, having made headlines with its massive project in Danga Bay, Johor, that is estimated to have a gross development value of RM18 billion.

In August 2013, Country Garden attracted attention when it announced the sale of 6,000 out of its 9,000 units of condominiums on its development in Danga Bay. It attracted attention because a project of such a scale had not been seen in Malaysia.

It prompted allegations that the high take-up rate was due to huge discounts offered by Country Garden. There were reports that it even offered “buy-one-free-one” for its buyers from China.

Yuen rubbished speculation that the company employed a “buy-one-free-one” approach to lure buyers.

“People who made those claims do not have knowledge of the property market. There is no logic in it,” he said.

Apart from Johor, Country Garden also has projects in Selangor. In the Klang Valley, it plans to launch the project in Serendah with its 55:45 joint-venture partner Malaysia Land Properties Sdn Bhd

(Mayland) this year.The 67.58ha project has a gross development value (GDV) of RM1.5 billion.

Its other project in Selangor is known as Diamond City in Semenyih. The RM2 billion project, which was launched officially over the weekend, received overwhelming response with some 60% of the offered units sold.

Country Garden Properties (M) Sdn Bhd managing director Chai Keng Wai, who also represents Mayland, said he was confident that the remaining units would be fully taken up in “a few weeks’ time.”

He said people had booked most of the units since the soft launch of the project last year.

Prices for its link houses, bungalows and mansions range from RM378 psf to RM430 psf while built-up sizes start from 2,300 sq ft to 8,600 sq ft.

The first phase of Diamond City sits on a 40ha tract and counts a clubhouse, a Spanish-style commercial street and an infinity pool as some of its facilities. Its selling points include its Spanish-inspired design as well as ready-built show village and amenities.

Country Garden is one of the top 10 developers in China and has more than 20 years of experience in township development.

The government will take stern action against those who increase prices after the implementation of the Goods and Services Tax (GST) on April 1, 2015, said Finance Ministry Secretary-General Tan Sri Dr Mohd Irwan Serigar Abdullah.

He said those who sell goods and provide services should not use the GST as an excuse to increase prices because prices of certain items will not go up due to tax exemptions.

“We have requested the Domestic Trade, Co-operatives and Consumerism Ministry to be more firm and take action against those who profiteer by bringing them to court and charging them.

”This firm action will deter those who take advantage of the GST,” he told reporters after the launching of the ministry’s new portal website and 1Pekeliling Perbendaharaan by Second Finance Minister Datuk Seri Ahmad Husni Mohamad Hanadzlah recently. Also present were deputy ministers Datuk Ahmad Maslan and newly appointed Datuk Chua Tee Yong.

Mohd Irwan Serigar said over two million products will be monitored nationwide when the GST is implemented. He also said that his ministry has approved the Domestic Trade, Co-operatives and Consumerism Ministry’s request for 472 new staff for enforcement activities in 222 parliamentary constituencies.

More than 10,000 products will be monitored in each constituency when the GST is implemented, he said, adding that a GST monitoring committee has also been established to ensure the smooth implementation of the new tax system.

Country Garden Plans 5,000-Acre Man-Made Island Off Johor Government Warns Stern Action Against GST Price Hikers

Country Garden’s regional president for Malaysia project Kayson Yuen



/// Contributor

Dr. Daniele Gambero is the CEO of strategic marketing consultancy firm REI Group of Companies. He holds an MBA from L. Bocconi University in Milan-Italy, Master in Communication from the University of Michigan Ann Arbour MI – USA, Ph.D in Marketing Strategies and Communication from L. Bocconi University and University of Michigan.

With his vast experience in strategic marketing consultancies, investment studies, researches, property market reports and business valuation globally, the REI Group of Companies helps Malaysian developers with business solutions relating to design, concept, strategic marketing and pricing, advertising and marketing and sale procedures for their residential, commercial and industrial projects since 2007.

Dr. Gambero’s lectures attract large crowds due to his lively presentation of serious topics with deep insight into the Malaysian Property market since 2011.

Dr. Daniele Gambero

Penang, the Malaysian Silicon Valley for the last 20 years, has seen its manufacturing sector, which has been contributing for more than 50% to the Penang GDP in the past years, to move on a decreasing trend. The Penang State Government is planning since last August to stimulate alternative sectors and diversify the GDP composition in a smarter way by using available resources and fame and tapping into the Federal Government planning for further expansion.

The Federal Government is investing heavily in promoting Malaysia oversea and the two latest “promotions” of 2014 Visit Malaysia Year and 2015 Malaysia Festival Year will surely help in drag international attention on this fast and consistently growing Country and consequently increasing the high potential of long term capital gain and very interesting ROI from different types of properties.

Construction, even though looked at as big contributors to the GDP growth, cannot be looked at as one of the economic drivers as related to the Property Market. Hopefully the State Government will have this in mind when planning future expansion of the State’s GDP and put more efforts in the right directions.

Here are some of the current numbers which may become future opportunities from a recent report released by Bloomberg rating all countries in the world for best and worst performance. The table contains for sure some surprises for Malaysia:

Penang: From Malaysian Silicon Valley To Strategically Sustainable Property Market Location

CEO and co-founder of REI Group of Companies


Challenges to come and the right angle to look at Property Market


A

TOTAL PENANG POPULATION AS AT 2012 1,493,826

CURRENT DEMAND OF HOMES 497,942

ESTIMATE NEED OF HOUSES 133,568

B+C

TOTAL PENANG POPULATION AS AT 2015 (Est + 1.2% yr) 1,562,062

DEMAND OF HOMES IN 3 YARS TIME 520,687

ESTIMATE NEED OF HOUSES BY 2015 102,217

D+E+F

TOTAL PENANG POPULATION AS AT 2020 1,682,784

DEMAND OF HOMES BY 2020 560,928

ESTIMATE NEED OF HOUSES BY 2020 77,517

Demand and Offer: actual drivers of Property Values and their Growth

Zooming into the best Property spots

Health-care which may be looked at as health-tourism brings along even better outlook for Penang state, something to be very proud of. Out of Malaysia scoring at the 18th position as health care efficiency, Penang compared to other cities in the world shows off as being more efficient of most of them showing a clear direction of future growth when combined with the growing international tourism. Till here we have defined the possible drivers for further economic growth of Penang and you all know by now how important is to always look into why the Property Market in certain geographical area is growing and which are the further possible expansions.

This is as old as the basic economic principles, its logic and common sense wisely mixed and for sure, by looking at the numbers below, we can foresee not such troubled waters for the Penang Market. No bubble or oversupply at the moment. This table is an extract from the Property Market Report 2012 issued by Napic and shows in progression existing stock, short term (2 years) incoming supply and medium term (5 to 6 years) future supply of residential properties.

Once we have estimated how many dwellings will be available by 2020, we need to look at the population growth and see whether there will be a positive or negative resulting out of it. The numbers, even though based on estimated growth of population (between 1.2 and 1.5% per year), do not take into any consideration the potentially increasing demand for short-term rentals generated by an impressive increase of tourist

and neither look into health-tourism that is more and more becoming an important contributor to the demand of dwellings.The final results clearly and conservatively show plenty of room for further growth and define the high sustainability of the Penang Property Market as within the next 7 years there is no way the offer of new houses will be able to cope with the actual demand.

Defined the why there is a high chance to get good capital appreciation and above average ROI is now time to define the where to look for. Doing this we do not have to forget the first rule that should drive a Property Investment Decision, ease of accessibility. Budget is for sure the second one but for that I’m sure each of the readers will define it by him/herself.

Pulau Penang and the southern areas of Penang mainland, namely SimpangAmpat, Bandar Cassia (BatuKawan) and Jawi are already and further more will be influenced by the official opening of the second bridge and its link with the North-South highway. Universities, International Schools and Hypermarkets have been already securing deals in the area and just naming one of them we

can get the “success signature” that the whole area will experience in the next 8 to 10 years, Ikano better known to the public as Ikea. A vital new flow of population growth is estimate to take place in these areas and to compete, price wise with the Island values as looking at a psf basis prices will be for sure more affordable in this new development area. My personal take is for properties values, in the areas

above, to easily growth at a two digit pace, YoY basis, for several years to come. Pulau Pinang instead, while keep on profiting of the established fame of Georgetown Heritage area and BatuFeringi will surely see a good growth of values both as capital gain and ROI for those areas touched by the landing point of the second Penang bridge.

BLOOMBERG WORLD BEST RATING COUNTRIES

RATING CATEGORY

# 3 BEST EMERGING COUNTRIES 2014

# 9 GREATEST GROWTH IN WORLD OIL PRODUCTION

# 9 MOST GOVERNMENT HEALTH-CARE SPENDING IN ASIA PACIFIC

# 10 TOP TOURIST DESTINATION

# 11 GREATEST INCREASE IN VEHICLE SALES

# 11 LONGEST LIFE SPAN IN ASIA PACIFIC

# 12 BEST GDP GROWTH

# 18 MOST EFFICIENT HEALTH CARE

RANK CITY HEALTH CARE INDEX

1 Bangkok, THAILAND 90.15

2 Munich, GERMANY 90.08

3 Bergen, NORWAY 89.40

4 Penang, MALAYSIA 86.11

5 Manchester, UNITED KINGDOM 86.11

6 Copenhagen,DENMARK 85.74

7 Trondheim, NORWAY 84.81

8 Paris,FRANCE 83.33

9 Denver,CO, UNITED STATES 82.59

10 Canberra, AUSTRALIA 81.85

SUPPLY OF RESIDENTIAL UNITS BY TYPE IN PENANG

ITEM PENANG ISLAND + MAINLANDSingle Storey

Terrace

2-3Storey

Terrace

Single StoreySemi-D

2-3StoreySemi-D

Detach TownHouse Cluster Low Cost

HouseLow Cost

Flat Flat Service App Condo Soho

A Existing stock 42,245 57,675 8,886 15,718 6,819 2,738 7,923 15,170 55,513 111,195 513 39,979 -

TOTAL EXISTING 42,245 57,675 8,886 15,718 6,819 2,738 7,923 15,170 55,513 111,195 513 39,979 -

B Completions 350 2,388 140 718 212 152 402 418 339 2,001 - 2,251 -

C Incoming supply 4,446 10,119 1,126 3,865 2,324 677 1,271 1,171 4,186 6,899 869 7,742 -

TOTAL BY 2015 47,041 70,182 10,152 20,331 9,355 3,567 9,596 16,759 60,038 120,095 1,382 49,972 -

D Starts 733 2,324 96 1,006 298 - 438 - 694 750 - 3,075 -

E Planned supply 2,812 12,124 1,215 3,489 2,309 630 632 764 4,171 8,285 412 5,716 -

F New planned supply 189 3,185 402 1,194 956 301 346 - 1,146 2,078 - 3,171 -

TOTAL BY 2020 50,775 87,815 11,865 26,020 12,918 4,498 11,012 17,523 66,049 131,208 1,794 61,934 -

TOTAL PER TYPE 204,903 214,780 63,728

GRAND TOTAL 483,411


Source : MIDA Statistics as at June ‘13, IRDA

Singapore continues to be the top foreign investor in Iskandar Malaysia with committed investments of RM11 billion up to April this year.

