700 shopping malls by end of next year?

(File pix) Sunway Velocity Mall is a new shopping destination in Cheras.

By Sharen Kaur - Published in NST Property on October 25, 2018 

BY the end of next year, Malaysia will have close to 700 shopping malls with total net lettable area of 170 million sq ft. The biggest challenge will be to fill up the space amid the current economic backdrop, said Malaysia Retail Chain Association (MRCA) president Datuk Seri Garry Chua.

“Currently we have about 560 shopping malls operating nationwide with total net lettable area of about 135 million sq ft. The occupancy for majority of the malls in Klang Valley is between 85 and 87 per cent and that is considered okay if compared with neighbouring countries like Singapore.

“One way to fill the malls, both new and existing, is tourism. The government has to do a lot more in getting tourists from around the world to come here, especially from China.

“Chinese tourist spend about US$260 billion globally. They are the biggest spenders.

Indonesia doesn’t have a problem when it comes to retail shopping as they have a lot of people coming from China to buy their products,” Chua told NST Property.

He said it has been projected that by 2030 or 2035, tourism is going to be the largest contributor of gross domestic product (GDP) worldwide.

In Malaysia, retail contribution to the GDP could expand to 15 per cent from the current 10 per cent in the next five years and it could get better with tourism growth, he said.

For the second quarter of 2018,Malaysia’s retail industry reported a growth rate of 2.1 per cent in retail sales, compared to the same period in 2017.

MRCA members projected the second quarter growth rate at six per cent.

In June, some retailers enjoyed a 30 per cent increase in business, and others only 10 per cent after the zerorisation of the Goods and Services Tax (GST). High value-added retail goods, such as luxury items, sporting goods, electrical goods, electronics goods, gadgets and furniture, enjoyed higher sales compared to those of basic necessities, household goods and general fashion items.

MRA estimates average growth of 6.1 per cent during the third quarter.

Chua said the government should have more business-friendly environment and policies that will attract both investors and tourists.

“There is huge potential in the local retail industry, despite concerns of a glut in retail space. For future retail, it will have to encompass a lot of digital and concept stores. The malls must be interactive. It must have things like artificial intelligence where you have robots moving around and interacting with people.

“There should be new dynamics in shopping. Mall owners must keep abreast with latest trends. Pricing and design must be right, especially for fashion brands.

“Malls are also adding more and more food and beverage (F&B) outlets. Previously, tenant mix comprised 20 per cent of F&B but today, it is 30 per cent,” he said.

Chua said for developers who are looking to set up malls, they should consider location and connectivity.

Other important points to consider include concept, target market, mixture of tenants, security, parking, cleanliness and making the malls interactive.

Pent-up demand in Seberang Prai

(File pix) An aerial view of Seberang Prai. Pix from Google Images

 

By Sharen Kaur - Published in NST Property on October 25, 2018

SEBERANG Prai in Penang mainland has come a long way from being a sleepy cowboy town to becoming a bustling and developing residential and commercial giant.

The main town in Seberang Prai, which is linked to Penang island via a 13km Penang Bridge is Butterworth. Other prominent towns include Bukit Mertajam, Seberang Jaya, Sungai Puyu, Prai, Nibong Tebal and Kepala Batas.

Many major developments have been focused in Seberang Prai, which is touted as a catalyst for Penang’s growth in the 21st Century.

Henry Butcher Malaysia expects the property market in Seberang Prai to remain stable in the second half of this year.

The current stable economic and political environments, a relatively low unemployment rate, healthy gross domestic product growth, a manageable inflationary rate, and stable borrowing cost and interest rates are expected to soon boost property development in the area, which has been stagnant since 2016, the firm said in its mid-year review on Seberang Prai.

It said volume of residential property transaction is expected to improve and prices to remain stable, especially those of medium-end houses below RM500,000.

Prices for affordable homesbelowRM300,000 would continue to rise, particularly for landed houses in hotspots, in view of the strong demand and low entry point.

The proposed Penang Master Transportation Plan would also have positive impact on property demand in Seberang Prai, particularly for projects in Raja Uda, Prai, Batu Kawan and Bukit Mertajam, it said.

“It would also narrow the price gap between properties in Penang island and those in the mainland, if this integrated development plan materialises,” said Henry Butcher.

Meanwhile, the performance of the development land sub-sector in Seberang Prai has also improved.

According to Henry Butcher, total volume of transactions increased to 294 transactions in the first quarter of this year from 261 in the first quarter of last year. However, total value of transactions declined by 35.06 per cent to RM116 million from RM178 million during the same term previously.

“All three districts in Seberang Prai recorded an increase in the total volume of transaction, whereby North Seberang Prai recorded the highest growth rate at 19.78 per cent, followed by South Seberang Prai at 18.52 per cent and Central Seberang Prai at 4.31 per cent.

“Central Seberang Prai remains the most active district with 121 transactions. Major deals include a parcel of development land of about 1,642 acres (664.5ha) in Tasek Gelugor sold for RM620 million and another at Permatang Tinggi at 44 acres (17.8ha) sold for RM76.7 million.”

The performance of this sub-sector is expected to maintain at the current pace in the second half of this year and prices are expected to remain stable, it added.

Industrial sector growing in Seberang Prai

(File pix) A view of Seberang Prai industrial area. Archive image for illustration purposes only. Pix from Google Images

 

By Sharen Kaur - Published in NST Property on October 25, 2018

THE industrial sector in Seberang Prai is building pace with several factory projects underway ― reflecting an active market in mainland Penang.

