KUALA LUMPUR: A new government scheme to build affordable homes for young middle-class Malaysians has been given the thumbs-up by prospective buyers, with some real estate analysts comparing them to Housing Board flats built in Singapore.

The apartments, to be built in Klang Valley, will be priced some 20 per cent lower than similar flats being sold on the open market – plugging a gap between low-cost housing for poor families and increasingly expensive condominiums in the city.

Called the 1Malaysia Housing Programme (PR1MA), the scheme forms another plank in Prime Minister Najib Razak’s efforts to improve national policies and address public concerns.

Young Malaysians earning RM6,000 (S$2,400) or less a month will be eligible to buy the flats, which will be priced from RM150,000 to RM300,000 – lower than the RM400,000 usually required for a mass-market condo or a terrace house in Kuala Lumpur and its suburbs.

Meant to help first-time buyers, the scheme not only offers 100 per cent loans but also allows buyers to borrow money to cover the legal fees. Buyers must occupy the flats and cannot sell them for 10 years.

‘The concept is similar to Singapore’s HDB scheme,’ noted property analyst Steven Tan, who said the response so far had been positive. ‘Now everyone can own property.’

Agreeing, teacher Ida Zainal, 33, said: ‘It’s good because it encourages people to buy homes early, before they rack up credit-card and other debts.’

Launched by Datuk Seri Najib last week, the PR1MA scheme comes amid a sharp rise in property prices caused by speculative buying. The rise has made many condos in and around the capital too expensive for middle-class Malaysians.

‘The government is aware of difficulties faced by the moderate-income group, who cannot afford to purchase high-priced houses but, at the same time, are not eligible for the existing low-cost public housing programme,’ Mr Najib said while launching the first project in Putrajaya.

Construction of 42,000 units, ranging in size from 800 sq ft to 1,400 sq ft, will begin this year in Kuala Lumpur and its suburbs. The units will be built by government-linked property developers such as Putrajaya Holdings and Sime Darby.

Datuk Seri Michael Yam, the president of the Real Estate and Housing Developers’ Association, said the scheme should succeed if the flats were not located too far from city centres and had access to good infrastructure.

As he told The Straits Times, inaccessibility would put off would-be buyers because, for many, it would cost less to just rent a home near their workplace.

Mr Tan noted that the locations announced so far have been attractive. The sites in Sungei Besi and Cheras are close to downtown Kuala Lumpur, he observed, while others are near popular town centres such as Puchong and Subang.

Source: Straits Times, 16th July 2011

Mr Robert Kuok, Malaysia’s richest man, has tabled a lucrative deal to take the group private.

ALLGREEN Properties’ shares rocketed on heavy volumes yesterday after a lucrative privatisation offer was announced for the property group.

The stock shot up 44 cents, or 38 per cent, to $1.59 on trades of 148 million shares, after a trading halt imposed on Monday was lifted.

Malaysia’s richest man, Mr Robert Kuok, who already controls the firm, has tabled what looks to be a knockout deal to buy the rest and take it private.

He has lodged a cash offer of $1.60 per share, about 39 per cent above the stock’s $1.15 price last Friday and about 20 per cent above its highest traded price in the past three years.

The privatisation bid – it was announced on Monday when trading for the counter was halted – is being made through Brookvale Investments, a firm linked to Mr Kuok.

The offer values Allgreen at $2.54 billion. The firm’s core businesses are property development and investment, project and property management and hospitality.

‘The privatisation will allow Allgreen to dispense with listing-related expenses and focus its resources on business operations,’ said Citi Investment Research.

UBS Investment Research expects minority shareholders to accept the offer, given the attractive price, the stock’s low liquidity and the risk of the firm suffering if more measures drag down the residential market.

More property firms are taking the privatisation route.

Hongkong Land privatised its subsidiary MCL Land last year while Soilbuild Group was privatised after an offer from managing director and co-founder Lim Chap Huat.

Among non-property players, S-chip Passion Holdings has been delisted and fellow China-based firm Sinomem Technology is also on the path to leaving the stock market.

