PTLM Property Market Forum: Buy property when the market is weak Registration

Entitled Deal Or No Deal In 2016: A Property Market Forum by PTLM, the casual event covered an extensive range of topics that are most important for homebuyers and property investors.

The event was held on Saturday, 28 November 2015, at the newly-opened RM12 million SkyWorld Property Gallery showcasing its SkyArena development in Setapak. Built by ambitious property developer SkyWorld Development Sdn Bhd, the show gallery complex is said to be the largest in Kuala Lumpur.

The panelist members were Ms Khin Lee, SkyWorld’s General Manager of Sales & Marketing and PTLM co-founders Mr Patrick Chay, a property researcher and representing Generation-Y; Mr Nick Tan, a savvy property investor focusing on small unit sizes; and Mr Jerro Loh, a licensed and experienced real estate agent.

The discussion was hosted by Mr Hwang Wei Young, another co-founder of PTLM.

The objective of the forum is to provide an unbias views about the economy and the property market. The panelists also provided a variety of educational insights to homebuyers during the slowing property market.

We summarised the forum discussions as below.

 

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The forum started with the moderator asking about the panelists’ personal thoughts about the property market as we move into 2016.

They all agreed that the property market has slowed down and may remain status quo next year if the economic climate remained uncertain. The current economic climate is weak and property buyers are being very cautious, with some savvy investors staying away from property fairs and property launching events in recent times.

“If you are buying for own stay, any time is good time. If you are a property investor, the best time to buy a property is when the demand for properties is weak. This is because developers have to be generous… extra generous in providing additional incentives to purchasers.

“Due to the slowdown, some new launches are now sold at reasonable price in per square foot terms. At entry, the prices should not exceed 20% of subsale prices in surrounding vicinity unless the product is unique,” said Patrick Chay.

Khin Lee shared that as a developer they have to be mindful to the needs and affordability of homebuyers. SkyWorld is a lifestyle builder and hence its products are designed to give a sense of belonging and to serve the needs of the increasing number of working adults in strategic areas.

SkyWorld is strongly focused in all districts within the jurisdiction of Federal Territory of Kuala Lumpur due to the expected rise in household population and urban migration.

The moderator asked if there would be an overhang or oversupply situation in the property market.

“I am a property agent in Mont’Kiara. When it comes to the term ‘oversupply’, this is something that have been said since many years ago, especially in Mont’Kiara. Now, other locations might be going the same way.

“My opinion is that there is a large mismatch between the supply and the buyer’s demand. There are some condos doing very well in Mont’Kiara while many others are not convincing enough to the buyer,” said Jerro Loh.

The panelists agreed that overhang and oversupply situation will happen, and in fact, it has been an occurence since many years ago. This will remain largely a general perception by property investors moving forward.

“The best thing is to be positive. Have a positive mind in whatever you do including investing in property. Malaysia is a growing country. The need for homes will always be there,” said Nick Tan.

“It all comes down to whether your property are able to convince renters or buyers. Every location would have the goods and bads in property,” added Jerro Loh.

“Every prime location today would have high density developments, but if your property is convincing and acceptable to the needs of the people at that location at that time, then it would be a matter of time before it gets snapped up,” said Nick Tan.

“Location specific. Product specific. In the event of any oversupply situation, there will still be properties that outperform the rest in the same location. Understanding the product specification and understanding the needs of the demographics, i.e. the local population, are two important factors.

“It is not just solely the location factor. It is a combination of factors,” said Patrick Chay.

The moderator quoted a recent article about unsold stocks as reported by the Real Estate And Housing Developers’ Association (REHDA).

“The unsold stocks appeared to be largely Bumi quota units which are being held back for sale or have not been converted or released by the developer. This is the main reason for causing such stocks to be difficult to move.

Another reason for unsold stocks is the affordability reason. This could be either the property unit size is large hence the price would be high. Not many people could afford large-sized property today.

“Or simply the property is overpriced if the unsold stocks are uncleared until completion,” added Nick Tan with Patrick Chay concurring.

Jerro Loh said that property investors have to be savvy in making investment decisions and be prudent in their financial planning.

“You may be asking for a certain price, but the bank may value the property slightly lower. Worst still, there might not be many transactions that happened around your property. So do your due diligence when buying a property in an area that you are not familiar,” said Jerro Loh.

The moderator then asked about the impact of the Goods and Services Act (GST) on property developers, property investors and first homebuyer.

“I agree that the GST has affected property developers. But things will stabilise and we are now heading towards normalisation. People have started accepting it as a matter of fact.

Now 8 months into implementation, the confusion over GST has subsided. Developers have pushed their commercial products with incentives such as covering the buyer’s GST portion.

Ultimately, Malaysians are known to be ‘survivors’ and we will together ride out from any price impact caused by inflation and GST,” said Khin Lee drawing nod gestures from the attendees.

According to Patrick Chay, commercial players should take advantage on commercial products that have their GST portion covered by the developers. As people adapt, the developers will take down this incentive.

Alternatively, some developers are also offering schemes such as Guaranteed Rental Return (GRR) on shop offices which provide an additional level of comfort in the first few years upon completion.

“In my opinion, shops with immediate catchment of large population in the vicinity, or shops with direct residential properties above who are mainly own-stayers are most viable. Investors have to do extra homework on studying the demographics, traffic flow and the exposure of business in that area.

“The realistic yield for new properties has dropped below 4% so shop owners should be flexible in their asking rentals. If the rental price are not desirable, some retail tenants may even ask for discounts and rebates from time to time or otherwise they will delay rental payments,” added Patrick Chay.

The moderator says that many first homebuyers would want to know if the government would re-introduce the scheme known as Developer Interest Bearing Scheme (DIBS).

The DIBS was stopped since 1 January 2014 and many properties with such scheme are now completing and handing over to the purchasers.

Nick Tan agrees that DIBS should be re-implemented but only for first homebuyers so that they have an equal chance to own a property like many of the Generation Ys who have invested in their first property during the 2010-2013 golden years.

He said banks have to be lenient in approving such financing as long as commitments and repayment patterns in CCRIS are met but at the same time there should not be any shortcuts for obtaining their mortgages.

Besides DIBS for first homebuyers, there are currently several ‘boosters’ for first homebuyers to buy affordable homes such as 100% loan financing under government-initiated programs.

On the issue of affordable homes, there are now 10 known RUMAWIP schemes in Kuala Lumpur and the first two PR1MA schemes have called for a few rounds of balloting exercise.

As part of SkyWorld’s corporate social responsibility programs, the developer launched its first affordable homes under the RUMAWIP scheme earlier this year. The development is the most ‘luxurious’ in its category with 16 full-condo facilities. Since then, Sky Awani Residence on Jalan Sentul Pasar has been sold out.

With such overwhelming demand, SkyWorld will be embarking next year on its subsequent RUMAWIP schemes called Sky Awani 2 and another project near Jalan Ipoh.

The moderator wanted to know how does a politically-tensed situation impact our property market next year.

Patrick Chay calls for the resolvement of the 1MDB saga to improve Malaysia’s reputation in global financial markets. He shared about the current economic situation which drew close attention from the attendees.

“The secondary market is slow but not the worst. Any uncertainty will have to be diminished, but even before that, there are actually many good deals that can be found in the secondary market,” explains Jerro Loh.

The moderator asked the panelists for suggestions on what to do if a property investor is not able to rent out his/her apartment unit within 6 to 10 months.

“There are always rental enquiries …or upgraders’ enquiries for subsale during the first 6 months period for every newly-completed property.

“The question is whether do you want to catch them and how to do it? There are many property owners who delayed their collection of keys and this is causing them to miss-out on rental deals.

“If they are asking for high rentals (higher yield) then they would have to wait for more than 6 months in today’s market. If they have the holding power to wait, then it is fine, otherwise good luck,” said Patrick Chay.

Khin Lee shared about the urgent need of doing up defect works upon obtaining you property keys in order to speed up your unit availability for rent.

She shared that every developer will have alot to do upon vacant possession especially when the number of units are alot, but sometimes it is the human relations element that could speed things up for you.

“(You may) get hold of the person’s contact who does inspection with you.”

“I recently collected keys for a property, spent a short time for defect works since it was very minor and quickly managed to rent out at a reasonable time of less than 3 months,” quips Nick Tan.

“I offered a higher commission, i.e. 1.5 months, to the agent dealing with my property tenancy. At least this can motivate the agent to quickly push my property rather than wasting several months empty.”