Iskandar Regional Development Authority Chief Executive, Datuk Ismail Ibrahim, said from 2006 up to end-April, the economic corridor has attracted a total of RM138.61 billion in committed investments, of which 45 per cent of them had been realised.

“Singapore is currently the highest foreign investor in Iskandar. We are looking at creative industry, other manufacturing activities, oleochemi-cals, logistics and food agriculture processing.

“We will be making the announce-ment when the time comes,” he said when asked on other new invest-ments in the pipeline.

Ismail told reporters this after the groundbreaking ceremony for Nusajaya Tech Park here Thursday (June 12).

Meanwhile, Minister of Interna-tional Trade and Industry, Datuk Seri Mustapa Mohamed, said the joint-venture project between UEM Sunrise Bhd and Ascendas Pte Ltd was a testimony to the long bilateral relationship between the two coun-tries.

“This will bring about closer coopera-tion. The park will also be among the key drivers for growth for Iskandar Malaysia moving forward,” he said, adding that it would result in spin-off activities and win-win collaborations between the two countries.

He said Iskandar Malaysia continued to drive strong interest from foreign investors, especially Singaporean companies, due to its proximity and strategic location to ports and airports.

Until December last year, 969 manufacturing projects had been implemented in Iskandar Malaysia with investments of RM46 billion, of which 75 per cent of them were foreign investments.

Meanwhile, Singapore’s Trade and Industry Minister, Lim Hng Kiang, in his speech earlier, said Iskandar Malaysia was strategically important for both countries as it not only contributed to greater cooperation between Malaysia and Singapore but also the integration of both economies.

In the morning, Mustapa and Lim held bilateral talks for an hour, discussing the progress of the two countries’ Industrial Cooperation Working Group as well as regional issues such as Regional Cooperation Economic Partnership and Asean Economic Community.

Singapore Tops Foreign Investor in Iskandar Malaysia With RM11 Billion Committed Investments

Stringent Loan Policy Stifles Sale of Bumi Housing Quota in Melaka

The stringent housing loan policy by Bank Negara Malaysia (BNM) is among the factors that make it difficult for developers to sell the Bumiputera housing quota units, leading to a glut in such units especially in this state.

The Real Estate and Housing Developers’ Association (Rehda) Melaka Chairman Datuk Anthony Adam Cho Tian Han said the policy also indirectly restricted the Bumiputera buyers in the middle-income group earning between RM2,000 and RM5,000 a month from owning the unsold Bumiputera housing units which are priced at RM250,000 and above.

In this regard, he said BNM was urged to review the housing loan policy to ensure that developers were able to sell Bumiputera quota housing units.

“Rehda has tried to discuss with Bank Negara to address this issue, however, with the introduction of new policies that are more stringent for housing loans, this problem is difficult to resolve.

“Additionally, Bank Negara is controlling the inflationary pressure, besides the new policies have given an impact on the property sector,” he told a media conference in conjunction with Malaysia Property Exhibition (Mapex) 2014 in Melaka on Friday (June 20).

The three-day expo was participated by 27 property developers promoting 4,223

properties in Melaka, Negeri Sembilan and Penang worth over RM1.7 billion.

Cho said the unsold Bumiputera quota units had caused developers to incur losses and they were not able to continue undertaking new projects in the state over the next few years.

According to him, a total of 2,820 Bumiputera housing units worth close to RM1 billion were unsold in Melaka up to March 31, 2014.

He said out of this total, some 1,101 units valued at over RM323 million had obtained the Certificate of Completion and Compliance (CCC) while 1,719 units had not obtained the CCC.

Meanwhile, he said based on the National Property Information Centre, Melaka recorded fewer property constructions than market demand last year.

“Only 5,672 housing units were built out of 9,359 units needed and this indirectly showed that housing demand in the state is high compared with the offering,” he said.


The partnership signing between IOI Properties Group Bhd and Starwood Hotels and Resorts Worldwide Inc represented by (from left) IOI chairman Tan Sri Datuk Lee Shin Cheng, IOI chief executive officer Lee Yeow Seng, Starwood regional vice president Chuck Abbott and Starwood Asia-Pacific president Stephen Ho

Legoland Hotel in Johor Bahru

IOI Properties Group Bhd (IOI) signed an agreement today with Starwood Hotels and Resorts Worldwide Inc (Starwood) to manage two hotels, namely the Four Points Hotel by Sheraton in Puchong and Le Méridien Hotel in Putrajaya.

These hotels are censured to be opened in the late 2014 and early 2015 respectively.

The hotels will add 599 rooms to Starwood’s collection portfolio in Malaysia, reflecting its rapid hospitality expansion to other districts in the nation.

“We are delighted to announce the partnership with IOI Group to manage the Four Points by Sheraton and Le Méridien in Putrajaya, underscoring our expansion plans in Malaysia,” said Starwood South-East Asia regional vice president Chuck Abbott.“We look forward to strengthen our foothold in country as we welcome these two new hotels into our portfolio,” he added.

Starwood currently operates 12 hotels in the country’s top tourist destinations including Kuala Lumpur, Langkawi,

Penang, Kota Kinabalu, Sandakan and Kuching.

“The hotels will be considered to be landmark developments within the two townships and contribute positively to the region and our own portfolio,” said IOI chief executive officer Lee Yeow Seng.

“Malaysia’s strong economic growth and healthy tourism arrivals presented us an exciting opportunity to strengthen our branding in the country,” said Starwood Asia-Pacific acquisition and development senior vice president Matthew Fry.

“Starwood’s development in the rapidly growing districts of Puchong and Putrajaya will enable us to cater to Malaysia’s increasing numbers of business and leisure travellers in the state.”

Starwood manages various top hotels in Malaysia such as The Saint Regis Kuala Lumpur, Sheraton Petaling Jaya Hotel, Sheraton Desaru Hotel and Four Points by Sheraton Kota Kinabalu.

IOI and Starwood Seals the Deal

Tropicana Corp and Ivory Properties Group have joined forces to build Penang World-City, a 103-acre integrated project in the island’s south-eastern coast.

To be built in phases in the next 10 years, the mixed-use waterfront project features about 9,000 houses. Most of the units measure less than 1,500 sq ft, making them quite affordable.

Penang WorldCity is also a perfect place to unwind and relax thanks to water-themed parks and pockets of green-ery, while its host of leisure facilities such as the Wellness area and Performing Arts Cen-tre makes it a truly exciting place to live in.The world-class city also

comes with grade A offices, a convention centre, an inter-national hotel, luxury retail outlets, al fresco restaurants and an international learning institution, making it one of Penang’s most sought-after destinations.

Strategically located between Penang Bridge and its newly opened sibling, the 1.5 mil-lion sq ft project is only a short drive from the island’s international airport and the UNESCO-listed heritage site George Town. It is also stone’s throw away from Queensbay Mall, Pantai Hospital and the Bayan Lepas Free Trade Zone.

Specifically, Penang WorldC-ity’s first phase will comprise six blocks of 22-storey condominiums. Available in

eight distinctive layouts, units at Tropicana Bay Residences range between 455 sq ft and 1,950 sq ft.

Designed by international ar-chitect, the resort-style project sports many amenities like a gym, saunas, a tennis court, an overhanging pool and a gorgeous drop-off point.

So far, 90 percent of the units in the first four blocks have been taken up, but the devel-oper is now accepting reserva-tions for units at Block E. Sizes range from 872 sq ft to 980 sq ft, while prices fall within RM769,900 to RM935,900.

Penang WorldCity to Transform the Island’s Skyline

Malaysia was crowned as this year’s best family tourist destination at the Lonely Planet Magazine India Travel Awards 2014 in Mumbai.

Director of Tourism Malaysia (India) Manoharan Periasamy said the award was a recognition of Malaysia’s achievements in promoting the country as a leading

ASEAN family destination.

“The rapid development of various theme parks and children entertainment centres in Malaysia such as Legoland, Puteri Harbour Family Theme Park, Kidzania, and i-City, to name a few, is a testament to the fact,” he said in a press statement.

Potential candidates were chosen by readers after nominees were shortlisted by an expert panel.

Lonely Planet is perhaps the world’s most well-known travel guidebook, with over 100 million copies of various countries sold worldwide.

Lonely Planet Crowns Malaysia Top Family Tourist Destination




Proud stakeholders: (From left) Eco World head of sales and marketing, credit control and customer care Evon Yap; chief financial officer Heah Kok Boon; director Tan Sri Datuk Liew Kee Sin; director Tan Sri Lee Lam Thye; Chang; executive director Liew Tian Xiong, and chief operating officer Datuk Sundarajoo Somu at the launching of Eco Majestic development in Semenyih

Eco World Development Group Bhd recently launched its first township in the Klang Valley called the EcoMajestic in Semenyih, Selangor.

Spread over 1,089 acres, it is set to be one of the largest, fully gated and guarded town-ships in Malaysia with a gross development value (GDV) of RM11.14 billion.

Phase 1 offers 612 units of terraced homes of varying sizes, with prices starting from RM586,000.

Subsequent launches will offer semi-detached units as well as bungalows for sale.

Designed around a colonial theme, EcoMajestic’s master plan includes 150 acres dedicated for development as a commercial hub that will make it the centre of business and economic activity for the Kajang, Bangi and Semenyih vicinity.