Analysts said the market may see more cases of controlling shareholders taking their firms private. Private equity firms may also get into the action, delisting firms and restructuring them before heading back to the bourse.

‘If the major shareholders think that the companies (have low valuations), why not? They’ll get 100 per cent of future profits, and they may be bullish on the future earnings,’ said Mr Terence Wong, co-head of research at DMG & Partners Securities.

He added that S-chips and mature manufacturing companies may see more delistings, ‘if the valuations continue being where they are right now’.

Kim Eng Securities said that other property-related stocks may consider privatisation given attractive valuations and low borrowing costs.

It noted that some counters are trading at 30 to 40 per cent discounts to their book values, particularly those with substantial exposure to the residential market because they may be affected by future policies.

Source: Straits Times, 25th May 2011

MALAYSIA’S central bank has placed a maximum 70 per cent loan-to-value (LTV) limit on third home mortgages in a bid to curb excessive speculation and to bring about a more stable and sustainable property market.

The measure will apply with immediate effect, Bank Negara said in a statement yesterday. Financing facilities for first and second home purchases would not be affected and borrowers are only subject to prevailing LTV levels applied by individual banks based on their internal credit policies.

The central bank noted that specific locations, particularly in and around urban centres, have experienced faster growth, both in the number of transactions and in house prices in the recent past. This was further supported by an increase in financing provided for multiple unit purchases by a single borrower which in turn suggests increasing investment activity that is of a speculative nature, it added, but did not provide details.

While the average home buyer is expected to applaud the move, property players expect little impact apart from a slight dampening of sentiment in the near term.

‘Bank Negara has done a wonderful job regulating the financial sector, but I feel it has erred this time,’ Zerin Properties chief executive Previndran Singhe opined. ‘Where is the speculation? Is it reflected in home loan non-performing loans?’

In his view, the measure would not work because there is very little speculation. ‘The bulk of buyers are old money, serious investors with a long term view on property. And because most are wealthy, the new lending caps will mean little to them.’

Recent price jumps in specific developments – mainly landed residential in the Klang Valley and Penang – are a result of market demand and growing land scarcity in those areas, he said, noting the national average increase is only marginal. ‘I bet the coming Napic (National Property Information Centre) report will show less than a 5 per cent rise in prices.’

Real estate in other states has moved more sedately, a fact the central bank acknowledged. ‘This aggregate growth trend remains largely manageable and has not deviated from the long term trend in residential property prices.’

Even so, it said that the targeted implementation of the LTV ratio is expected to moderate the excessive investment and speculative activity in the residential property market which has resulted in higher than average price increases in such locations. ‘This has also led to increases in house prices in surrounding locations, thus contributing to the declining overall affordability of homes for genuine house buyers.’

In some new developments, a purchaser need only come up with a 5 per cent downpayment because banks are happy to lend up to 90 per cent of the property value if they think the borrower is credit worthy. The other 5 per cent can come in the form of a developer’s rebate to make the purchase that much more attractive.

For those reasons, Mr Singhe said that the 70 per cent LTV rule on third mortgages should apply only to new units and not to secondary homes.

Source: Business Times, 4 Nov 2010

KUALA LUMPUR: Malaysia’s central bank placed a limit on the loan-to-value ratio for people taking out third mortgages to buy homes, in a bid to moderate ‘excessive’ investment and speculation in urban areas.

A maximum lending limit of 70 per cent will take effect immediately, Bank Negara Malaysia, the country’s central bank, said in a statement yesterday. Banks typically provide loans of as much as 90 per cent of the value of a property.

The South-east Asian nation joins Singapore, Hong Kong and China in introducing measures to cool its real estate market, on concerns that asset bubbles are forming as home prices surge.

Singapore in August increased down payments for second mortgages and imposed a stamp duty on property held for less than three years.

‘While Malaysia is not experiencing a general property bubble, targeted pre- emptive measures are appropriate to moderate the increases in property prices that are evident in selected locations that are speculative in nature,’ central bank governor Zeti Akhtar Aziz said in a speech sent to the media yesterday.