Property investors are adviced not to spend too much time on defect works and typically, minor ones can be omitted and cleaned up when you are doing your renovation.

Nick Tan: “The rule of thumb is that you should not spend more than 10% of the property cost in your renovation or interior design cost. Fully furnished is good but bear in mind tenants may not appreciate your choice of furnishings.

“The best is to buy a new highrise property with at least partial furnishes. I would spend less than 5% of the property cost to add on the necessities, unless needed to put more things as negotiated by the would-be tenant.”

Innovations on interior designs is a new trend for enhancing one’s property. Creating a “wow” concept can be very costly which may improve your asking rental price but not necessary actual rental yield.

Innovative interior designs may attract attention from visitorship from potential tenants. However, due to the competitive nature of rentals, then one would have to differentiate itself.

Nick Tan: “I always on the look-out for home furnishing deals. For example, I bought a whole set of furnitures for as low as RM6,000 from a sale that was on its last day.”

With the popularity of mixed development on commercial land these days, the moderator query the panelists whether such developments would be a better bet.

PTLM co-founders Patrick Chay, Nick Tan and Jerro Loh believe that mixed development projects provide the attraction factor to those looking for investment play.

Khin Lee: “Typically in any mixed developments, there will be several phases of developments and several blocks of properties which are launched in stages over several years.

“And each time a developer launches a block, the price gets higher and higher and this actually will assist investors in price appreciation.

“This is the advantage to property investors especially if you are buying into the early phases of a holistic mixed development project.”

“SkyWorld is very selective in the landbanks that we do, as we would conduct a market study to find out if the intended end product will be marketable at a right price,” added Khin Lee.

Speaking on innovative ideas, the moderator asked if dual-key apartment units are practical, purposeful and rentable.

“If you have a small family, a decent family size apartment will be good. But there might be excess space that you may not use. This is where dual-key unit comes in useful as you may consider letting out the second unit and monetise the extra space. Similarly, if you are not living-in, then you may rent out separately to two tenants whenever possible,” said Patrick Chay.

“Dual-key units are very popular as far as we are concerned,” said Khin Lee referring to the sales of Bennington Residences in SkyArena, which has a take-up rate of 70% for the first tower (Block B).

“Parents with teenagers. Teenagers especially. They would want a dual-key unit for their own use. It’s like their own bachelor pad. Privacy so to speak or away from the parents watch,” stressed Khin Lee as a mother of two children while attendees listened attentively.

“Besides that, a dual-key unit is very useful if you have a mother-in-law living with you,” said Khin Lee drawing laughters from the attendees.

Property experts always say that one should invest in places with upcoming infrastructure projects. The moderator asked if projects with MRT/LRT integration are still a good buy today considering that they are already sold with a large premium.

“For me, again it has to be the location, demographic-profile and product specific that overrides the MRT point. Though, there is nothing wrong if you are buying a property with a large premium over your nearest competitors because of the MRT factor.

“The MRT factor is supposed to be a catalyst for property appreciation but I felt that several developments may have priced in some appreciation to some extent.

“It has to be MRT-integrated project which means a property connected to the station, not connected to the running tracks.

“There will be lesser demand during its construction period. You should asked yourself whether could your MRT property transact at the desired price upon completion. Asking prices that are too high is unrealistic because there are no ready buyers, with or without MRT/LRT.

“Thereafter completion, a MRT Line takes at least 5 years to mature to its projected ridership. Will you be able to hold for the Line to mature?” said Patrick Chay.

“If you see the past LRT projects, the properties around LRT have appreciated almost equally with other properties in areas without LRT. In my opinion, it all comes back to what kind of rental rates could MRT properties fetch.

“As we know, rentability supports the property value. I do not deny that MRT properties will have the advantage in rental demand due to the convenience factor and the rising transportation costs would put more people onto trains.

“But this does not necessary improve the rental price and yield as MRT properties are highly-densed and competitive… and will have more and more competing projects, just like your property, integrated within the Line(s) too.

“It then depends on the right pricing for such properties,” said Jerro Loh.

The moderator concluded the forum discussion by asking the panelists about their opinions on ‘Hotspots for investment’ for the year 2016.

Patrick Chay: “We at PTLM no longer uses the term ‘Hotspots’. This term is too outdated. Instead, I think investors should look into ‘Hot Properties’ as opposed to hotspot areas because hotspots are just talked-about locations based on temporary sentiments and news. Most of us already know areas that are covered by infrastructure such as MRT.

Contrary, there are many ‘Hot Properties’, which are product-specific, across many strategic locations.”

The moderator opened the floor to several questions and the forum discussion ended with a short teaser preview of SkyLuxe Luxury Suites, an upcoming development by SkyWorld located adjacent to the Bukit Jalil Recreational Park, the Bukit Jalil Golf & Country Resort and the large-scale Pavilion Bukit Jalil shopping mall.

The casual forum lasted for one and a half hour and finally ended with a buffet lunch and a mingling session.

As always, PTLM is committed to sharing with its members an unbias view about the property market and previewing upcoming ‘Hot Properties’ coming into the market.

Lend Lease to build 1,800 apartment units in TRX Lifestyle Quarter Registration

TRX Lifestyle Quarter will be built over a 16.8-acre freehold site (6.8ha) within the heart of TRX. It has a potential revised gross development value (GDV) of US$2.8 billion upon completion. In ringgit terms, the GDV would have increased from RM8 billion to more than RM11.5 billion at today’s exchange rate.

The mixed development will be jointly developed by Lend Lease with a 60% stake and 1 Malaysia Development Bhd’s (1MDB) wholly-owned subsidiary 1MDB Real Estate Sdn Bhd (1MDB-RE) owning the remaining 40%. The formalisation of the joint development agreement took place in March this year.

Essentially, Lend Lease had become the lead developer for the Lifestyle Quarter. The company states that it does not rule out any possibility of tieing up with an experienced local property developer if the need arises.

Lend Lease will develop, design, construct, lease and operate TRX Lifestyle Quarter’s shopping mall which will have a gross floor area (GFA) of 2.118 million square feet and a net lettable area (NLA) of approximately 1.35 million square feet.

The Lifestyle Quarter is being designed by London firm Grimshaw Architects, an agency that has worked on New York’s Fulton Center, the city’s newest transit hub.

The integrated precinct forms the social heart of the TRX, by offering a series of modern lifestyle experiences and will set new benchmarks not only in terms of design, but for the types of retailers, dining establishments, outdoor spaces, leisure activities and entertainment options.

The retail development will be a premium branded shopping centre and is envisioned to be one of the most trendy shopping mall in Kuala Lumpur in the coming future.

The concourse level (Lower Ground Floor) will consist of supermarket and food grocer, food and beverage outlets and VIP valet parking. Levels 1 and 2 will be premium shopping floors anchored by a branded international-class departmental store.

Level 3 will consist of a rooftop parkland which made up of a multi-layer Central Park that will be open 24/7, a plaza area with landscape, a cineplex, nightlife and al-fresco food and beverage outlets. There will be an approximately 2,800 car parking bays at the two basement levels of the mall.

It was speculated that retail tenants in the the Lifestyle Quarter may include American upscale fashion retailer Nordstrom, a Jamie Oliver restaurant and Japanese retail giant Takashimaya. The parent company of Takashimaya was said to have conducted a market survey vigorously in Kuala Lumpur several years ago.

Construction of the mall will commence in March 2016 and is planned for opening in the middle of 2019. The construction period is 35 months from the winning bidder’s site possession date.

The retail mall will be seamlessly connected to the TRX MRT Station, which will be the largest mass rapid transit (MRT) station in Kuala Lumpur with an underground depth equivalent to 5 levels hosting double-stacked cross platforms and four rail tunnels.

It will be earmarked as an interchange station serving both MRT Sungai Buloh-Kajang Line (or MRT Line 1) and MRT Sungai Buloh-Serdang-Putrajaya Line (or MRT Line 2).

For the hotel component, a 5-star international hotel will be built on the podium structure of the retail mall adjacent to the Central Park. The hotel will have 425 rooms and will be 40 storeys in height.

Interested parties for the hotel had been narrowed down to a few luxury brands, including Chimera, Rosewood Hotels and Resorts, and Hilton-owned Waldorf Astoria.