Some 100 acres has also been set aside to be developed as green zones and recreational areas, in line with the com-pany’s vision of eco-living.

Eco World president and chief executive officer Datuk Chang Khim Wah said the company received strong support from buyers, who lined up two days

prior to the official launch to get numbers for the unit selection.

“We get many young couples looking for a home, as well as older buyers who are purchasing property for their children so that they can live nearby,” said Chang.

“The area has good accessibil-ity as it connects to the exist-ing Jalan Semenyih,” he said, adding that a new interchange to the LEKAS highway will be completed in time for the handover of units.

Chang also said that Semenyih was a growing catchment area as a large number of the population are settling there.

“It is a mature township that is close to major towns such as Bangi and Semenyih,” he said.

“The launch comes following the success of our first two projects, the EcoBotanic in Nusajaya, Johor and EcoSky located off Jalan Ipoh in Kuala Lumpur, which has given us the confidence that there is a strong demand for our prop-erties,” Chang said, adding that they achieved a com-bined total sales of RM1.13 billion as of March 31, 2014.

Apart from EcoMajestic, the group simultaneously

launched two other new development projects, the Eco Spring and Eco Summer in Tebrau, Johor.

The 613 acre mixed develop-ment has a combined GDV of RM5.87 billion.

The group also previewed their first Business Park, locat-ed in the same vicinity, called Eco Business Park I which aims to take the concept of green full-serviced business parks to another level.

The developer recently an-nounced its sales target of RM5 billion for financial years 2014 and 2015 at RM2 billion and RM3 billion respectively.

“We still have many more projects to be launched and look forward to bringing more innovative products to delight our customers and followers in the near future,” he added.

Upcoming projects include EcoSanctuary in the Klang Valley, the newly revamped EcoTropics, Eco Business Park II and III in Iskandar Malaysia, as well as EcoMeadows on mainland Penang over the next few years.

Eco World Launches EcoMajestic in Selangor Datuk Seri FD Iskandar Takes Over the Helm at REHDA

Real Estate and Housing Developers Association Malaysia (REHDA) welcomed its new president Datuk Seri Fateh Iskandar Mohamed Mansor at its annual delegates’ conference on June 21.

He takes over REHDA’s presidency from Datuk Seri Michael KC Yam, who has served as REHDA president for four years and is now immediate past president.

The association’s current line-up includes most recent past president Datuk Ng Seing Liong, deputy president Datuk Soam Heng Choon and vice-president Datuk Wan Hashimi Albakri.

Datuk Seri FD Iskandar attended the Malay College Kuala Kangsar and later obtained a law degree and subsequently his Master’s Degree in Business Administration from the University of Queensland, Australia. He started his career practicing law in Australia before coming back to Malaysia to begin a new chapter in his career in the property development industry.

With more than 20 years of experience and involvement in the industry, Datuk Seri FD Iskandar’s

vast experience and expertise has made him a very well-known and respected figure among his peers. He is frequently invited as a guest speaker in forums, seminars and conventions, both locally and internationally to offer his insights and views on the property market in Malaysia.

Prior to his new position, he was the deputy president and most recently past branch chairman of REHDA Selangor.

He is also the group managing director of Glomac Bhd.

REHDA is recognised as the leading voice for advocacy and governance in the real estate and housing industry in the country.

To date, REHDA members have built more than four million housing units and have contributed in excess of RM20 billion to Malaysia’s gross domestic product annually.

Datuk Seri Fateh Iskandar Bin Tan Sri Dato’ Mohamed Mansor, known globally as ‘FD Iskandar’, The Group Executive Chairman, Chief Executive Officer, Managing Director of GLOMAC




The imminent increase in interest rates has caused anxiety among some Ma-laysian households, as the prospects of higher repay-ments for their outstanding loans will likely put further strain on their spending power.

As it is, many in the country are already feeling the im-pact of rising inflation eating into their disposable in-come, leaving them with less to spend on each month.

Data provided by the Performance Management Delivery Unit (Pemandu), which is the special govern-ment agency tasked to drive Malaysia to high-income status by 2020, show a sobering fact – about 80% of households in Malaysia are currently earning less than RM4,000 per month.

Amid the rising inflation and a potential interest-rate hike, the low-and-middle-income earners are easily seen as the most vulnerable.

“The low and middle income earners will likely feel the

impact the most, especially if everything happens at almost the same time – the electricity hike, fuel hike, higher prices of natural gas and so forth,” says Malaysian Rating Corp Bhd (MARC) chief economist Nor Zahidi Alias.

“However, while low-income earners will be somewhat compensated by govern-ment measures such as BR1M and the absence of income tax, the middle in-come group will be affected more on a relative basis as the latter does not receive as much compensation as the low-income group, and they are subjected to in-come taxes,” Zahidi explains.

The middle-income group, defined as those earning between RM3,000 and RM7,000, accounts for about 40% of total households in Malaysia based on 2012 statistics. It is noted that middle-income households tend to have more hous-ing loans than low-income households, which are made up of another 40% of the country’s population.

The combination of low interest rates and easy access to credit in recent years has encouraged many households in Malaysia to borrow against their future income to finance their present consumption. And that, to some extent, has contributed to the country’s economic growth.

A similar trend is observed in Asia, but Malaysian households have turned out to be one of the most heav-ily indebted in the region.

“Certainly, easy access to credit and low interest rates has helped fueled private consumption growth, which ultimately contributes to the country’s economic growth,” explains Alliance Investment Bank chief economist Mano-karan Mottain.

“But credit-fueled growth is definitely not a sustainable trend, especially when you have household income growth that is not keeping pace,” he says.

At 86.8% of the country’s gross domestic product

(GDP), Malaysia’s household debt level is the highest in Asia, slightly ahead of South Korea’s household debt level at 86% of its GDP, and Singapore’s 77% of GDP.

Bank Negara concedes that Malaysia’s household debt level is not likely to come down anytime soon, as de-mand for credit is expected to remain strong over the next few years, driven by a young labour force and increasingly affluent urban population.

Statistics show the bulk of Malaysia’s household debt is made of home-mortgage loans, as households take advantage of the prevail-ing low interest rates to buy properties, leading to increased demand, and eventually, the significant in-crease in property prices in the country in recent years.

But rising household debt level can be a cause for con-cern, economists note, as it makes households more vulnerable to the risks on an economic shock that could affect their debt-servicing

capability, and hence, their future consumption. The good news is, such risks seem remote as of now.

The looming interest rates, however, will have implica-tions for consumers, as mortgage rates, which in Malaysia are pegged to the base lending rate (BLR), will rise in tandem, while future hire-purchase and personal loan rates will also increase.

The expectations of an inter-est rate hike have been ris-ing since Bank Negara sent out the clearest signal early this month that it might have to adjust the degree of monetary accommodation to address the continued build-up of economic and financial imbalances in the country so that these risks do not undermine Malaysia’s growth prospects.

Most economists expect the overnight policy rate (OPR) hike to take place when Bank Negara’s Monetary Policy Committee (MPC) convenes its next meeting on July 10.

Bank Negara has left the OPR unchanged for the past two years. The last revision took place in May 2011, when the MPC decided to increase the OPR by 25 basis points (bp) to 3%.

According to economists, the impact of an interest rate hike on households will ultimately depend on the quantum of the rate increase.

A 25 bp increase to the benchmark OPR from the current 3% to 3.25% – which is what is widely expected by the financial community – is unlikely to cause any serious dent, economists argue.

“Based on our assessment, many households will likely be able to absorb any increases in debt obligations arising from a 25 bp increase without experiencing any severe circumstances,” Manokaran says.

“And at a higher rate of 3.25%, we think the OPR is still accommodative to growth,” he adds.

Zahidi concurs, saying, “The impact will not be that significant although consumers will still end up paying slightly more for their mortgages and future hire purchases.”

“But if another hike takes place, pushing the OPR up by 50 bp (from the current level), then the impact on consumers will likely be more pronounced and this may lead to further moderation in private consumption growth,” Zahidi argues.

Economists in general do not expect Bank Negara to take a too aggressive stance on its monetary policy, given the negative implication on the country’s economic growth as a whole.

Expecting Bank Negara to make only gradual adjustments to the country’s policy rate, RAM Ratings Sdn Bhd head of research Kristina Fong notes that “the central bank has embarked on a very holistic approach to their policy rate decision.”

“Any decision made by Bank Negara would have been well

assessed so as to avoid any adverse impact on growth sustainability,” she argues.

Sharing the same sentiment, Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid says: “We do not subscribe to the idea that the central bank would aggressively tighten its monetary stance. A 25 bp hike would be sufficient enough at this juncture since growth in the second half of the year is expected to moderate on account of the implementation of subsidy rationalisation.”

Economists reckon that the prolonged period of low interest rates in Malaysia is a major driver of rising household debts in the country. The low borrowing costs have also encouraged many households to use borrowed funds to invest in speculative activities to seek higher returns, as partly evidenced by the significant increase in asset and property prices in the country in recent years.

“The adjustment in OPR is necessary to avoid risks of financial imbalances becoming more entrenched as the existing macro prudential measures have yet to exhibit significant slowdown in lending to household,” Afzanizam explains.

Drawing an example from the collapse in the US subprime mortgage, which subsequently led to the 2008/09 global financial crisis, Mohd Afzanizam argues that there are always dire consequences of keeping interest rates too low for too long.

“The recent out turn of GDP growth data clearly suggests that Malaysia’s economy is on firmer footing, and therefore, any forms of economic stimulus (which include low levels of interest rates) should be withdrawn in order to ensure growth remain sustainable,” Afzanizam says.

Rising Inflation and Potential Interest-Rate Hike Put Medium and Low Salary Earners at Risk Eco World on Course to Become Major Property Player

Eco World Development Group Bhd (Eco World) is gradually emerging as one of the big property players in the country.

RHB Research Institute Sdn Bhd (RHB Research) in a report said the company’s latest corporate exercise to raise funds for expansion will fast track its growth.

The research firm believed that the funds raised will be utilised to acquire more landbank in other region particularly Penang to balance up its geographical exposure.