Home prices rose 5.6 per cent during the first quarter of the year and 4.2 per cent in the second quarter, Dr Zeti said. Specific locations, particularly in and around urban centres, have experienced faster growth in the number of transactions and values, the central bank said.

This has been coupled with an increase in financing provided for multiple unit purchases by single borrowers, the statement said.

The targeted implementation of the loan-to-value ratio should moderate ‘excessive’ speculation, it added.

The central bank’s ruling ‘should not affect significantly the overall sentiments of the market, which comprises mainly first-time buyers and upgraders’, said Tan Sri Leong Hoy Kum, group managing director of developer Mah Sing Group, in an e-mailed statement.

‘There is no property bubble, as price increases have only been for properties with good concepts, by branded developers and sited in good locations.’

Malaysian home sales may rise 26 per cent to a record RM52.9 billion (S$22.1 billion) this year, boosted by low lending rates and liquidity, Kenanga Investment Bank analyst Yeow Yeonzon said in a report last month.

Loans applied for purchasing residential properties rose 32 per cent in August from a year earlier to 15.4 billion ringgit, according to central bank data.

In January, the government imposed a 5 per cent capital gains tax on homes sold within five years of purchase.

BLOOMBERG

Source: Straits Times, 4 Nov 2010

Analyst suggests retail rather than commercial Reits in view of large supply

MALAYSIAN Reit investors could be better off looking at retail rather than commercial trusts, as a large supply of upcoming office space in Kuala Lumpur threatens to dampen rents.

The recommendation comes after the government announced plans last week to ramp up commercial space in the capital, with some proposed projects to start next year.

Their mega scale has exacerbated concern about oversupply that is bound to curb the potential for rent increases.

‘We are less bullish on the office property segment now given the huge 26.7 million sq ft of new supply coming into the market between 2010 and 2014,’ said Maybank IR Research analyst Wong Wei Sum.

Citing estimates by CB Richard Ellis Malaysia, she said the new supply will add 35 per cent to the existing 77 million sq ft in the Klang Valley – a situation that will be further aggravated by the privatisation of state land for new commercial projects.

‘This will result in lower rental growth and higher occupancy risks,’ Ms Wong said, highlighting the proposed Kuala Lumpur International Financial District and a 100-storey skyscraper, the specifics of which have yet to be detailed.

Her concern is echoed by industry players, who have urged the country’s largest asset management company, Permodalan Nasional Bhd (PNB), to conduct feasibility studies before rushing to put up the mega skyscraper in Kuala Lumpur by 2015.

Amphil Corporation chief executive P K Poh said construction timing is crucial because the building of super structures often converges with a recessionary cycle. ‘There is a real danger of these projects crowding out other developers’ projects when the construction of this and other iconic projects starts,’ The Star newspaper quoted Mr Poh as saying.

He also pointed out that high demand for construction materials will push material prices up and inflate development costs for everyone.

A campaign is already underway on social networking site Facebook to protest against PNB’s 100-storey Warisan Merdeka building. Called the ’1M Malaysians reject 100-storey Mega Tower’, the site was set up by individuals with the aim of registering a million dissensions. It has, apparently, attracted more than 30,000 fans in only four days.

Near Kuala Lumpur, other large private mixed developments are also on the drawing board – noticeably one by the Naza Group in the Mont Kiara area.

The future deluge of commercial supply has prompted Ms Wong to recommend retail Reits, particularly those with ‘strong domestic retail growth prospects’, such as Sunway’s SunReit and CapitaLand’s CapitaMalls Malaysia Trust (CMMT).

The latter’s sister office Reit Quill Capita Trust (QCT) remains a ‘hold’ for Ms Wong.

While QCT’s recent third-quarter results were within expectations – rental income was flattish and net income only slightly improved on better cost management – its attractiveness has also been dimmed by slow asset acquisition.