The northern site fronting Jalan Utara will consist of the residential component for the Lifestyle Quarter. There will be 6 iconic residence towers with approximately 1,800 apartment units built on three individual podium complex.

The towers will be connected by a common podium consisting of community space located at Level 8. The residential towers will be approximately 70 storeys each and will be marketed as mid-to-high end within the market. The apartments will have a full view of the Central Park on one side.

The first phase apartments will be launched in 2017 onwards with an expected price of RM1,500 per square foot. PTLM Research noted that the planned total residential apartments for the entire TRX is 3,800 units.

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Entirely, the 70-acre TRX project is positioned as Kuala Lumpur’s purpose-built international business and financial district. It is located near to Jalan Bukit Bintang, Kuala Lumpur’s shopping belt and the iconic Petronas Twin Towers in KLCC.

Designed by US-based Machado Silvetti and Akitek Jururancang Malaysia Sdn Bhd, the TRX masterplan entails four precincts, which are: (a) Financial Quarter; (b) Lifestyle Quarter; (c) Park Quarter; and (d) Urban Quarter.

There are 25 plots of land altogether with a total of 25 buildings built offering a GFA of over 21 million square feet and a total GDV of RM29.4 billion based on early estimates.

The Park Quarter, sited on the western edge of TRX, will have offices and residences. Unlike the financial quarter, this parcel, on completion, will be relatively more serene than the hustle and bustle of the core area which will be located in the Financial Quarter.

A large public plaza anchors the Park Quarter and links the ground level streetscape along Jalan Barat with the Central Park. This precinct and its amenities are accessible from Jalan Barat, Jalan Sultan Ismail and Jalan Tun Razak.

The Financial Quarter will be anchored by the 3.4-acre TRX Signature Tower, which was purchased by Indonesia’s Mulia Group in May this year for RM665 million (or RM4,490 psf with a Plot Ratio: 15 times).

Mulia Group, which has a leading market share for premium commercial properties in Jakarta, intends to commence work next year on its proposed 90-storey ‘Grade A+’ office building, which will also have supporting ancillary facilities including retail, trading hub and business facilities.

1MDB is investing close to RM3.8 billion for its infrastructure. Recently, it awarded a major infrastructure and roadway works package to WCT Bhd, with a contract valued at RM754.8 million.

The two-year contract will cover underground road structures, installation of direct buried utilities, at-grade and elevated roadways, as well as associated earthworks, and mechanical and electrical works. This follows an earlier award of an earthworks and substructure contract package in April 2013 that WCT won worth RM169 million.

TRX is envisioned to host 100 to 250 of the world’s leading corporations and create more than 40,000 jobs for knowledge workers specialising in various high-value sectors such as financial services and Islamic banking.

In order to attract global multi-national and financial services corporations to set up base in TRX, the government of Malaysia is offering several tax incentives for owners and tenants that fall under TRX’s marquee incentives such as accelerated capital allowances (100% over 2 years), stamp duty retention and 50% additional tax deduction on renovation expenses.

TRX has been awarded Platinum Provisional GBI Certification by Green Building Index Accreditation Panel, the first ever platinum level township certification in Malaysia, and a LEED for Neighborhood Development Plan Gold Level Conditional Approval from US-based Green Building Council, for its sustainability plan.

TRX will also be equipped with Smart City Infrastructure comprising TRX Security, Urban Operating System, Digital Homes, Mobile and Wireless Cloud and Smart Waste System among others.

SkyWorld’s BENNINGTON Residences transforming Setapak Registration

Today marks a significant day in the history of Setapak as SkyWorld Development Sdn Bhd launches their much anticipated Bennington Residences @ SkyArena. In conjunction with this launch, SkyWorld also officially opens the door to their new RM12 million SkyWorld Property Gallery at SkyArena, Setapak to the public.

“We are proud to host this Property Launch and Gallery Opening celebratory luncheon for 200 of our guests, customers, business partners and employees at one of Malaysia’s largest showroom galleries, in dedication of their support that has contributed to the success of SkyWorld in these early years.” says Chief Project Officer and EXCO member, Lee Chee Seng.

SkyArena is SkyWorld’s mega mixed-development project covering 28 acres, which aims to nurture a vertical community built around health and wellness and designed around a 9.4-acre multi-facility sports complex. Its full completion is slated for 2021, and will feature SOHO residences, a retail mall and commercial space, as well as a boutique hotel.

While other matured areas in Kuala Lumpur are experiencing plateaus, Setapak still has the potential for long-term growth. Bennington Residences @ SkyArena is currently the only integrated development in Setapak that consists of residential, commercial and a multi-storey sports complex.

The property is located in the heart of Setapak’s prime area off Jalan Genting Kelang, and easily accessible from the DUKE highway. Just 7km from the Kuala Lumpur City Centre (KLCC) and its iconic twin towers, It is perfectly poised to take advantage of Setapak’s current investment appeal.

Surrounded by established malls, namely Setapak Sentral Mall, Wangsa Walk Mall, AEON Big, Suria KLCC and Great Eastern Mall, Bennington Residences offers the convenience and ease of living for all its residences.

It is also just few minutes away from two international schools, Fairview International School and Sri Utama International School. These factors make Bennington the perfect fit for young couples looking to start their families.

There is no other development in the Setapak area offering an integrated community living like Bennington Residences @ SkyArena.

“We are proud to share that Bennington Residences @ SkyArena boasts Malaysia’s first triplex Sky Lounge and Sky Gym. Bennington features two residential towers blocks with 580 luxurious units set upon two acres of rainforest-themed Sky Park and Gardens to make wellness an everyday affair for all residences.” says Mr. Lee.

Bennington follows the success of Ascenda Residences, which was Phase One of SkyArena. In 2014, Ascenda saw its 650 high-rise units fully sold out in nine months based on word of mouth alone. SkyWorld is aiming to outdo this achievement with Bennington Residences, which is Phase Two of SkyArena. Some 70% of 1st Phase of Bennington units were already booked weeks before the launch on Sunday.

“We have set our sights on greater heights for SkyWorld and we are scheduled to launch SkyLuxe, our Luxury Suites at Bukit Jalil, by first quarter of 2016.

SkyWorld owns prime landbanks in Setapak, Sentul, Bandar Baru Sentul, Taman Danau Desa, Bukit Jalil and Setiawangsa with potential gross development value totalling more than RM5 billion.

SkyWorld’s Property Launch and Gallery Opening was hosted by celebrity Xandria Ooi and guests were treated to a special feng shui talk by Dato’ Joey Yap who attended the ceremony as SkyWorld’s honorary guest.

The Locus launching soon right after IKEA Cheras opening frenzy Registration

Located diagonally opposite the multi-billion mixed integrated development of Sunway Velocity, the final parcel of the KLCV project is jointly developed by Warisan Tradisi Sdn Bhd, Brunsfield International Group and Dewan Bandaraya Kuala Lumpur.

The Locus @ KLCV is currently open for registration and the soft launch for invited guests takes place this weekend.

Sitting on leasehold land measuring over an acre on Jalan Cheras, the development comprises a 26-storey block that houses 160 units of studio, 1-bedroom and 2-bedroom apartments, some of which are dual-key units.

These have a built-up area of between 550 sq ft and 1,100 sq ft, and are priced between RM590,000 and RM1.2 million. There will also be retail units at the podium level available on lease.

Brunsfield Development Sdn Bhd general manager of sales and marketing Felix Ng Tiam Chai tells The Edge Property that the development is just 10 minutes’ walk to the two upcoming MRT stations (Cochrane and Maluri) and is accessible via major roads such as Jalan Cheras, Jalan Loke Yew and Jalan Pudu.”

The development’s close proximity to downtown Kuala Lumpur has allowed for a design that maximises views of the city centre, while mitigating exposure on its east-west axis to the sun. All units will have a balcony, and come partly furnished with kitchen cabinet, hood, hob and air-conditioning.

Facilities include an open-air sky gym and infinity sky pool on Level 25, and a private atrium garden on Level 6 exclusively to ten serviced apartments.

Apart from the two MRT stations, amenities in the area include the newly-opened IKEA Cheras, AEON Taman Maluri Shopping Centre and several schools.

In future, two large shopping malls, MyTOWN Shopping Centre and Sunway Velocity, will serve the lifestyle and leisure needs of residents here. Recently, PTLM wrote about the upcoming plans of MyTOWN integrated development.

Ng said the strategic location of The Locus @ KLCV, coupled with its nearby amenities and low density, would be a key selling point in a weak property market.