RHB Research noted Eco World’s landbank profile is largely located in Iskandar Malaysia, Johor which made up 66 per cent of its total landbank.

The research firm observed that after the company’s fund raising exercise, the property player’s landbank will be ramped up to 4,433 acres from 1,326 acres with estimated gross development value (GDV) of RM43.5 billion.

RHB Research said Eco World has recently sealed a deal with Tropicana Corporation Bhd to acquire 308.7 acres of land in Canal City, named as Eco Sanctuary in the Klang Valley.

Besides that, the research firm said the company could be a potential winner for the tender of a 450-acre golf course project in Batu Kawan, Seberang Perai Selatan, Penang.

As for the company’s latest corporate

exercise to include rights issue, private placement and share split, RHB Research said the move will bump up the share base of Eco World substantially by more than 10 times.

The research firm noted that it is the easiest and fastest way to grow the market capitalisation and size of the company.It added that the entire corporate exercise is expected to be completed by October 2014.

Moreover, RHB Research said Eco World’s financial year 2015 (FY15) earnings will witness contributions from most of the company’s newly injected projects while its FY14 earnings will see two out of its three on-going projects, Saujana Glenmarie and Eco Tropics recorded in its financial performance in FY14.

Steered by one of the prominent captains in the property industry, Tan Sri Liew Kee Sin who was former chief executive officer and group president of SP Setia Bhd, RHB Research believed that Eco World will gradually join the ranks of big players in the future.

Hence, RHB Research remains upbeat on the company’s medium to long term growth.

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

/// International Property News

Asia-Pacific Property Market Become World’s Largest at USD$4.6 Trillion

The Asia-Pacific real estate sector, with an estimated worth of USD4.6 trillion, has overtaken the European property market for the first time ever to become the largest in the world.

According to data compiled by integrated property services group DTZ, the Asia-Pacific market grew 9 percent, year-on-year, in the past year and has topped Europe, which only strengthened by 2 percent, valued at USD4.4 trillion, the Financial Times reported.

Analysts attribute the rapid growth to mainly to China’s real estate industry, which recently surpassed the Japanese market with a compound annual growth of 32 percent in the last ten years. It has also become the region’s property leader, despite a recent slowdown of the Chinese market and concerns of a possible developing bubble.“But the problems in China will not be as severe

as in Europe, because the leverage ratios are not the same,” DTZ global head of research Hans Vrensen told the Financial Times.

Nearly half of the tallest skyscrapers in the world that were constructed in the last four years are located in China, the Middle East or Southeast Asia, based on a study by insurance company Allianz. At present, 50 percent of the world’s tallest buildings are based in Asia.

“These buildings are prestige objects to show the power and wealth of these areas and regions,” according to the Allianz research.

Reports of a slowing Chinese property market, which is partly due to China’s cooling economy, have caused concerns. One tycoon, Song Weiping, chairman of Hangzhou luxury developer Greentown China Holdings, reportedly resigned

his post because of the slumping market, The Wall Street Journal reported last month.

Yu Liang, chief executive of China’s biggest residential developer based on revenue, Shenzhen-based Vanke, whose quarterly profit declined for the first time since 2002, told the South China Morning Post that although China’s “golden age” in real estate had passed, “all the talk about a looming crisis is misplaced” and instead described the current situation as China’s “silver age”.

The latest DTZ report also stated that China has become the second largest market in the world, behind the United States. “Everyone wants to have a share of the Chinese market and maybe that opportunity is coming up now as developers need to fund their upcoming activity by selling off some of their assets,” Vrensen said.

Hong Kong, one of the leading property investing market in the world


RBA Welcomes Foreign Property Investors

Foreign investors are not pushing first home buyers out of the property market, a central banker says.

Rising house prices in the past 12 months have been driven by low interest rates and a growing population rather than foreign investors, Reserve Bank of Australia assistant governor Christopher Kent told a parliamentary inquiry.

Prices have grown across the country, including cities or pockets of cities that do not typically attract foreign investors, Dr Kent said.

“The information available suggests that foreign residential purchases have probably not had a large direct effect on the price of housing that is typically purchased by first home buyers,” Dr Kent told the hearing in Sydney on Friday.

The inquiry into foreign investment in residential real estate has previously heard first time buyers typically buy established properties, while foreign investors are only allowed to buy newly constructed property or off-the-plan.

Graham Mirabito, the chief executive of real estate researchers RP Data, told the hearing on Friday overseas buyers are often looking for different properties to those sought by local first home buyers.

“They’re looking at one to two bedrooms max,” he said.“The typical first homebuyer would be seeking something

more substantial, probably with a larger area, potentially not right in the middle of the CBD.”Dr Kent also said foreign demand was concentrated in high density apartments in inner city Sydney and Melbourne, close to universities.

It was possible foreign demand was affecting prices in certain segments of the market, but it was hard to know what the impact was, if any, Dr Kent said.

“My own sense is that it’s probably had a marginal impact but you just can’t say definitively how much,” he said.

Mr Mirabito also said price pressures from overseas investors were localised, most often in high density areas.

“From a macro or a national scale it’s unsubstantial,” he said.“If you look at Docklands or Southbank in Melbourne, for example, you’ll find there is some price pressures being caused by foreign buyers.”

The RBA was not concerned about property price rises over the past year, as supply was just catching up to demand following a period of slow construction, relative to population growth, Dr Kent said.

Concern would be raised if a long, sharp spike in house prices continued, but the growth rate had already begun to slow, he said.Foreign investment supported local construction, while foreign-based developers added competition and provided access to alternative sources of financing, Dr Kent added.

Perth Retail Headed for Bright Future

An influx of international retailers, shopping centre upgrades, and the rise of online shopping has kickstarted Perth’s biggest retail overhaul in 50 years, a forum on Perth’s retail future has heard this morning.

More than 300 attendees at the Property Council of Australia breakfast at the Hyatt Regency Perth were told international traders still preferred Perth’s two key malls on Hay Street and Murray Street rather than urban shopping centres — but that they would soon make their way to the suburbs.

Architects, shopping centre managers, town planners and local government representatives were among the attendees.

Shopping centres would also move from “retail boxes” to designer spaces with dining and entertainment options, starting with Ocean Keys Shopping Centre in Clarkson.

The revamped Ocean Keys centre will open later this year and include a new dining precinct, a Target and 30 new specialty stores.

Upgrades are also in the planning stages for Garden City and Karrinyup shopping centres.

The construction and delivery phase of those projects should begin by 2016.

Zara, Top Shop and Williams-Sonoma are leading the influx of international retailers, with the new Zara’s first Perth store to open in Booragoon next month.

The retail overhaul comes at a time when WA has emerged as one of the biggest online shopping regions in Australia, the attendees were told.

After the NT and ACT, WA had the third highest spend per capita on online sales.Panellist Jim Tsagalis, managing director for Lease Equity, also said the rise of hotel developments, emergence of new food and beverage precincts, new liquor licensing approvals, and the simultaneous development of large-scale projects were driving the retail change.

Mr Tsagalis said the Elizabeth Quay precinct, the Perth City Link, and a Forrest Chase upgrade would continue to attract international retails over coming years.

“Over $2 billion will be spent on shopping centre developments over the next four years,” Property Council of Australia WA president Joe Lenzo said.

“That’s the kind of figure you hear for the mining industry.”Mr Lenzo said the lifting of restrictions on shopping centre sizes had been the catalyst for the transformation.“[The retail landscape] is going to be totally transformed,” Mr Lenzo said.

“We’ve been way behind the rest of Australia; even our biggest shopping centres don’t make the top 40.”

Mr Lenzo said in addition to the international retailers already announced, half a dozen others were interested in Perth including major Singapore retailers.

“Shopping centres will become true destinations,” he said.“You won’t go there only to shop — you go there to be entertained, to eat.”

He said Perth’s new-look shopping centres would incorporate commercial and residential apartments and have a “true main-street flavour” similar to established centres in NSW and London.


/// International Property News

Brisbane Property Set to Boom

Brisbane is predicted to be Australia’s strongest property performer in the next three years, with economic forecaster BIS Shrapnel’s latest Residential Property Prospects report forecasting a 17 per cent increase in median house prices. Report author Angie Zigomanis said the strongest conditions were forecast for New South Wales and Queensland as both markets had an undersupply of dwellings. “The pieces are falling into place for the Brisbane residential market to continue to strengthen,” Mr Zigomanis said. New housing construction had fallen below underlying demand in the Queensland market in recent years and a shortage of dwellings had emerged, with vacancy rates in Brisbane at 2.3 per cent in the March quarter, Mr Zigomanis said. While Brisbane’s median house price at June had risen 8 per cent for the year to an estimated $475,000, it was still 7 per cent below its June 2010 peak in real terms which, together with the low interest rate environment, had resulted in affordability being at early-2000s levels.

Brisbane, Australia

Singapore Official Discusses ‘Uneasy Calm’, Tells Banks to Prepare for Financial Collapse

While just about every other central bank on the planet is giving everyone two thumbs up on the economy, the deputy chair of the Monetary Authority of Singapore (Lim Hng Kiang) said last night at a dinner that “an uneasy calm seems to have settled in markets” and that “we remain in uncharted waters.”

It was pretty amazing, really, to see such pointed language from a central banking official.

Mr. Lim jabbed at the “obvious” risks and said there would be “bumps on the road” ahead.

That’s putting it mildly.

Warren Buffet once said that ‘only when the tide goes out do you discover who’s been swimming naked.’ (In my mind he says it like ‘nekked’ but I seriously doubt he pronounces it that way…)

That’s exactly what happens in severe financial crises. You find out which banks have been playing it safe… and which have so mind-numbingly stupid it’s a miracle they’re still around.

There are a number of ways to judge how safe a bank is. One way is by looking at its liquidity;

my preferred metric is to calculate how much cash a bank has on hand as a percentage of customer deposits.

Note- this doesn’t mean physical currency, as in bricks of paper cash stacked up in a vault. Those days went away long ago. I’m talking about electronic currency– typically deposits with central banks.

The more cash a bank has on hand, the safer it is. Because in a financial crisis, people tend to panic (hence the crisis) and want to withdraw their money.

Banks bleed cash. And if they don’t have enough of it on hand, the bleeding turns into a sucking chest wound.