Still, Hwang DBS-Vickers rates it a ‘buy’, mainly because of its FY 2011 yield of an ‘attractive 8 per cent’ versus 7.1 to 7.2 per cent for Sunway and CMMT.

Source: Business Times, 21 Oct 2010

Malaysian Property Incorporated’s office-cum-show gallery at SGX Centre 1, Shenton Way, aims to be a one-stop shop for real estate investment queries.

Potential investors can get the latest updates on Malaysian government regulations, investment policies, property valuation, taxation, financing as well as information on the country’s infrastructure, healthcare and education facilities and economic growth.

MPI chairman Thong Yaw Hong pointed out that Malaysians and Singaporeans have a shared history and cultural background, and many have friends and relatives on both sides of the Causeway. ‘This familiarity with the country and its people is one of the many reasons that make investing in real estate in Malaysia attractive to Singapore investors,’ he said.

He also noted that property prices in Singapore have skyrocketed. ‘If you couple this with the favourable exchange rate of the Singapore dollar against the Malaysian ringgit, investing in a piece of quality real estate in Malaysia becomes truly more affordable than in Singapore,’ he said.

MPI was set up in 2008 as a joint venture between the Malaysian government’s Economic Planning Unit and the private sector. In addition to providing real estate information, MPI will offer rental space to Malaysian developers and government agencies that wish to promote Malaysian investments in Singapore.

And for Singapore-based investors worried about the credibility of developers in Malaysia, MPI provides an annual rating of the country’s top developers and works to ensure that developers give an assurance of the completion of projects.

Separately, Malaysian developer Mah Sing Group Berhad said it will market its new residential project, Icon Residence Mont Kiara, in Singapore this month through a series of private previews and exhibitions.

Unit sizes range from 875 sq ft to 2,697 sq ft, with a starting price of $504,800 (around RM1,200, or S$510, per square foot). There are also six penthouses priced from $2.43 million. These units range from 4,200 sq ft to 4,436 sq ft and come with private swimming pools.

Source: Business Times, 2 Oct 2010

Prices of landed houses in some popular areas have appreciated by 10-30% over the last six to eight months

MALAYSIA’S economic recovery has fuelled a resurgence in the residential property market in Kuala Lumpur as well as the lesser-known investment destinations of Penang and Johor. The year started off on a positive note for Malaysia, with the economy registering a robust growth of 10 per cent in the first quarter – the fastest in a decade.

In the nation’s capital Kuala Lumpur, developers’ and buyers’ confidence have been renewed with the economic recovery. There has been revived interest in the high-end condominium market as reflected in the fairly successful launches in H2 2009 and H1 2010, with more developers undertaking re-branding and repositioning exercises of previously deferred projects.

‘The high-end condominium market has bottomed and with recovery setting in, further improvement is expected by the end of the year or early next year,’ said Knight Frank in its Q2 report on the Malaysian property market. ‘Most developers have changed their game plan from prudently deferring their planned projects earlier to actively updating and revamping their proposals, with several launches planned in the next six months.’

A number of new condominiums and service residences are scheduled to launch over the rest of the year. Data from another property firm, CB Richard Ellis (CBRE), shows that the Kuala Lumpur luxury residential market performed steadily during Q2 of 2010 with prices for secondary transactions edging up 0.7 per cent quarter-on- quarter to RM704 per square foot (psf).

A number of projects which had their official launches during Q2 sold well, including Kiaramas Danai Tower 1 (136 units, about 70 per cent sold), Seri Ampang Hilir (40 units, about 85 per cent sold) and Verve Suite’s Vox Tower (250 units, more than 75 per cent sold).

In addition, Vox Tower set a new benchmark price for the Mont Kiara area, with a reported average selling price of RM1,250 psf. And the most significant sale during Q2 2010 was that of a penthouse at The Binjai On The Park development in Kuala Lumpur City Centre (KLCC), which went for RM38 million (S$16.3 million).