“With the current market conditions, projects in strategic locations will continue to sell,” he says.

Ng believes the property market will remain cautious next year due to the many uncertainties affecting the economy as well as other factors that have affected the buying behaviour and loan eligibility of potential customers.

“However, savvy buyers will continue to take advantage of current market conditions to invest in prime property in strategic locations, coupled with the right package offered by the developers. When the economy picks up, lending policies, developers’ packages and eligibility assessments may once again differ,” says Ng.

 

Step up and make your mark at a new centrepoint, The Locus @ KLCV is where people, places and possibilities converge.

 

 

News Source: The Edge Property, 20 November 2015. Original article entitled “Locus @ KLCV coming up in Cheras“.

Will slowdown make houses more affordable? Registration

Data from the National Property Information Centre’s (NAPIC) First Half Property Market Report shows that during the first six months of the year, the total value of property transactions declined 6% year on year to RM77.08 billion.

In terms of volume, property transactions fell 3.5% to 186,618. The residential segment saw a 2.6% drop in transaction volume but its value took a 9.7% dive to RM36.4 billion.

The report will make sobering reading for many younger households who, for years, have seen property prices only move northwards.

Between 2009 and 2014, the Malaysian House Price Index registered a compound annual growth rate (CAGR) of 10.1%. It marked a period of sharp acceleration compared with 5.6% for the period between 2000 and 2014.

This rapid growth in an otherwise sedate domestic property sector came on the back of ample liquidity that flooded the market following the global financial crisis in 2008.

Predictably, grumbles that houses were too expensive for the hardworking middle class emerged.

The government attempted to halt this price growth by stopping free-flowing mortgages and stepping efforts to combat speculative activities as early as 2011. Price growth slowed but it was not till 2015 that growth in residential property deals stalled.

This year, property developers are struggling with sales. Few are selling or building properties at rates seen during the housing boom and NAPIC reported that property stock, which stood at 4.87 million units in Q1 2015, grew to 4.89 million units in Q2 2015.

At the same time, new launches fell 12.8% in H1 2015 year-on-year while unsold units under construction rose a whopping 32.7%.

These unsold residential units have started to subtly drive prices down. NAPIC’s numbers indicate that as at Q2 2015, the Malaysian House Price Index was at 220.2 points, up 5.9% year-on-year. The rate of increase of the index has been slowing since Q3 2015.

“House prices have definitely come down. If you don’t see them, it is because property developers have started to offer rebates, discounts or other incentives like free legal fees or stamp duties, which will lower the amount you pay for the property in the end,” says Chang Kim Loong, secretary-general of the National House Buyers Association.

If the additional supply is helping to moderate property prices, then some will find NAPIC’s data on incoming supply comforting.

It reported that Malaysia had incoming supply of 795,372 residential properties in Q1 2015, which increased to 831,186 in Q2 2015.

While private developers are more cautious about adding on to that, the government is not.

Based on the 11th Malaysia Plan, the government, through various housing programmes, targets to deliver 653,000 new housing units from 2016 to 2020. The sum excludes many state housing schemes.

For the middle class in particular, the 1Malaysia People’s Housing (PR1MA) programme should be adding an extra half a million affordable homes by 2018.

The bulk of the promised 500,000 units should enter the market in 2017 and 2018. Lest we forget, there is also the government’s directive to government-linked companies (GLCs) to build 800 units in Kwasa Damansara and for Sime Darby Property to build 4,600 units of affordable homes.

Also reassuring for aspiring homeowners is that those in the business of building homes are not expecting property prices to see a surge.

They tell The Edge that growth in house prices is likely to stagnate in the near term, as buyers looking for new properties and prepared for the added debt burden are denied owing to lending restrictions.

Bina Puri Holdings Bhd executive director Matthew Tee says, “I expect property prices to remain at current levels, with growth capped by the current regulatory environment. I don’t see prices coming down too much because the cost of development is very high. Land and other costs are still going up.”

Ken Holdings Bhd’s Sam Tan says, “The property development business is not as easy as it used to be. You have to offer more amenities, and provide connectivity and infrastructure to attract buyers. Developers’ profit margins are thinning due to rising costs and slowing market.

“It depends on what you build and how you price your product. The bread-and-butter properties — those priced between RM300,000 and RM500,000 — will still sell. But, generally speaking, you will not see a surge in prices anytime soon.”

Value of property transactions in Malaysia.

 

 

So, are moderating residential property prices arising from an increase in supply the answer to the housing affordability woes of the middle class?

MIDF Research economist Izzuddin Yusuf doesn’t believe that is the case. Property prices have swelled too much over the last few years for a small tapering off to count. Affordability is still an issue for most middle-income earners looking to live under their own roof.

“I think the idea of affordable housing has changed recently for the public, to a point that it is considered affordable so long as you are eligible for a bank loan.

“Property prices are currently at a level that is still unaffordable for ‘real demand’, meaning those who buy in order to live in the property, even as speculative buying has slowed significantly. From here, property prices will probably grow at a very slow pace and it will be a while before they become affordable for most first-time buyers,” he says.

Indeed, Khazanah Research Institute’s (KRI) study, “Making Housing Affordable”, found that the the median price for the Malaysian housing market exceeded the three times median annual household — the threshold for affordability.

The general median price stood at 4.4 times in 2014 — a seriously unaffordable level.

In cities like Kuala Lumpur and Penang, residential properties were “severely unaffordable”. Launches were priced way above the affordable threshold of RM274,320 for the capital city and RM168,272 for Penang.

Implicit in KRI’s statistics is that house prices — soaring or moderating — is not the only variable that determines if a middle-class household can afford to buy a property. It also has to do with income level and growth in disposable income.

“Housing affordability is not simply about having cheaper houses. For a house to be affordable, it means that the purchaser has the budget to pay for the home,” says Teh Lip Kim, managing director of Selangor Dredging Bhd.

Ken Holdings’ Tan says, “We try to build affordable homes and what is being sought after, but people still have to be able to buy them. People are now in a situation where banks are tightening lending requirements. [They also] have one or more banking loans to service and face a higher cost of living.”

“To buy a property, you need the additional disposable income. While wages in Malaysia are growing and the employment rate is good, they are not growing as fast as property prices. The higher your income, the more affordable a house will be to you.”

Further, socially popular regulations that stifle property price growth may help quiet public complaints about housing affordability, but won’t do more than that for the Malaysian economy.

Not only does the construction sector contribute directly to the country’s gross domestic product (GDP) but it also has a strong multiplier effect. As it also affects sectors like finance, building materials, logistics, infrastructure development and job creation, it is unlikely that a prolonged sluggishness in property prices is what the government wants.

Rajiv Biswas, chief economist at IHS Asia-Pacific, says, “The construction sector in Malaysia accounted for 4.3% of GDP in 2014, based on government data. Therefore, the size of the sector is significant and any significant slowdown would act as a drag on GDP growth.

“Therefore, if the private sector residential construction sector experiences a downturn, the overall impact on total construction activity could be reduced by stronger public sector spending on affordable housing and public infrastructure projects.”

But even as growth in home prices is losing steam, the dream of home ownership may still remain elusive to the middle class.

 

The Issue of Home Loans

Although the government’s aim to increase home ownership among the middle class is laudable, the lack of access to financing is a big problem, given that the average middle-income earner finds it difficult to come up with the 10% downpayment.

Hence, the government over the last few years has introduced various types of home loan schemes to help this group of people.

Under Perbadanan PR1MA Malaysia’s affordable home scheme, eligible applicants may apply for a 110% loan from the agency’s panel banks. The additional 10% is to help the homebuyer pay additional items such as legal fees and insurance.

Meanwhile, other programmes such as My First Home and the Youth Housing Scheme provide loans of up to 100% to first-time homebuyers with income not exceeding RM5,000 a month, or in the case of joint buyers, household income not exceeding RM10,000 a month.

The government should be applauded for making it a tad easier for the public to own a home. But does this seem to go against the cooling measures Bank Negara Malaysia has taken to rein in high household debt over the last few years?

Simply put, it raises the question of whether the “easier” access to loans could cause a higher risk of default in the banking system.

Bank Negara governor Tan Seri Zeti Akhtar Aziz, who agreed that there is still a shortage of affordable homes, said they should be offered to those who are creditworthy.