It’s at this point that they’ve been caught red handed swimming naked, and they need to go raise cash from somewhere, anywhere else.

So they start selling assets– loans, securities, and even shares of the bank itself.

But this is not an orderly liquidation in a well-functioning market. It’s a distress sale brought on by a full blown crisis. Asset prices are collapsing, fear has taken hold, and it’s difficult to find a buyer.

You never get full price in a crisis (unless you’re Goldman Sachs and can call up your BFF the Treasury Secretary). So, in the process of raising cash, banks end up taking heavy losses on their balance sheets.

Now, banks that have healthy balance sheets will be able to withstand these losses.

But banks with razor thin capital ratios (i.e. a bank’s net equity as a percentage of total assets) will fold. Or go to the taxpayer with their hats in their hand claiming to be too big to fail.

This is precisely what happened to the US financial system back in 2009. Lehman Brothers. Wachovia. Washington Mutual. Etc. They were all swimming naked, with very little liquidity and miniscule capital levels.

Singapore’s monetary authority is obviously concerned about financial markets. They understand that you can’t expect to conjure trillions of dollars out of thin air without creating epic bubbles and even more epic consequences.

Sure, you can shuffle those consequences out a few months… even a few years. But at some point those bubbles must be reckoned with.

Perhaps the greatest concern is how few people seem to care.Central banks and institutional investors turn a deaf ear to obvious risks and fundamentals that are screaming out in desperation hoping some conservative steward will notice that we are tap dancing on a knife’s edge, where nearly every

single financial market is simultaneous at/near an all-time high, and central bankers keep pumping money into economies that they claim to be ‘recovered’.

This is the ‘uneasy calm’ that Mr. Lim discussed – a prevailing attitude that there’s nothing to see here; keep calm and buy the all-time high.

And he’s telling banks to get ready for something to happen.

Curiously, Singapore’s banks are already better capitalized and more liquid than most western banking systems. Back in 2008, Singapore demonstrated a lot of resilience as a financial center, sidestepping most of the problems with zero bank failures.

But for a country that went from third world to first world in just a few decades, complacency is not a cultural norm.

According to Mr. Lim, Singapore’s experience with the 2008 crisis “shows how the buildup of risks can severely destabilise even the most developed and sophisticated financial markets.”

So he wants them to increase their capital and liquidity even more.

If a senior official presiding over one of the world’s safer banking jurisdictions wants his banks to become even safer, a rational person would certainly wonder– “What do these guys know about the financial system that I don’t?”

They must be expecting the mother of all busts.


Australia in Global Top 10 for Price Growth

The Richest Man in Asia Is Selling Everything in China

Property advisory firm Knight Frank has released analysis, placing Australia in the top 10 nations globally for real estate price growth. The Knight Frank Global House Price Index for the first quarter of 2014 sees the nation at number seven on a ranking of countries with the biggest price gains. Michelle Ciesielski, an associate director at Knight Frank, says the result highlights a return to form for Australia and other markets. “The turnaround in the US, Australian and Icelandic housing markets is evident with three countries now appearing in the top 10 rankings for annual price growth alongside key emerging markets such as China, Turkey and Brazil.” Dubai topped the annual rankings, but prices rose by only 3.4 per cent in the first quarter, compared to a 9.2 per cent jump over the same period in 2013. Croatia, Cyprus and Greece were the weakest-performing housing markets in the 12 months to March 2014. Although the index saw slower growth in the first quarter of 2014 compared to last quarter, it still recorded annual growth of 7.1 per cent. Ciesielski says their outlook remains bullish for future results. “We expect to see the index’s performance strengthen again in the second quarter,” she says. “All eyes will remain on central banks, in particular the Federal Reserve, the Bank of England and the European Central Bank.” And she says the pace of monetary policy change will be the determining factor. “The issue is not when interest rates rise but the speed and extent to which they do.”

Here’s a guy you want to bet on - Li Ka-Shing.

Li is reportedly the richest person in Asia with a net worth well in excess of $30 billion, much of which he made being a shrewd property investor.

Li Ka-Shing was investing in mainland China back in the early 90s, way back before it became the trendy thing to do. Now, Li wants out of China. All of it.

Since August of last year, he’s dumped billions of dollars worth of his Chinese holdings. The latest is the $928 million sale of the Pacific Place shopping center in Beijing.

Once the deal concludes, Li will no longer have any major property investments in mainland China.

This isn’t a person who became wealthy by being flippant and scared. So what does he see that nobody else seems to be paying much attention to?

Simple. China’s credit crunch.

After years of unprecedented monetary expansion that has put the economy in a precarious state, the Chinese government has been desperately trying to reign in credit growth.

The shadow banking system alone is now worth 84% of GDP according to an estimate by JP Morgan. The IMF pegs total private credit at 230% of GDP, jumping by 100% in the last few years.

Historically, growth rates of these proportions have nearly always been followed by severe financial crises. And Chinese leaders are doing their best to engineer a ‘soft landing’.

If they’re successful, the world will only see major drops in global growth, stocks, property, and commodity prices.

If they fail, the spillover could become pandemic.

This isn’t important just for Asian property tycoons like Li Ka-Shing. Even if you don’t know Guangzhou from Hangzhou from Quanzhou,

there are implications for the entire world.Here in Chile is a great example.

Chile is among the top copper producers worldwide, China among its top consumers. With a major slowdown in China, however, copper prices have dropped considerably.

Consequently, the Chilean economy has slowed. The peso is down nearly 10% against the US dollar in recent months, and the central bank is slashing rates trying to prop up growth.

There are similar situations playing out across the globe.

Not to mention, China could put the entire global financial system on its back just by dumping a portion of its Treasuries in order to defend the yuan.

Now, you’d think that a major credit crunch with far-reaching consequences in the world’s second largest economy, its largest manufacturer, and its largest holder of US dollar reserves, would be constant front-page news.

But it’s not.

Most traditional investors are unaware that what’s happening in China will likely have far greater implications to their investment portfolios than the policies of Janet Yellen and Barack Obama combined. At least for now.

And folks who don’t see this coming and keep buying at the all-time high may see their portfolios turned upside down. Quickly.At the same time, some investors who are conservative and cashed up may realize a real ‘blood in the streets’ moment.

Again, using Chile as an example, I’m starting to see over-leveraged property owners coming to the market in droves ready to make a deal. This is great news because my shareholders and I are able to buy far more property with US dollars than we could even just six months ago.

I expect this trend to hold given that China is just at the beginning of its process.

It’s said that the Chinese word for “crisis” is a combination of “danger” and “opportunity”.

This isn’t entirely accurate. ‘Weiji’ can have several meanings, but is probably best translated as ‘dangerous’ and ‘crucial point’.

We may certainly be at that crucial point, and now might be a good time to take another look at your finances and consider selling before a major crash.

The richest man in Asia certainly thinks so.

Perth, Western Australia

A hike in the Overnight Policy Rate (OPR) will provide a short-term benefit for banks as lending rates can re-price immediately, but competition will continue to pressure the net interest margin (NIM), said Alliance DBS Research House.

“An interest hike will be positive for most banks as the variable rate and BLR-based loans tend to be re-priced within a week of a hike, while deposit rates take longer to adjust, due to various maturity profiles,” it added in a note Tuesday.

The research firm anticipates Bank Negara Malaysia raising the OPR by 25 basis points (bps)

to 3.25 per cent at its upcoming Monetary Policy Committee meeting on Thursday.

“With the exception of AMMB and Affin (with a larger share of fixed rate loans), most banks should benefit in a rising rate environment.

“Meanwhile, banks with a larger current and savings account ratio base (low-cost funds) would be in a stronger position to manage the rising cost of funds,” it said.

AllianceDBS said based on its sensitivity analysis, every 10 bps hike in the NIM would raise the sector’s earnings by six per cent.

The research house said banks have to balance between expanding the NIM and keeping non-performing loans (NPL) intact as interest rate hikes can lead to higher NPL and provisions.

In 2010, it added, the 75 bps hike triggered an uptick in the NPL, and provisions or credit costs crept up.

However, AllianceDBS opined that a 25 bps hike should be manageable and not affect borrowers’ ability to service higher interest costs, but a

larger hike could create risks of a higher NPL and provisions.

Nevertheless, it said, the banking system’s loan loss coverage ratio remains robust at above 100 per cent and able to buffer an NPL uptick.

The research firm said its top picks are Public Bank, Hong Leong Bank and RHB Capital.

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Meanwhile, banks with a larger current and savings account ratio base (low-cost funds) would be in a stronger position to manage the rising cost of funds

Hike to Benefit Banks but Competition Will Affect NIM

IMF Triggers House Alarm

The International Monetary Fund (IMF) has sounded the alarm of another potentially devastating housing crash given that house prices are still well above their historical average in many countries in relation to incomes and rentals. The world financial body says the situation has emerged as one of the biggest threats to economic stability.

Indisputably, the many trillions in quantitative easing (QE) money launched by the United States in recent years and record low interest rates are among the contributors for the sharp hikes in property prices in many parts of the world today.

Is Malaysia faced with a risk of a housing market bubble and should we be worried of a potentially damaging burst of the bubble given that the inflated property prices seen in the last two years may not be sustainable?

Borrowing the definition of a property bubble from the internet site, Investopedia which is dedicated to investment education, National House Buyers Association (HBA) honorary secretary-general Chang Kim Loong says there is a risk of a property bubble in Malaysia as property prices have increased rapidly in the past four to five years, and excessive speculation in the property market has driven property prices to

“its current artificially high level.”

According to Investopedia, a property bubble is a situation that shows a run-up in housing prices fueled by demand, speculation and the belief that recent history is an infallible forecast of the future.

Chang says in the event borrowers could not afford to pay their mortgage installments and the banks are forced to auction off their properties, “there is a risk a property bubble in Malaysia can burst, just like what happened during the sub-prime crisis in the US.”

“Skyrocketing house prices have forced house buyers to take back-breaking mortgages which have left many borrowers with little or no savings after deducting the monthly installments and other basic necessities. Many borrowers need to combine their income in order to qualify for a mortgage, and this has placed the family at risk as the family could fall into a deficit situation if any sudden emergencies happen to either of the borrowers,” he points out.