The 42nd storey unit has an area of 14,300 sq ft and the price works out to about RM2,660 psf. That makes it one of the most expensive homes to have been sold in Malaysia in recent years, and possibly the country’s largest ever condominium transaction.

Observed Knight Frank: ‘Demand is predicted to grow gradually in selected markets and locations, particularly for projects by reputable developers with marginal price appreciation expected in newly completed projects while the rental market is expected to remain competitive in view of the high impending supply coming onstream within the next three years.’

Penang

Penang continues to be a property hotspot with developers from both the island and Klang Valley on the acquisition trail to increase their landbanks on the island. In particular, the housing market in Penang is expected to remain fairly resilient with the landed housing sector continuing to attract strong interest.

But the high-end condominium market is not expected to be as strong in view of the mediocre occupancy rates at many completed projects, analysts said.

Knight Frank’s data showed that prices of units in high-end completed condominiums and those nearing completion within the prime areas of Tanjung Bungah and Pulau Tikus have generally remained unchanged at H2 2009 level, ranging from RM380 psf to RM600 psf. Asking monthly rentals of fully furnished units have also remained stable within the range of RM6,000 per unit to RM13,000 per unit.

However, achieved rentals – especially for the higher- priced units – are likely to be lower in view of increasing competition from the impending new supply entering the market, the property firm noted.

Johor

Boosted by the development momentum of Iskandar Malaysia and the positive impact of the 10th Malaysia Plan, the property market in Johor is expected to be more active for the rest of this year and 2011.

In particular, developers on both sides of the Causeway were excited by the joint statement by the prime ministers of Malaysia and Singapore in May that Khazanah Nasional will form a 50:50 joint venture company with Singapore’s Temasek Holdings to develop a ‘wellness’ township on a 500-acre site in Iskandar Malaysia.

And under the 10th Malaysia Plan tabled in Parliament in June, the federal government will form a facilitating fund under which funds will be allocated to Johor for various projects.

Among the main projects outlined were the RM1.8 billion Johor Baru city transformation plan, the RM8 billion double tracking rail project from Gemas to Johor Baru and the Bus Rapid Transit System in Iskandar Malaysia.

Analysts said that the high-end residential market in Johor Baru should benefit from the expected investment inflows. Looking ahead, there are concerns over whether the booming housing market will lead to an asset bubble and if there is a need for more tightening measures to curb speculative buying and ensure the market stays sustainable. Prices of landed houses in some popular areas like Klang Valley, Penang, and Johor have appreciated by 10 per cent to 30 per cent over the last six to eight months, reports said.

But for the Kuala Lumpur luxury residential market, incoming supply is likely to curb capital appreciation, at least in the short term. ‘Capital values are expected to remain stable in the short term while rentals may come under downward pressure due to large supply and high vacancy,’ said Jones Lang LaSalle (JLL) in its Q2 report on Kuala Lumpur’s luxury residential market.

But JLL added that Kuala Lumpur’s luxury condominium market is expected to perform well over the next 12 months as it rides on a surge in supply and demand picks up as the economy strengthens.

Source: Business Times, 23 Sep 2010

New sales gallery and service centre to target S’porean, foreign buyers

MALAYSIAN property developer UOA Group has set up a customer service centre and property sales gallery at Suntec City as it looks to grow the proportion of Singaporeans and other foreigners who buy its high-end commercial and residential developments.

‘It is a common worry for buyers of properties overseas that there will be poor after-sale services for leasing, sales, repairs and payments, etc,’ said UOA senior general manager David Khor.

‘By having this office and bringing our service standards to them right here in Singapore, buyers can have more confidence in our group.’

UOA also hopes to boost the number of foreigners who buy its properties.

‘Singaporeans and (other) foreigners, from countries such as China, make up about 10 per cent of the buyers for our high-end commercial and residential developments. With this property sales gallery and service centre in Singapore, we aim to increase that proportion to 25 per cent,’ Mr Khor added.

Buyers in Singapore can now attend previews to the group’s property launches in Singapore at the sales gallery.