“Of course, while we are promoting house ownership, it is only to those who can afford to own houses. We do not want to see individuals and families enter into debt that they cannot service because it will end up with the house being repossessed… This is not a direction that we want to move to, but we do want to provide homes to the community,” she said at a press briefing after announcing Malaysia’s third-quarter GDP growth last Friday.

She opined that affordable homes should also be made available for rent, providing an alternative for those who cannot afford to take up a home loan.

Nonetheless, the banks stress that they practise equal prudence when approving loans for buyers of affordable homes.

OCBC Bank (M) Bhd head of secured lending Thoo Mee Ling clarifies that the riskiness of a loan is not determined purely by the applicant’s income level and number of outstanding loans. It also involves the health of the loans in the applicant’s Credit Bureau record and his repayment behaviour.

This means that a person who earns RM5,000 a month may not necessarily be a higher risk compared with a person who earns RM20,000 a month.

The common perception that loans for affordable homes are dished out more easily should be eliminated. According to Thoo, the credit assessment of loans for affordable housing schemes such as My First Home is the same as for other mortgage applications.

“OCBC Bank uses a combination of risk acceptance criteria to determine the creditworthiness of loan applicants. These include factors like debt-servicing ratio, sources of income, the customer’s profile, Credit Bureau track record and loan-to-value ratio. Ultimately, these are also weighed against the responsible lending guidelines [set by Bank Negara],” says Thoo.

Meanwhile, RHB Banking Group head of group retail banking U Chen Hock says the bank has approved only 15% of loan applications for My First Home since it was launched.

It is mostly because the applicants had insufficient income to meet financing and debt-servicing requirements. Poor credit history is another factor, he adds.

According to U, RHB has not seen any significant default rates so far among those who succeeded in getting their loans.

CIMB Group CEO of group consumer banking Renzo Christopher Viegas notes that credit worthiness for home loans is assessed based on factors such as the customer’s repayment history, credit score, repayment capacity and debt service ratio. He says the criteria for the bank’s My First Home loan are broadly similar to those for normal housing loans.

The National House Buyers Association of Malaysia honorary secretary-general Chang Kim Loong is strongly against the home loan schemes for affordable housing, saying that giving the buyer a 100% loan with “free legal fees and stamp duties” does not give him an understanding of the home-buying process.

“To buy a house, you must have commitment. When you get everything for free [or easily], you tend to buy a property without a sense of responsibility. If you don’t have the 20% downpayment, don’t buy the house. You should be borrowing as little as possible and not bind yourself as a slave to the bank. If you lack the sense of responsibility, [there is a high possibility that] you will be a defaulter,” he says.

According to IHS Asia-Pacific chief economist Rajiv Biswas, the risk of a housing bubble related to government support schemes would depend on the types of incentives provided. He says the risk of default on home loans can be reduced through a combination of sufficient collateral requirements and risk-mitigation products.

“An important aspect of addressing moral hazard related to such affordable housing schemes is ensuring that even low-income households have to provide some collateral. In some countries, a limited amount of the collateral can be provided from pension fund savings,” he says.

 

 

 

Delivering On The First Home Ownership Promise

Call it an instrument of wealth creation, a tool to create socially stable communities or a driver of the national economy. Whatever the moral and economic rhetoric on the virtues of home ownership may be, Malaysians want their own homes and the government seems keen on helping out.

But, are the billions the government has spent on expanding home ownership among low and middle-income earners working?

A housing boom and soaring property prices that started in 2009 have priced many out of the housing market.

The middle-income group, or M40 as Prime Minister Datuk Seri Najib Razak calls them — whose monthly income is between RM3,860 and RM8,320 — has been squeezed for being unable to afford to buy properties in the open market and being unqualified for many of the government housing schemes for the poor.

In fact, a recent study by KRI found home prices to be “seriously unaffordable” at over four times the median income of the country’s population — especially so in Kuala Lumpur, where the median house price was RM490,000.

In its attempt to put homes back within reach of the average buyer, the government has announced new affordable housing programmes and policies, and endorsed schemes to ease the path to home ownership.

The My First Home programme, unveiled in 2011, allows a state entity to guarantee 10% of a borrower’s facility secured for 100% of the value of an affordable home.

The RM300 million My Home Scheme in 2014 was used to get private developers to build 10,000 affordable homes. For every unit sold, the developer would be entitled to an incentive of RM30,000 to cover the 10% downpayment required of buyers during the purchase.

The Youth Housing Scheme under Budget 2015 allows up to 20,000 young married individuals to obtain financing and receive monthly financial aid to repay loans.

Under Budget 2016, RM200 million is set aside to help first-time buyers of affordable houses make downpayments under the First House Deposit Financing Scheme.

MIDF Research economist Izzuddin Yusuf argues that there are limitations to such government-backed financing schemes that target first-time homebuyers. They have been unpopular with banks, which favour their own credit assessments of borrowers over the government’s eligibility criteria.

“Many banks are reluctant to provide loans under such schemes. Even if the buyers are successful in securing an offer from the banks, the interest rates will be significantly higher. Buyers will either be unable to afford the amount or simply have second thoughts about the scheme.

“The number of houses the government can subsidise is limited and, therefore, the effectiveness of intervention from the demand side and stabilising of prices is negligible,” he says.

The government, Izzuddin says, is better off focusing on the supply side of the equation by incentivising private developers that build affordable housing.

So far, the most notable of the government’s efforts on the supply side is the nationwide home-building initiative through Perbadanan PR1MA Malaysia (PR1MA) — an agency under the Prime Minister’s Department that was given the task of building 500,000 affordable homes in prime locations over five years for middle-income earners.

It is a tall order but the scheme is well supported. Allocations for PR1MA projects have increased every year since its inception.

Under Budget 2013, PR1MA was allocated RM500 million to build 80,000 homes. This sum doubled in 2014 for the construction of another 80,000 homes. The agency was given RM1.3 billion under Budget 2015 to build the same number of homes. Next year, it will receive RM1.6 billion to provide 175,000 new housing units.

Rajiv Biswas says there is space for state-backed housing schemes like PR1MA, but it has to serve a “very targeted” group.

“You should not have government-built properties competing in the open market and similarly, you cannot have applicants for these housing units struggling for ownership. Housing programmes have to be targeted at the right beneficiaries,” he says.

In that sense, PR1MA has glaring gaps in its modus operandi.

Unlike other government-backed housing schemes, access to PR1MA homes is open to those who are already homeowners.

PR1MA CEO Datuk Abdul Mutalib Alias told a press conference recently that those who already own a first property “should not be denied” access to the government-backed scheme. Many middle-income earners held urban jobs and could only afford suburban properties, he said.

Yet, as National House Buyers Association secretary-general Chang Kim Loong puts it, the practice is at odds with the government’s aim of expanding home ownership to those who cannot afford them.

“There are not enough PR1MA units to go around. Every time a project is open for balloting, PR1MA claims there is overwhelming demand and response. So, it should be offering the units to those who are deserving. If you have an excuse now to open the programme up to those who already own a property, there will be new excuses to widen the eligibility requirements next time,” he tells The Edge.

Also noteworthy is the fact that PR1MA poses no additional requirements in terms of the nature, location or value of the first property an applicant owns.

Hypothetically, an individual with a monthly salary of below RM10,000 (which is above Najib’s M40 range) who owns a property in Singapore but lives in Kuala Lumpur with his family would still be entitled to a shot at being enriched by PR1MA’s state-subsidised units.

“We still prioritise first-time homeowners. So, maybe only 3 in 10 who are successful during the balloting process would be those who already own a property,” Mutalib assured by giving a ballpark figure.

Yet because that 30% figure is more of an estimate than a cap, the figures could theoretically go the other way should a lot more applications come from second or multiple homeowners with better credit rating and earning power.

Another point of contention among observers is that PR1MA has deviated from its original strategy to use federal and state land as the main sources of its landbank to keep costs down.

Privately owned land, they argue, should be PR1MA’s last resort in acquiring the 12,500 acres it needs. But, it is understood that just over 20% of its existing landbank is sourced from federal and state governments — something that perhaps PR1MA itself never intended to see.

“We started thinking that we will have access to federal and state land. It hasn’t been the case and we decided not to wait because we have the mandate to build,” said Mutalib.

Besides that, PR1MA partners private developers for the construction and development of its projects. Mutalib claimed that PR1MA’s ability to buy properties in bulk from developers, coupled with strict cost requirements it imposes on builders, ensure that it is the most cost-effective way of developing its landbank.