However, Chang qualifies his outlook by saying that as long as Malaysia’s economy holds and there is no downturn, the bubble will not burst.

“Malaysia is still a young country with high demand for housing and coupled

with urban migration, there is still a strong demand. But the question is whether this group of genuine buyers can afford the properties that they want.

“Although the frenzied escalation of house prices have somewhat slowed down, overall house prices have not gone down,” Chang observes.

DTZ Nawawi Tie Leung executive director Brian Koh says the fact that housing prices have jumped 15%-20% in the last two years are actually emerging signs of a housing market bubble, but he acknowledges the fact that “a property bubble can only be recognised and confirmed as one after it has happened.”

However, Knight Frank Malaysia managing director Sarkunan Subramaniam believes the property market is still resilient and with the market cooling measures introduced by the Government, “there will not be a property bubble like a massive property price correction but only a mild price correction of the property market.”

Sarkunan says Malaysia and the other South-East Asia countries have been the bright spots for economic growth and investment returns, and in the aftermath of the global financial crisis, they have attracted encouraging levels of investments that have also boosted their property markets leading to sharp hikes in prices.

“The governments in these countries have acted responsibly by implementing various measures to cool their property markets, averting potential property bubbles.

Despite the recent scale-back in quantitative easing by the US (leading to large reversals of capital flows), Malaysia’s economy is expected to remain fairly resilient supported by a strong banking system.”

Sarkunan says if there is a property bubble, “it is not brewing across the board but only in selected regions or locations, and in certain property segment, category and type, where there are more speculative activities and over-building.”

“A property bubble is akin to having an elephant in the room. We really need to acknowledge that in some areas, the elephant is getting bigger. But the market appears to be self-correcting. Developers are holding back their launches amid weaker market sentiment and revisiting their development plans to cater to current market demand and trend,” he adds.

Concurring with Sarkunan, CB Richard Ellis Malaysia executive director Paul Khong does not envisage any serious bubble in the market, especially this year, and further expects the market to continue to march ahead towards the second half of the year.

“The first half of 2014 has been relatively quiet as predicted earlier, as the property market has been absorbing the market cooling measures silently hoping for some good news. We currently see the secondary market becoming slightly active and prices in select locations are now looking relatively attractive,” Khong says.

Maybank Aims to Disburse RM39 Million in Loans via New Donggongon Branch

The Maybank Donggongon branch was officially opened on June 9 by Assistant Finance Minister Datuk Ramlee Marahaban and witnessed by Maybank head of community financial services Malaysia, Hamirullah Boorhan.

The opening marks the bank’s 21st branch in the state.Hamirullah said that Maybank chose to open its 21st branch in Donggongon due to its growing potential as a commercial and economic hub.

The company is targeting to disburse loans amounting to RM39 million through the new branch, he said.

According to Hamirullah, out of the figure, RM12 million will go to small-medium enterprises (SMEs), another RM12 million to mortgages and housing, and RM15 million for the Amanah Saham Bumiputra (ASB) investments.

“For entrepreneurs looking to expand their businesses, Maybank offers loans without collateral from RM300,000 up to RM1.5 million,” he added.

This follows their collaboration with the Credit Guarantee Corporation this year where they had raised RM1 billion in funds to assist SMEs.


58 www.PropertyHunter.com.my www.PropertyHunter.com.my 61www.PropertyHunter.com.my 59

RHB, CIMB, MBSB Seek to Merge

Just as the market was heading towards a period of listless trading due to the World Cup and prevailing cautious sentiments, trading in three financial institutions are being suspended today, paving the way for the formation of Malaysia’s biggest bank.

The trading of RHB Capital Bhd, Malaysia Building Society Bhd (MBSB) and CIMB Group Holdings Bhd are suspended today, all three told Bursa Malaysia separately yesterday.

It is learnt that the three banks will write to Bank Negara to seek permission to commence a corporate exercise which will result in a mega bank that will have a market capitalisation of more than RM90 billion, assuming the deal is concluded at about 1.70 to 1.75 times book value.

“The deal is likely to be done at 1.75 times book value based on CIMB’s current valuation of almost

1.70 times book. It is unlikely to be transacted at anything less,” said a source.

At 1.75 times book value, RHB Cap would have a market capitalisation of about RM30 billion, while MBSB’s total capitalisation would be about RM6.8 billion.

“Together with CIMB’s market capitalisation, the merged entity would fetch a market value of more than RM90bil,” said the source.

The Employees Provident Fund (EPF) will play a significant role in this merger because it has significant stakes in all three entities.

It is the major shareholder in RHB Cap with a 40.76% stake. The other major shareholders of RHB Cap are Aabar Investments PJSC with a 21.43% stake and OSK Holdings Bhd with a 9.91% stake.

The EPF has a 64.73% stake in MBSB and 14.46% in CIMB.

The eventual merger will see the EPF emerge as the largest shareholder in the mega bank, with a stake estimated to be more than 25%.

RHB Cap and CIMB closed four sen lower each at RM8.72 and RM7.24 respectively, while MBSB ended 12 sen higher at RM2.34 at yesterday’s market close.

Sources said the impending merger was a well-kept secret, with only a few people having knowledge of it.

“Only a few people were clued in on the entire deal. News of a merger between RHB Cap and MBSB was already out in the market in the afternoon, but CIMB entering the fray caught most people by surprise,” said a source.

When the market closed and the announcements came out late, it became apparent that the creation of Malaysia’s largest bank was in the making.

At the close yesterday, CIMB was trading at 1.70 times book value, RHB Cap at 1.29 times book value and MBSB at 1.60 times book value.

Sources said the exercise would possibly involve a share swap between CIMB and RHB Cap at a book value of 1.75 times and an outright buyout of MBSB.

MBSB is a building society whose loans are mainly for residential loans and commands a lesser premium.

“But it is probably one of the most profitable financial institutions and has the fastest growing balance sheet. This is evident from the returns it has given to its shareholders in the last two years,” said an analyst.

A merger of the three financial institutions will result in a bank with the largest asset base, market capitalisation and earnings based on the latest published numbers.

Based on latest figures, the merged entity’s asset size is expected to be more than RM600 billion and combined profits based on its last financial year will exceed RM7 billion.

It will surpass that of Malayan Banking Bhd (Maybank) that has a market capitalisation of RM91.1 billion currently and asset size of RM578 billion as of March 31 this year.

RHB Cap has been a takeover target as far back as three years ago, with both CIMB and Maybank as its suitors.

The block in RHB Cap that belonged to Aabar Group from Abu Dhabi was up for sale then.

However, talks fell through due to a pricing issue and the block changed hands between companies related to the Aabar Group.

Recently, Datuk Seri Nazir Razak charted a leadership transition plan for CIMB, whereby he will relinquish his role as group chief executive in September this year to become the chairman of the group replacing Tan Sri Md Nor Yusof, who is retiring.

An increase of 0.25% in the overnight policy rate (OPR) will not have a significant impact on borrowers for low-cost and affordable housing priced between RM45,000 and RM450,000, according to a senior executive of a real estate agency.

VPC Realtors (KL) Sdn Bhd

director James Wong said there would only be an estimated marginal increase of RM5 to RM53 per month in loan repayment compared to the previous interest rate for a 30-year tenure with a 20:80 margin (see chart).

“As for high-end residential properties, most buyers are

either cash buyers or they buy with a minimum loan margin. Hence, an increase of 0.25% per annum will be insignificant,” he added.

Bank Negara has raised the benchmark overnight policy rate by 0.25% to 3.25%, the first rate hike since June 2011.

Mortgage rates are based on the base lending rate (BLR) which in turn is correlated to the central bank’s OPR.

Wong felt that speculators would be hit the most.

“If they are unable to service the loan, they will be forced to sell. But it will not be as easy as before due to the

real property gains tax,” he said.

Wong did not expect rental rates to be impacted by the increase in interest rate as the rental market was primarily determined by demand and supply.

Property consultants expect fewer transactions as mortgage rates will rise in tandem with the interest rate.

Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector president Siders Sittampalam said: “With the interest rate hike, we expect a gradual fall in volume.”

That said, property prices will still be driven by demand and supply.REI Group, CEO, Dr. Daniele Gambero also commented after almost three years of freeze OPR has finally announced by many bankers and professionals, BNM has raised it 0.25% as of 11th July 2014 there will be a hike in the cost of financing that will somehow slightly affect the Property Market.

Sourcing from a couple of reliable links with interesting opinions at this regard and have a look at the table which Dr. Daniele Gambero compares Malaysian Interest rate with the one of some other countries.

New Overnight Policy Rate Will Have Little Impact

/// Banking and Investment News


Top Tips When Buying Your First Property

Buying your first property? Read this guide to make sure you don’t end up paying more than you need to and Save Money!

Buying your first property - be it for your own stay or for investment - can be very intimidating yet exciting at the same time. This is not unusual for most of us as buying a house will probably be one of the single largest purchases we would make in your lifetime, and along with the mortgage required for it, getting the whole process right will be one of the biggest ways to Save Money.

In this guide, we will look at ways to Save Money on securing the property itself. For this we want to share with you the top 5 tips that you ABSOLUTELY need to be aware of when buying your first property!

TIP1: DEFINING OBJECTIVES

One must be crystal clear about your objectives when buying your property. The two main objectives are:

(a) For Own StayWhen it comes to buying your first home, it’s very easy to get carried away with finding the perfect home. Sorry to burst your bubble, but perfection does not exist. So be prepared to compromise. You need to be realistic with what you can afford given your budget. So make sure you have a BUDGET and STICK TO IT.

(b) For InvestmentIf you are buying for investment, you then need to be clear if you are investing for Capital Appreciation (rising price of property) or for Rental Returns. As a general rule of thumb, if you are still young with high future earnings potential, you should focus on properties which are likely to provide the highest Capital Appreciation. But if you are approaching retirement, you should be looking at properties which will preserve its value yet give good Rental Returns to fund your retirement.

If you are buying for Capital Appreciation, one would usually go for off-plan properties (Properties which are sold before they are complete). However, things have changed in the past few years especially in the Klang Valley where there is currently an oversupply situation therefore making it very tricky to ‘flip’ properties (Flipping is a common term used to describe buying a property on a short-term speculative basis) immediately on completion.