The new office will also serve as the group’s investor relations office for its more than 2,000 shareholders. UOA obtained a secondary listing on the Singapore Exchange in 2008.

UOA spent about $8 million to buy and renovate its new office at Suntec City Tower One .

UOA, which has been listed on the Australian Stock Exchange since 1987, is based in Kuala Lumpur.

The group has a total land bank of more than 60 acres with a potential estimated gross development value of RM4 billion (S$1.7 billion) to be realised over the next 10 years. In addition, its investment portfolio is valued at around RM1.2 billion, UOA said.

Source: Business Times, 9 Sep 2010

(KUALA LUMPUR) The property sector is likely to be downgraded if Bank Negara Malaysia imposes a lower mortgage loan-to-value ratio (LVR), says Kenanga Research.

Bank Negara is reported to have written to financial institutions to secure feedback on the possibility of capping the LVR for mortgages at 80 per cent to avert the risk of a potential property bubble.

Currently, banks can usually lend up to 90 per cent of the house value, or up to 100 per cent in selected cases, which has been handy for developers promoting their newly launched homes under interest absorption schemes like 10/90 home loan schemes.

Kenanga said in a research note yesterday it would not be surprised if Bank Negara implements the 80 per cent cap on the mortgage LVR, or at least for properties costing more than RM500,000 (S$212,200), as the government is clamping down on investment-related property acquisitions.

‘If implemented, we are likely to downgrade our sector call, as we expect property transactions to fall since deposit requirements will double, or essentially double the investment risk, limiting the number of homes that an individual can buy. We expect buyers to become more discerning when it comes to property choices, meaning stronger market leaders with branding and quality will be winners, when it comes to grabbing market share of a smaller pie,’ Kenanga explained.

It is also maintaining a ‘trading buy’ call on the property sector for now.

Kenanga said, currently, the ‘buy call’ is largely premised on strong sales achieved for developers, who are well positioned with several projects or aggressive land banking.

‘We look to review our sector and company calls in the next couple of weeks, pending further light on the matter,’ it added.

Meanwhile, OSK Research said it is unlikely that Bank Negara will enforce a strict capping of the LVR at 80 per cent across all residential property classes, but rather impose a restriction only on higher-end properties.

‘We understand, however, most banks would have an internal risk control policy limiting the LVR to 85 per cent for higher-end residential properties of more than RM700,000,’ it said.

Residential properties currently contribute to 26.6 per cent and 49.8 per cent of total industry loans and household loans respectively. — Bernama

Source: Business Times, 31 Aug 2010

In making the call, Hua Yang chief operating officer Ho Wen Yan said that the matter should be looked into seriously to encourage more developers to build more affordable homes.

‘For the next budget, I think a key aim for the government is to benefit the poor, so affordable housing should be given some incentives,’ he said.

‘Incentives should be given to help developers in producing low-cost and affordable homes,’ he told Bernama.

Currently, according to Mr Ho, the incentives are not specific and not so targeted.

‘So, in order to benefit the right group of people, the incentives to developers should be more targeted.’

Prime Minister Najib Razak is scheduled to table Budget 2011 on Oct 15, 2010.

A series of focus group meetings are being organised by the Finance Ministry to gather input for the budget.

The meetings provide a forum for select groups from industries, associations, professional bodies and non-governmental organisations to make suggestions for the government to consider.

On Hua Yang as a property developer, Mr Ho said that the company has strived over the past 30 years to build a reputation in providing affordable public housing, delivered with quality and concern for the built environment.

‘While most developers have moved on to high-end luxury projects, including overseas developments, we will continue to focus on providing affordable housing for the middle-income segment,’ he said.

Hua Yang is now operating in Perak, the Klang Valley and Johor. Its key projects in the Klang Valley are One South in the Seri Kembangan area and Symphony Heights in Selayang.

Its other projects include the mixed township developments of Bandar University Seri Iskandar and Metro Pengkalan in Perak, and Taman Pulai Indah in Skudai, Johor. — Bernama

Source: Business Times, 12 Aug 2010