Chang, who remains sceptical, says, “Private property developers are not there for charity. With them on board, the cost of construction will go up and homes will become less affordable.”

Checks with industry sources reveal that construction awards offer “competitive rates and margins” to builders.

For all its flaws, PR1MA’s success in expanding homeownership is perhaps best judged by the numbers.

According to a reply to a question in Parliament last month, Minister in the Prime Minister’s Department Datuk Seri Shahidan Kassim said some 200,000 units had been approved, with 64,794 units being constructed so far. To date, only 560 units in Putrajaya have been delivered to homeowners although Najib promised that another 10,000 units should reach the public by next year.

Can an extra half a million Malaysians be expected to own PR1MA homes by 2018?

A private developer who recently won a multibillion-ringgit contract from PR1MA to build about 1,000 units says, “Things are moving but they are way behind schedule. (They) need to complete all the units before the next general election. PR1MA is getting into a desperate situation.”

If PR1MA under-delivers or deviates from its intended goal, more Malaysians will likely have to contend with not being homeowners just yet.

 

News Source: The Edge Property, 18 November 2015. Original article by Yen Ne Foo entitled “Will slowdown make houses more affordable?

Tribunal rules 28 Boulevard’s Soho units GST exempt Registration

A consent award was entered before GST appeal tribunal in Putrajaya today after the Customs Department agreed that the 1,279 units at the 28 Boulevard project were built for residential purposes.

But purchasers will have to pay the consumption tax if the units, also known as virtual office, were also used for business and commercial purposes.

Today’s decision means that the buyers need not pay the GST ranging between RM18,000 and RM25,000.

The units are sold from RM298,000 and onwards.

Best Boulevard launched the SOHO units in Pandan Perdana in March, a month before GST came into force.

Lawyer Datuk Pretam Singh, who appeared for the developer, said the company took up the matter before the tribunal because the units, although built on commercial land was solely for residential use.

“This is a historical case because this was the first matter involving SOHO units to be filed and decided,” he said.

Pritam said the decision was only confined to this project and could not be used as precedent for other cases.

Best Boulevard director Derick Lim said the ruling was hugely beneficial to purchasers as they need not pay GST.

“For future rental and sub-sale, the transactions of the SOHO units will also not be subject to GST,” he added.

Before GST, the developer wrote to the department to seek clarification but in May it was told to impose the tax.

Pritam said the developer decided to take the matter before the tribunal in June as it would have serious impact on purchasers.

The lawyer said after going through the documents, the department director-general had exempted the developer from collecting GST.

Lee Chee Thim, Abdul Ghafar Abdul Latif and Effendi Nazilah were members of the tribunal which conducted the proceedings behind closed door.

Mohd Azawan Hamdan and Kamaliah Kassim appeared for the department.

 

News Source: The Malaysian Insider, 17 November 2015

IJM Land offers Penduline, affordably priced homes in Bandar Rimbayu Registration

Penduline, the first phase of the township’s Fauna precinct, will feature 625 two-storey terraced homes in a 54.95-acre leasehold parcel.

The homes are priced from RM625,000, or RM356 psf, with built-ups of 1,751 to 2,021 sq ft and land area of 20ft by 70ft each.

Sales incentives for the units include a 12 to 24-month instalment plan that covers part of the down payment. To qualify, buyers must use their RHB, Maybank or CIMB credit card to pay the amount. Penduline has a gross development value (GDV) of RM451 million.

“We are offering house prices (at a little) over RM300 psf for a landed property. Even a condominium in the Klang Valley is already priced at RM700 to RM800 psf, with an absolute value of over RM1 million,” says IJM Land managing director Edward Chong.

“Penduline is for buyers who have held back their dream of owning a landed home for a long time and are looking to revive that dream. The price we are offering can hardly be found in the Klang Valley now,” Chong points out.

Penduline is targeted at young families and couples from nearby areas such as Kota Kemuning, Putra Heights, Subang Jaya and Puchong, with a household income of RM6,000 to RM8,000 and who plan to upgrade to landed homes, he says.

 

Township attractions

One of the township’s attractions is Oasis International School, which is scheduled to open in Q4 2017, he adds. Oasis International School will be the third school in Klang Valley which adopts the American syllabus.

The school’s Phase 1 consists of an administration building, classrooms, auditorium building, soccer field, gymnasiums and parking bays will commence after obtaining approval from the relevant local authorities, with initial intake of 600 students. Phase 2 will follow should the opportunity arises in respond to the capacity that eventually should peak at 1,200 students.

The RM11 billion township development will come with a 5.7-acre park, with amenities such as a lawn park, 730m walkway and futsal court.

The developer has designed it to have features such as a single entry and exit point to facilitate the implementation of a guarded scheme, once residents have moved in and voted to do so.

Citing Bandar Rimbayu’s first phase The Chimes as an example, Chong says the residents had unanimously decided to turn the development into a guarded scheme. IJM Land then helped to build a guard-house and put up a fence around the area.

The soft launch for the first 132 units of Penduline, with built-ups of 1,751 to 1,897 sq ft, was held on Saturday, 14 November, for the 1,500 people who had registered their interest. Sales will be (was) on a first come, first served basis, says Chong.

IJM Land noted that the take-up rate was very encouraging as 85% of the first 132 units has been sold. More than 100 families have showed interest in this project, with some of them spending the night at our sales gallery before the day of the launch to secure their preferred units.

“We decided to return to the first come, first served sales method as we felt that it would be fairer to our buyers — they queue up themselves to obtain a unit.”

This is in contrast with the launch of The Chimes in March 2013, when about 2,000 buyers showed up to ballot for 115 out of 526 two-storey terraced houses with built-ups of 2,179 sq ft (22ft by 75ft) to 2,322 sq ft (24ft by 75ft) and priced from RM580,000 onwards.

“When we sold our houses via balloting, we got post-mortem comments saying that it was not fair as it was based on luck. There were buyers who had enquired about our properties months ahead but did not manage to get a unit,” says Chong.

Thus, selling on a first come, first served basis is preferable, even if IJM Land has to spend extra on housing, feeding and entertaining the potential buyers who camp out at its sales galleries in the days leading up to the launch, he says with a chuckle.

Meanwhile, IJM Land is cautious about releasing too many units into the market when demand is still muted as Malaysians are finding it harder to obtain approval for their home loans, Chong explains.

Other previously launched phases of Bandar Rimbayu include Scarlet, Perennia and Wisteria, which comprise 2-storey terraced homes; and Periwinkle, which consists of 2-storey semi-detached cluster homes.

To be launched in Q1 2016 is two blocks of serviced apartments in Blossom. With the exception of Blossom, all the non-bumiputera lots for all the phases have been taken up. Twenty per cent of houses are left available for sale.

The 1,879-acre Bandar Rimbayu is connected to five major highways, including Lebuhraya Shah Alam (Kesas) and Lebuhraya Kemuning-Shah Alam (LKSA), which links Subang, Petaling Jaya, Damansara, Kuala Lumpur city centre, Puchong, Shah Alam and Klang.

The township will be linked to Putrajaya, Cyberjaya and Kajang via the South Klang Valley Expressway (SKVE), while Ekspresway Lingkaran Tengah (ELITE) will provide access to Kuala Lumpur International Airport and the southern region.

Bandar Rimbayu will also have access to the proposed West Coast Expressway (WCE), which will link Banting to Taiping, Perak. This will further enhance connectivity to the west coast of Malaysia, says Chong.

Within the township is a private park called The Arc, which is about 108,000 sq ft. The structure comprises a roof deck that arches towards the ground on both ends, allowing pedestrians direct access to the deck. The deck encircles a football field and also contains Bandar Rimbayu’s show gallery and office.

Some of The Arc’s green features include a man-made creek that collects rainwater to irrigate the green spaces and plants and a green roof deck, which insulates and filters rainwater before discharging it to the canal waterways and community vegetable gardens — such as the spice garden — which houses different types of vegetables and fresh herbs. Bandar Rimbayu has been awarded the green township status certified by Green Building Index (GBI).

The Arc received an honorary mention in The Edge-PAM Green Excellence Award 2014.

 

Penduline is made affordable

According to Chong, IJM Land is able to price Penduline affordably because it eliminated the frills — “wants” such as solar panels and rainwater harvesting systems — without compromising on quality.