An advantage of buying properties off-plan is that developers usually have very attractive Developer Interest Bearing Schemes (DIBS), making it very affordable for buyers. Under the DIBS, the buyer only has to pay the 10% down-payment on signing of the Sale & Purchase Agreement (or 30% if you already have 2 outstanding loans), and nothing else until you get the keys to

your unit. So you don’t have to make any progressive payments during the construction period (Progressive payments are payments made to finance a housing loan during the course of construction. Typically, you only pay the interest element of your loan during the construction period).

The public should be aware that although this scheme seems to be very attractive, never forget that the developer would have factored in their finance cost during the construction period into the pricing of the property. Other advantages of buying off-plan is that developers will usually give a lot of ‘freebies’ such as free legal costs for your Sale & Purchase Agreement and sometimes even for your Loan Agreements too. This will help reduce your initial capital outlay.

If you are buying for Rental Returns, it is advisable to buy properties from the secondary market where the rental yield is likely to have stabilised. Imagine this, if you have bought a unit off-plan which takes 2 years to complete, you will be faced with a lot of competition to let out your unit during your first year. Aside from that, for an off-plan property, you won’t be able to collect any rent during the construction period.

Historically, condominiums and apartments have given superior rental yields* as compared to landed properties. However, yields are currently being squeezed as compared to 10 years ago where supply of condos and apartments were relatively scarce. Ten years ago, it was possible to find properties giving yields of 8 – 10% a year.In the current market conditions, you would be lucky to get 7% a year! Given the current market conditions, SaveMoney.my reckons there are two strategies that one can pursue in search of high rental returns. The first being LRT, LRT, LRT.

Properties located close to an LRT station have historically enjoyed better capital appreciation AND better rental returns. And this doesn’t just hold true in Malaysia, as it’s a trend that is obvious in other countries too. Being within walking distance to an LRT station also gives you a higher chance of finding a tenant sooner.

The second strategy is to go for properties catered to the masses i.e. properties priced below RM300,000 in reasonably central locations. Such properties have a real rental demand so finding a tenant will be relatively easy and yields of about 8% are very achievable. The only real risk with this strategy is collection of rent from your tenants given lower priced properties may come with a higher risk of non-collection of rent because of the lower income level of tenants.

*Rental yield is calculated as Annual Rental /Market Value of Property in percentage terms.

So for example, if the monthly rent for your property is RM2,000 per month, the Annual Rental is RM24,000. If the market property is RM400,000, the rental yield on this property is 6% (ie 24,000/400,000 x 100%).

Warning! Don’t forget to deduct items such as service charges, yearly repairs and maintenance costs and letting agent fees if you are calculating your net rental yield!

TIP 2: LOAN APPLICATION

Most people will look for the property first, then seek for financing. This is WRONG! One should always find out how much you are able to borrow from the bank FIRST before going out to look for the property.

Let’s just say if you don’t know what you can afford, you are more likely to screw up. You can do this by walking in to most banks and SaveMoney.my recommends you walk in to several to build the relationship with several Loan Officers as they will come in handy when you need to check the valuation of your property (see below). Also, never apply to just one bank.

You should always spread the risk (in case that one bank rejects your application) and applying to many banks will help you get a more competitive rate. Don’t be afraid to let your Loan Officers know what rates the other banks are offering you, because this keeps them competitive too. Some banks are known to undercut others but this has to be done before the formal Offer Letter is being issued.

Retirement Fund KWAP Buys Third UK Property for RM961 Million

Kumpulan Wang Persaraan (KWAP) has bought a controlling stake in its third UK property for £174.8 million (RM961.4 million), bringing the number of properties in its portfolio to seven.

The retirement fund said in a statement yesterday that it had sealed a joint venture with Intu Properties plc for the purchase of an 80% interest in the intu Uxbridge shopping centre.

The three-floor, 440,000 sq ft retail complex in West London was officially opened in February 2001.

Intu, a British retail-based real estate investment trust, retains a 20% stake and will continue to manage the freehold property on behalf of the joint venture.

The shopping centre, which has a net lettable area of 42,041 sq m and 71 stores, cafes and restaurants, counts major UK chains like Debenhams, Odeon Cinema, H&M, Next, TopShop, Boots and BHS as major tenants.

This is KWAP’s third property investment in the United Kingdom after acquiring 10 Gresham Street in October 2012 and 88 Wood Street in April last year for £200 million and £215 million, respectively. It now owns and co-owns seven properties, including four in Australia.

Chief executive officer Wan Kamaruzaman Wan Ahmad said the retirement fund

had to date invested RM5 billion into international properties.

According to a statement on Intu Properties’ website dated June 5 announcing the sale, KWAP had bought Intu Uxbridge at a 2% premium to its end-2013 valuation of £214 million for a 100% stake.

Intu Uxbridge, in Zone 6 of Greater London, attracted around 12 million visits each year, the company said.

Uxbridge is one of London’s major metropolitan centres, situated 15 miles from Charing Cross near the M25 London orbital motorway and close to Heathrow airport.

It is a significant retail, leisure and commercial centre with 40,000 office workers, including the European headquarters of a number of global blue chip companies like Apple, Coca Cola, Cadbury and Xerox, according to Intu.

Intu owns or part-owns about 16 shopping centres in the United Kingdom with over 21 million sq ft. Its shares are traded on the London and Johannesburg stock exchanges.

TIP 3: VALUATION

When you have found the property of your choice, you are usually required to pay a holding deposit of 2 – 3% of the purchase price to take the property off the market.However, making an offer and paying the holding deposit does not necessarily equate to acceptance. Until the Seller signs the Letter of Offer, nothing is confirmed. Usual conditions on the Booking Deposit receipts (sometimes also known as the Letter of Offer to Purchase) include:

• The Sale and Purchase Agreement (SPA) to be signed within 14 working days from the date of acceptance by the Seller. Extensions on SPA signing are usually granted at the Seller’s discretion.• You, as the Buyer shall bear your own portion of the Stamp duty and legal fees incurred in relation to the execution of the Sale and Purchase Agreement whilst the Seller will also bear his or her own legal fees.

• The Offer to Purchase is subject to the acceptance of the Seller and if and when it is not accepted, the holding/earnest deposit shall be refunded in full to the Buyer without any interest and legal recourse.

As the buyer, you should always add in a clause to say ‘Offer is subject to the confirmation of the actual square footage of the unit’ in the Offer Letter. Reason being you don’t want to be caught out in a situation whereby the agent tells you it is 1,200sf when it is actually only 1,000sf, which would mean you would be paying much more per square feet. Your lawyers will then be able to confirm this for you whilst in the process of drafting the SPA. Before you pay the holding deposit (also known as Earnest Deposit), make sure you do the following two checks.

(a) Valuation of PropertyIf the price that you have agreed to pay for the property is RM400,000, and you are looking for a 90% loan from your bank, you need to check with your bank that the valuation is ‘up to mark’. Reason being, if the banks’ valuers only values your property at RM350,000, the bank will only be willing to lend you 90% of RM350,000 and NOT 90% of RM400,000. What this basically means is that, if you really wanted to buy the property, you will need to fork out the difference from your own pocket i.e. RM85,000 [RM400,000 – (RM350,000 x 90%)] rather than RM40,000 that you thought you would need.

One way to mitigate this risk is that you ensure there’s a clause written in your Booking Receipt which says that you are entitled to get back your Holding Deposit in the event you are unable to obtain a loan.

This is not a standard clause in the Booking Receipt, but don’t be afraid to insist on this even if it means penning it yourself on the Booking Receipt.

Also, don’t rely on just one valuation. Ask a few Loan Officers to get a more accurate reading of the valuation of the property. This will reduce the risk of you being caught out in the scenario above.

(b) Check up on your Estate AgentBefore paying your Earnest Deposit, be sure to also check up on your Estate Agent to make sure they are legit. You can do a search to see if the company that they work for is registered with the Board of Valuers, Appraisers, and Estate Agents of Malaysia here.

Also, only issue cheques to the Realtor’s Company and never to an individual name.

TIP 4: SECONDARY MARKETS – Getting a Deal!

This is a little trick that you can use to find undervalued properties. If you have been following the property market i.e the Classifieds be it online or in print, avoid buying from real estate agents who are regularly advertising for a specific area or for a specific development. Reason being, they are more likely to be working with a lot of owners in that area and are more inclined to want to maintain high selling prices to protect the interests of all these owners.

Visit www.propertyhunter.com.my for the largest list of legitimate property listings from registered estate agents in Sabah!!

In this guide, we will look at ways to Save Money on securing the property itself. For this we want to share with you the top 5 tips that you ABSOLUTELY need to be aware of when buying your first property!



Are You Financially Ready to Buy a House in Malaysia?

AND WHAT YOU CAN DO IF YOU’RE NOTOwning a home you can truly call your own represents the ultimate dream for many. But with escalating real estate prices and the burden of lengthy loan repayment periods that easily go into 30 years or more, buying and financing a home is not just a matter of saying “I like it” and signing on the dotted line. It is something that should be done with a great deal of sense and prudence.

For all aspiring Malaysians who are actively considering buying a home by taking a loan, here are three things to determine if you’re financially ready to undertake this life-changing endeavour:

1) DO YOU HAVE ENOUGH FOR THE UPFRONT COSTS?In Malaysia, most banks offer up to 90% of the property’s price (margin of financing) for your first two residential properties. If you receive that 90%, you need 10% cash to pay for the rest of the property’s price.

Say you’re targeting to buy a condo in Kota Kinabalu for approximately RM400,000, you must have a minimum RM40,000 to pay upfront, be it from your savings or money from your parents, siblings or partner.

2) DO YOU HAVE EXTRA CASH FOR MISCELLANEOUS FEES AND CHARGES?

First-time home buyers may not know it; but buying and financing a home takes more than just the deposit and the loan, it also involves miscellaneous fees and charges that include, among others:

1. Stamp duty for transfer of ownership title (also known as memorandum of transfer or MOT) = 1% for the first RM100,000; 2% on the next RM400,000, and 3% on the subsequent amount.

2. Sale & Purchase Agreement (“SPA”) legal fees = 1% for first RM150,000 and 0.7% of remaining value of property within RM1 million

3. Stamping for SPA = Less than a hundred Ringgit

4. SPA legal disbursement fee = A few hundred Ringgit

5. Loan facility agreement legal fees = 1% for first RM150,000 and 0.7% of remaining value of loan within RM1 million

6. Stamp duty for loan = 0.5% of loan amount

7. Loan Facility Agreement legal disbursement fee = A few hundred Ringgit

8. Fee for transfer of ownership title = A few hundred Ringgit

9. Mortgage Reducing Term Insurance (ie. think of it as a life insurance for your home loan) = RM1,000 or more (some banks waive

this amount)

10. Government Tax on Agreements = 6% of total lawyer fees

11. Bank processing fee for loan = RM200

*Note: The percentages are based on recommended numbers and industry averages. Actual figures may differ.

To put things into perspective, a home valued at RM400,000 with 90% margin of financing comes close to about RM20,000 in fees and charges – which will have to be borne by you, the buyer. Now consider this: do you have the money to make it happen?

3) CAN YOU AFFORD TO PAY THE MONTHLY INSTALLMENT?Unless you have the financial muscle to buy a property with cash upfront (in which case, this article probably wouldn’t apply to you), you’ll need to secure a loan from a bank or a financial institution to help pay for your home.

Based on the current market rate of 4.2% to 4.4% p.a. interest for a standard home loan, you will need to pay a minimum of RM1,760 per month over the next 30 years for a 90% loan to finance a RM400,000 home. To quickly calculate the monthly installments charged by banks of Malaysia for a home loan of any value, you can use online calculators.

As most financial experts recommend that you allocate no more than one-third of your total income to pay off your home loan, this means you or your household should have an income of at least RM5,280 per month to afford the RM400,000 home.Take note that Malaysian banks generally allow you

to hold loans (including commitment for car loan, personal loan etc) of up to 80% of your income if you have a relatively good credit score, so you can always choose to increase your monthly installment and shorten your loan term. But make sure you’ve done the math and understood the financial implications before you commit!

WHAT IF I DON’T QUALIFY?For those of you who can afford the monthly installment but do not have the necessary savings for down payment and legal fees & charges, hope is not lost.

For a start, you may consider looking around for properties with free SPA and loan facility agreements to save thousands of Ringgit in legal fees. This should be relatively simple as most new property projects commonly absorb the costs of legal agreements for home buyers.

To cut down on the initial payment needed to buy a home, do actively shop around for properties with low initial down payments. Many developers now offer competitive early bird or “easy entry” sales packages which include rebates of between 2% to even 10% of the property price.

Ultimately, buying a home is a serious life decision that shouldn’t be taken lightly. Though owning a home in a posh area is always nice, one should always consider one’s financial position when it comes to buying property, so you don’t end up being overly burdened for the next few decades. Hopefully, this article will serve as a general guide for all Malaysians who are thinking about buying a home now.

The Penang state government has endorsed Eastern & Oriental Bhd’s (E&O) masterplan for the second phase of its Seri Tanjung Pinang (STP) project.

In its filing with Bursa Malaysia, E&O said its subsidiary Tanjung Pinang Development Sdn Bhd was notified yesterday that its masterplan for STP phase two had been endorsed by the Penang State Planning Committee.

The property developer had earlier hoped to receive endorsement for the project by the fourth quarter of this year.

On April 10, the Department of Environment granted E&O an approval in principle for the detailed environmental impact assessment study and conceptual masterplan for the STP phase two project.

STP phase two will involve reclamation of 760 acres of man-made islands and 131 acres of the Gurney Drive foreshore, which will be handed over to the state government for infrastructure development.

The infrastructure development will be for a new expressway, a new Gurney Drive promenade, and a parallel linear park for public recreational purposes.

Reclamation work is to take three to five years, and the development will take up to 15 years.

Phase one of the STP project involved the reclamation of 239 acres and was completed in 2005. To date, about 2,500 housing units have been completed at STP.

Penang Approves E&O’s Masterplan for STP Phase 2

Chinese Developers Bet on Malaysia as Investors Turn Cold on Hong Kong, Singapore

Malaysia is turning into the darling of Chinese developers as mainland investors turn their backs on market restrictions in Hong Kong and Singapore and bet billions on cheaper housing and higher returns in the Southeast Asian country.

State-backed Greenland Group announced this month a $3.3 billion deal in two residential and hotel projects in Malaysia, joining smaller peers Country Garden Holdings Co Ltd, Guangzhou R&F Properties Co Ltd and Agile Property Holdings Ltd, which have invested a combined $2.7 billion in Malaysia in the past two years.

In 2013, Chinese institutional and retail investors invested a total of $1.9 billion into real estate in Malaysia, exceeding the $867 million invested in Hong Kong and $1.8 billion invested in Singapore, according to real estate consultancy Savills. The figure also topped the $1 billion invested in Australia, but lagged investments from China into the UK and the United States.

“Malaysia hosts a vast Chinese community and has policies that attract foreign buyers so it has become a new investment destination,” said Greenland’s group chairman, Zhang Yuliang.

He added that Malaysia’s stable economic growth, large population demand in Johor Bahru, the city where the group is investing, its proximity to Malaysia’s major cities and Singapore, as well as the country’s established

immigration policies, are reasons for the company to invest.

“Malaysia is the cheapest in the region in terms of capital city pricing,” said Tim Murphy, chief executive of property investment consultant and underwriter IP Global. “We like Malaysia also because of the strong foreign ownership level and because you can borrow money. Lenders are friendly.”

A 15 percent stamp duty on non-resident buyers in Hong Kong and Singapore, where cash-rich mainland Chinese have been blamed for driving up prices in the past few years, has deterred many foreign buyers, Murphy added.

Luxury residences in Malaysia sell for between $2,300 and $5,600 per square meter, much lower than $27,600 to $33,700 in Singapore and $43,700 to $53,500 in Hong Kong, according to real estate consultancy Knight Frank. Average rental yields are also more attractive in Malaysia at 4 to 6 percent, compared to 3 percent in Singapore and 2.5 percent in Hong Kong.

Mortgage terms are also better for non-residents in Malaysia, with buyers able to borrow 70 percent of a property’s value. That’s more generous than the 40 percent to 60 percent in Singapore and 30 percent to 50 percent in Hong Kong.

Officials with Country Garden declined to comment while officials with Agile and R&F could not be reached for comment.

One challenge facing Chinese developers is their ability to secure land, which is tightly controlled by local governments.

“It’s difficult to find good opportunities because the good plots of land are controlled by the local government. Only local developers, family of government officials and political affiliates can have access,” said an executive at a private equity fund who invests in Southeast Asian projects.

PROPERTY TOURSCountry Garden, which focuses on high-end residential housing, has three villa projects underway in Malaysia after it entered the market in early 2012. At its latest condominium project at Iskandar, five minutes from the Singapore border, the company sold more than 6,000 units within the first month, reaping a total of 9.1 billion yuan ($1.5 billion).

Since the middle of last year, Country Garden has been organizing subsidized tours to Malaysia for potential Chinese buyers, departing from Guangzhou, Hong Kong and Macau.

A four-day tour costs as little as 3,610 yuan, according to information on real estate agent website, house.163.com, with the property developer sponsoring 2,000 yuan for each person.

One morning is spent at Country Garden’s Danga Bay villa in Iskandar.

The web page, topped with a banner that says “300,000 yuan to get residency for the whole family in a city next to Singapore”, also gives details about Malaysia’s immigration policies.

($1 = 6.1260 Chinese yuan)($1 = 7.7606 Hong Kong dollars)

Najib Confident of Sustained Economic Growth in Second Quarter

Prime Minister Datuk Seri Najib Tun Razak is confident the nation’s economic growth will be maintained in the second quarter of the year driven by political stability and investors’ confidence towards government policies.

He said the momentum would also be spurred by vibrant domestic activities coupled with a competitive export sector in the first quarter.

“Godwilling, this encouraging development will help the economy reach the target growth of more than five per cent this year.“This target is in tandem with the 5.2 per cent forecast by the International Monetary Fund for 2014,” he said in Parliament today.

Najib was replying to a question from Datuk Shamsul Anuar Nasarah (BN-Lenggong) who asked about Malaysia’s current economic performance and how the country was fairing against its neighbours.

Najib, who is also Finance Minister, said the economy showed an encouraging trend in the first quarter with real Gross Domestic Product registering a growth of 6.2 per cent.

He said this was the highest GDP growth recorded since the fourth quarter of 2012.

“In fact, this growth was better than that recorded by the Philippines (5.7 per cent), Indonesia (5.2 per cent), Singapore (5.1 per cent) and Thailand (-0.6 per cent).

“This performance was supported by robust domestic activities and favourable external factors,” he added.

Najib also said the sterling performance was a result of the Government Transformation Programme, high level of domestic savings, strong international reserves, resilient banking system, low unemployment and inflow of rapid foreign investments.

International investors from Hong Kong and China showed great interest in Malaysian properties at a recent private roadshow in Sabah



APARTMENT FOR SALE Extracted from PropertyHunter.com.my

*Listing are accurate at the time of print. Kindly contact the respective agents for updates.For more real estate listings, please visit www.propertyhunter.com.my

/// Property Listing



*Listing are accurate at the time of print. Kindly contact the respective agents for updates.For more real estate listings, please visit www.propertyhunter.com.my For more real estate listings, please visit www.propertyhunter.com.my

TERRACE / LINK HOUSE FOR SALE Extracted from PropertyHunter.com.my

*Listing are accurate at the time of print. Kindly contact the respective agents for updates.




SEMI- DETACHED HOUSE FOR SALE Extracted from PropertyHunter.com.my



*Listing are accurate at the time of print. Kindly contact the respective agents for updates. *Listing are accurate at the time of print. Kindly contact the respective agents for updates.For more real estate listings, please visit www.propertyhunter.com.my For more real estate listings, please visit www.propertyhunter.com.my

CONDOMINIUM FOR SALE Extracted from PropertyHunter.com.my




OFFICE SPACE FOR SALE

RETAIL SPACE FOR SALE

COMMERCIAL FOR SALE

Extracted from PropertyHunter.com.my



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