“If you want to install solar panels or renovate your home, you can still do it later. For now, the goal is to own a home first.”

The developer also trimmed the built-ups and land areas to make them smaller than the 2,000 sq ft and 22ft by 75ft typically found in the market, says Chong.

“In the current market conditions, we need to adjust accordingly. Yes, the units are smaller but we are not compromising on quality. Our smallest unit still comes with two bedrooms and two bathrooms, which is a very decent home to live in.”

While he acknowledges that buying a property can seem intimidating as it is a huge commitment, he says it is vital to overcome that psychological hurdle by making that first purchase.

“When I bought my first property in the mid-1990s — an RM80,000, walk-up apartment (700 sq ft) in Bandar Sri Damansara with my then girlfriend, now wife — I was only earning less than RM1,000 a month. I later sold it for about RM140,000.

“With my salary back then, there was no way I could afford it without a strict budget. No property is ever affordable, but everyone has to start somewhere. Otherwise, you will be left out of the property market,” he says.

According to Chong, as the growth in the value of properties will always outpace that of income, it is important to buy before prices rise too much. This could mean settling for a first property that is not a “dream home”, he says.

Penduline is not a strata-titled scheme, so there will be no maintenance fees levied on owners. This reduces the cost of owning the property, Chong remarks.

“For strata-landed properties, you would need to fork out a few hundred ringgit for maintenance such as for the street lights, landscaping and rubbish collection, on top of the RM2,000 to RM2,500 to service your loan. Some people may feel burdened by the extra cost.”

 

Loan margins are key

Global Link Properties head of sales and real estate negotiator Juin Lee says while Penduline offers affordable terraced houses near Kota Kemuning, banks may still offer smaller loan margins for homes priced over RM600,000, so buyers will need to come up with a substantial sum for down payment.

She adds that most of the newer launches around Kota Kemuning, such as Bandar Rimbayu and Eco World Development Group Bhd’s Eco Sanctuary, are leasehold while homes in Kota Kemuning are freehold.

“You can get a freehold landed property in Kota Kemuning for RM700,000 to RM800,000, but these properties are 10 to 15 years old.

“There is still a huge demand for landed properties in Kota Kemuning as buyers prefer having space,” says Lee.

She adds that the upcoming SKVE and link to ELITE are expected to help ease traffic coming into the township and those going to Kuala Lumpur.

Meanwhile, CBD Properties team manager Christina Gordon says Kota Kemuning continues to draw people from nearby neighbourhoods, thanks to its slower pace and amenities.

“We have a lot of retirees and families in the vicinity who enjoy taking things a bit slower. We have hospitals such as Columbia Asia, banks such as CIMB, OCBC and Public Bank, schools, eateries and supermarkets. For those who enjoy golfing, there is the Kota Permai Golf and Country Club and Bukit Kemuning Golf & Country Resort,” says Gordon, who resides in Kota Kemuning.

She adds that there is a community of expatriates, including a sizeable Korean population. “We also have international schools such as the Kuala Lumpur Chinese Taipei School and the upcoming Tenby International School to cater for their needs.”

Gordon says there are fewer renters this year and the rent rate has fallen compared with two to three years ago.

On the high loan rejection rates, Chong says there is a mismatch between the expectations of buyers and the banks over loan margins. Moreover, some buyers do not furnish enough evidence to show that they are capable of servicing the loans.

For example, during a credit check, banks will ask for documents such as income statements that show other commitments such as car loans, insurance and additional housing loans.

However, the statement will not include other sources of income such as from rent or side businesses. Therefore, the banks will not be able to accurately assess the borrowers’ ability to service the loan.

 

What’s next for Bandar Rimbayu?

“We will still be focusing on the residential components for now and from time to time, we will adjust our launches according to market demand. We will be launching 488 units of serviced apartments in Blossom next year,” says Chong.

“The key is to grow our population first, by making sure we have occupants in the township before we move on to the commercial side, because the key drivers of the offices and commercial buildings will be the residents of the township.

“People always tell me, ‘If you are a businessman, sell off your commercial lots first. They bring you the highest margins.’ For me, I want to take a different approach. I want to make sure I have fulfilled my responsibility to grow the area first before I focus on the commercial hubs. That will be my plan for Bandar Rimbayu,” says Chong.

The next two phases of Bandar Rimbayu are Blossom serviced apartments and the second phase of Blossom Square shop offices, to be launched in Q1 2016 and Q4 2016, respectively.

Blossom serviced apartments comprises 488 units of three different sizes — 872 sq ft, 921 sq ft and 1,055 sq ft.

The serviced apartments should be sold for below RM450,000, and cater to first-time homebuyers and already more than a thousand people have registered their interest in both products.

Blossom Square comprises 88 units of shop offices with a land area of 22ft by 70ft, or 22ft by 75ft. The sizes of their built-up area are being finalised. They are tentatively priced from RM1.5 million upwards.

 

News Source: The Edge Malaysia Weekly, 16 November 2015. Original article “IJM Land offers affordably priced homes in Klang’s Bandar Rimbayu“.

Bandar Malaysia’s final two bidders: Consortiums backed by China and Singapore Registration

The race to acquire a 60% stake in the development is now down to two bidders, one of which is a China-based consortium in a tie-up with tycoon Tan Sri Lim Kang Hoo and several other local developers and another bidder is a Singapore-led consortium.

It is understood that the Chinese firm has also expressed an interest to participate in the Kuala Lumpur-Singapore high speed rail (HSR), which will have a terminal in Bandar Malaysia.

Four preferred bidders were earlier shortlisted from the total of 12 proposals submitted at the closing date of a Request for Proposal (RFP) called by 1MDB-RE on 28 August. This included proposals from domestic private developers, government-link corporations and foreign parties, either submitted independently or as a consortium.

1MDB-RE and its transaction adviser CH Williams Talhar and Wong (WTW) are currently seeking clarification and undertaking a comprehensive analysis of the two bids, after which a recommendation will be made to the 1MDB Board.

“WTW is pleased to confirm that the final binding bids fully reflect the expectations of 1MDB-RE in terms of land valuation, payment terms and certainty of transaction.

“Accordingly, 1MDB-RE is confident that a development partner will be selected and a definitive agreement will be executed by year-end, as envisaged by the 1MDB rationalisation plan,” said WTW in a statement today.

To recap, 1MDB had obtained the planning approval for the 194ha (486 acres) Bandar Malaysia, a world-class, master-planned mixed-use urban development project on 26 October.

The development received planning approval with an average gross plot ratio of 4.05 across the entire 486-acre site.

The development, located about 7km from Kuala Lumpur City Centre (KLCC), is expected to serve as a catalyst for the transformation of Greater Kuala Lumpur, as it is aimed to be the country’s future leading transport/transit-oriented development (TOD).

Bandar Malaysia will host the terminals for the HSR project, Mass Rapid Transit (MRT) lines 2 and 3, KTM Komuter, Express Rail Link (ERL) and future access to major highway networks.

According to its website, the development aims to become a beacon for international businesses seeking to establish a footprint in Malaysia and the region.

Bandar Malaysia will be home to a Global Business District, a managed business park with features including smart offices, robust digital infrastructure, future-proofed work spaces, a comprehensive security masterplan and more.

Its Retail Lifestyle Cluster will introduce a new shopping experience. Experiential shopping concepts will be combined with ground-breaking architecture to create a vibrant shopping experience which would capture both global and local fashion designers, artisans and traders – emerging as an entrepreneurial centre for trendsetting ideas.

The Creative Enterprise Hub in Bandar Malaysia will be a natural home for companies operating in the high-end services industries – arts and culture, science & technology and fashion and design.

 

View the embedded image gallery online at:
http://www.ptlm.com.my/index.php/component/k2/11-insider/bandar-malaysia-s-final-two-bidders-consortiums-backed-by-china-and-singapore#sigProIdee72465580

All images courtesy of Bandar Malaysia Website.

 

Survey: Property market to recover in 2016 and reach a new high in 2018 Registration

The survey polled over 15,000 respondents and 43% were from Malaysia. The majority were between 21 and 30 years old.

“The year 2015 is analysed by property experts to be the slums of property market slowdown for the decade, and discussions have it that the property market will begin to pick up in the year 2016, and will again reach its height in the year 2018,” the survey report said.

iProperty Group managing director and CEO Georg Chmiel said that after the implementation of the Goods and Services Tax (GST) in April, respondents who are interested in purchasing a property in one to two years have increased to 34%, compared with 30% before the implementation of GST.

Those who are looking to purchase after two years have also increased to 16% post-GST, from 12% pre-GST.

But the percentages of respondents looking to purchase a property in less than 12 months have fallen to 50% now from 58% six months ago.

Chmiel said the introduction of the GST has not deterred people from investing in real estate.

“Even though Malaysians are concerned about the rising house prices and affordability, the level of interest in the Malaysian property market remains strong, from within Malaysia and increasingly from overseas,” he said after announcing the survey findings here yesterday.

The majority of the respondents are looking to get into the property market but are hindered by high property prices. Though various affordable housing schemes have been introduced by the government over the years, it is not enough to meet the demand.

However, Chmiel noted that there was an increase in the budget to purchase, a shift in the motivation to purchase and type of property to buy.

He said respondents are now looking for property priced below RM500,000 to RM1 million with condominiums being the favourite. As such, they are holding back on purchasing property now to probably to try to save more for a downpayment.

“Certainly property prices and the availability of attractive real estate have moved up a bit and people simply adjust it for themselves. On one side, increase in the property prices and on the other side, 55% of the respondents are also investors so we see more investors coming in to the market looking for slightly different price bracket,” said Chmiel.

He also pointed out that the Malaysian real estate is very affordable in the ASEAN region, citing an average property price of RM376,200 for a 900 sq ft property, with a gross development product per capita average of RM63,403, and a purchasing power parity for property value to income ratio is 5.93.

“Even if property prices (in Malaysia) were to double, they will still be affordable. From an outside perspective, you can spend a lot in Hong Kong and Singapore, or spend a fraction in Malaysia,” said Chmiel.

Compared with the situation six months ago, when there was a rush to buy property pre-GST, many respondents are now adopting a wait-and-see stance and a cautiously optimistic approach. They are hoping the government will introduce other effective schemes that can help the under 30s afford a property.

Meanwhile, Chmiel said, the weakening ringgit has led to higher demand from Singaporeans wanting to buy property in Iskandar Malaysia.

 

News Source: “Property market to pick up in 2016“, The Sun Daily, 20 October 2015

MyTOWN Cheras to build new towers above mall in anticipation of IKEA boom Registration

The MyTOWN project in Cochrane, Cheras in Kuala Lumpur is being developed by Boustead Ikano Sdn Bhd (BISB), a 50:50 joint venture between Boustead Holdings Bhd and Ikano Pte Ltd.

Boustead is a government-linked company in Malaysia with a diversified interests in six primary sectors. Singapore-based Ikano Pte Ltd owns and operates IKEA stores in Southeast Asia and under the franchise rights from IKEA System BV. It operates as a subsidiary of Ikano S.A., a privately held international group of companies owned by the founding family of IKEA.

According to the business publication, BISB has provided for structural and infrastructure requirements for a total of three towers in the planning of the shopping centre as it decides whether to build two service apartment towers and one hotel tower, or two service apartment towers and one office tower, or to build only two towers.

The masterplan of the project is being finalised, including the detailed planning of the right product in order to serve the expectations of property buyers in the next three years.

With the addition of residential and commercial components, the entire masterplan will have a gross development value (GDV) in excess of RM3 billion.

The MyTOWN project is expected to be a one-stop lifestyle destination for shopping, dining and social meetings for family and friends, in addition to having Malaysia’s largest IKEA store seamlessly connected to the shopping centre.

The IKEA Cheras store is set to open to much funfare on 19 November, less than two weeks away.

It will be Malaysia’s second IKEA store after the opening of IKEA Damansara in 2003. Spanning 42,000 sq m, IKEA Cheras will be 20 percent larger than IKEA Damansara, which was the biggest IKEA store in Asia at that time of opening and remained one of the most visited IKEA store in the world until today.

The Swedish home furnishing giant has already confirmed a new store in the northern state of Penang and is now concluding a new location in the southern state of Johor.

Malaysia’s largest IKEA store is opening on 19 November 2015.

 

 

MyTOWN Shopping Centre, which will be opening in Q4 2016, will have an elevated ramp from the Maju Expressway (MEX) into its multi-level carpark. It will have 6,500 parking bays spread over two levels of basement car parks and four levels of elevated car parks.

There will be a pedestrian tunnel connecting MyTOWN’s basement supermarket retail level directly to the Cochrane underground mass rapid transit (MRT) station. The MRT station will be operational by July 2017, and is only 1 station away to the interchange stations of TRX and Maluri, and 2 stations away to Bukit Bintang, Kuala Lumpur’s shopping district.

The mall aims to have 28 million mall visitors a year. It will have five floors of retail space with a net lettable area (NLA) of 1.1 million square feet, with an approximately 460 retail establishments.

The mall features a sunken garden with step seating, semi-covered event pavilion, landscaped outdoor park, international dining at al-fresco dining terrace, children’s play zone, indoor event spaces, departmental store, lifestyle grocer, fitness centre and a 13-screen cineplex, which will be the largest cineplex in Cheras.

BISB mentioned that ultimately, the towers sitting above the retail component would have to provide the best synergy to the MyTOWN Shopping Centre, the IKEA store and other developments by Boustead Group in the Cochrane area.

The Boustead Group collectively owns 50 acres of land in the Cochrane area, which will be developed over time.

The mall is designed by international and local architectural firms Broadway Malyan Pte Ltd and Arkitek MAA Sdn Bhd. On 30th October last year, WCT Bhd accepted a RM651.6 million contract to build MyTOWN Shopping Centre.

The immediate next phase is likely to be a freehold residential condominium project across the road on an 8-acre site. It will be known as One Cochrane Condominiums, and is planned for launch in October 2016.

The developer Mutiara Rini Sdn Bhd, also a subsidiary of Boustead Holdings Bhd, will build four residential towers with a total of 800 condominium units, comprising two 42-storey blocks (344 units) and two 41-storey blocks (456 units).

The project already has more than 4,000 expressions of interest. The estimated pricing for the first launch of condominiums would be RM1,000 per square foot, with sizes varying from 973 (1+1 room) to 1,400 square feet.

A show gallery will be built for One Cochrane adjacent to the site. 

According to BISB, the primary reasons Cheras were chosen for the MyTOWN project and the country’s largest IKEA store were due to the convincing population growth and the development potential of the vicinity, which is just a 5-minute drive time to the city centre, the upcoming financial district Tun Razak Exchange (TRX) and linked to the MRT station.

The mall is strategically located on Jalan Cochrane, with the potential to reach more than 1.6 million shoppers within a 10-minute drive and 5 million shoppers within a 30-minute drive.

Besides MEX, MyTOWN is also accessible from Jalan Tun Razak/Bulatan Pandan, New Pantai Expressway (NPE), SMART Tunnel, Kuala Lumpur-Seremban Highway and Middle Ring Road 2 (MRR2). Jalan Cochrane will be widened to accommodate new tunnelways for cars exiting the mall and both Jalan Cochrane and Jalan Nakhoda Yusof will be further expanded to cater to the influx of cars in the area.

With IKEA as the biggest crowd puller, it is no wonder that the tenant mix of MyTOWN will be among the best in Cheras, Ampang and beyond. The mall has secured over 60% of its tenants one year before it opens, and is expected to be opened with at least 85% occupancy rate.

Confirmed tenants so far include Parkson. Village Grocer, Golden Screen Cinemas, Celebrity Fitness, Spotlight, Best Denki, MPH Bookstore, Al-Ikhsan, Kid’s e World and Pet Lovers Centre. Fashion brands include H&M, Uniqlo, Zara, Terranova, Topshop/Topman, Suiteblanco, F.O.S., a full Mango concept store and first-in-Malaysia Calliope.

Food outlets include T.G.I. Friday’s, Italiannies, Sushi Zanmai, Madam Kwan’s Restaurant and a Food Junction-operated food court.

“Ikano’s mall in Bangkok, the Megabangna shopping complex anchored by IKEA, is a good example. It has more than 40 million visitors annually and has won international mall-design, brand selection and shopper awards, says MyTOWN general manager Kenny Chin.

 

View the embedded image gallery online at:
http://ptlm.com.my/index.php/about-ptlm/11-insider/mytown-cheras-to-build-new-towers-above-mall-in-anticipation-of-ikea-boom#sigProIddf6e3d970b

All images courtesy of MyTown Shopping Centre Website.