Henry Butcher Malaysia’s SeberangPrai mid-year review stated that the volume of transactions had increased marginally by nearly three per cent, from 67 transactions in the first quarter of last year (Q1 2017), to 69 in the first quarter of this year (Q1 2018).

But the total value of transactions surged 53.85 per cent year-on-year, from RM80.8 million to RM124.3 million.

Central Seberang Prai continued to lead the growth by making up 64 per cent of the transaction volume, followed by South Seberang Prai (20 per cent) and North Seberang Prai (16 per cent).

Major transactions included a 1.26ha factory in Taman Industri Bukit Panchor, Nibong Tebal, that sold for RM10 million.

There were two semi-detached factories with a land size of 743 to 929 sq m that sold for nearly RM6 million at the Sungai Lokan light industrial zone in Bagan Lallang, Butterworth.

Meanwhile, a parcel of freehold industrial land measuring 4.31ha at Valdor Industrial Estate in Sungai Bakap had been sold for RM20 million (RM43 per sq ft), the firm said.

“Prices of SME factories in the secondary market are stable and in the upward trend.

A 1.5-storey terrace factory at Sungai Lokan light industrial zone with a land size of 178 sqm was transacted at RM650,000 and remains firm comparedto transaction pricesin 2017,” the firm added.

In Taman Bunga Raya Merahat Raja Uda, a terraced factory with land size of 225 sq m recorded the highest transacted price at RM1.1 million.

Among the companies ramping up their businesses in Seberang Prai is Eonmetall Group Bhd, which is investing more than RM100 million this year and next in steel racking, and the machinery and equipment (M&E) business.

The company, based in Valdor Industrial Estate, will be channelling about 70 per cent of the budget to build 10 palm oil solvent extraction plants for a government-linked company.

Nibong Tebal Paper Mill Holdings Bhd, the manufacturer of Premier tissues, is investing RM50 million to expand its manufacturing facilities in Vietnam and Penang this year.

It wants to increase its production capacity to 170,000 tonnes from the existing 110,000 tonnes.

Manufacturer and steel product trader Tatt Giap Group Bhd plans to develop a 4.85ha light industrial project worth RM140 million in Valdor Industrial Estate.

This development included 38 units of three-storey semi-detached SME factories and two three-storey detached corporate warehouse cum office buildings.

JLL Malaysia Sdn Bhd will also be investing RM70 million in Penang over the next two years. This investment includes the acquisition of a 1.6ha plot of industrial land at Penang Science Park to build a factory to produce medical devices. The factory is expected to begin operations in early 2020.

Astino Bhd’s new plant in Jawi is expected to be ready by the end of the year. Worth RM60 million, it aims to tap the growing market for construction materials.

Golden Gates is an upcoming SME Industrial Park by Golden Land Bhd in Batu Kawan.

This 8.3ha freehold development comprises a mix of light and medium industrial units, which includes three-storey semidetached and detached factories selling for RM2.8 million onwards.

Wisdom Tech Avenue is a light industrial project by WSH Development Sdn Bhd in Valdor Industrial Estate.

It comprises three-storey semi-detached SME factories with land sizes ranging from 1,027 sqm onward, with prices of RM5.64 million and above.

The Park is a new SME project by Sincer Sunrich Sdn Bhd at Sungai Baong, South Seberang Prai. It comprises 34 units of double-storey, semi-detached factories with land sizes from 780 sq m onwards, and three units of double-storey detached factories with land sizes of 1,227 to 2,120 sq

Puncak Alam's rising potential

An aerial view of Shah Alam 2, which development of started in 2001. IJM LAND PIC

 

By Sharen Kaur - Published in NST Property on October 18, 2018

 

Infrastructure and amenities improvements in Puncak Alam in the last 10 years or so have attracted many developers to the 5,666-hectare township in Ijok, Kuala Selangor.

Formerly a palm estate of the Federal Land Development Authority within the locale of Bukit Cherakah, the main town in Puncak Alam was launched in 1997.

Bukit Cheraka Development Sdn Bhd was the master developer for the integrated township. In 2001, the company changed its name to Puncak Alam Housing Sdn Bhd and continued to develop the township through joint ventures with other developers.

The company also sold land to developers who wanted to make Puncak Alam their new investment haven. The land sales had significantly reduced the initially-earmarked area for Puncak Alam.

Key developers in Puncak Alam include IJM Land Bhd, Eco World Development Group Bhd, Oriental Interest Bhd (OIB), Worldwide Holdings Bhd, MKH Bhd, LBS Bina Group Bhd, Guppyunip Group and Perfect Eagle Development Sdn Bhd.

They have created several new areas in the township, such as Eco Grandeur (Eco World), Shah Alam 2 (IJM Land), Myra Alam (OIB), Puncak Bestari (Worldwide Holdings), Alam Perdana (LBS), Pelangi Seri Alam (MKH), Puncak Alam Jaya (Guppyunip) and Aquile (Perfect Eagle).

These projects comprise a collection of apartments, terraced houses, superlink homes, bungalow lots, semi-detached clusters and commercial properties.

PIONEER DEVELOPER

One of the earliest developers in Puncak Alam is IJM Land Bhd, which started developing the 405ha Shah Alam 2 in 2001.

Its managing director Edward Chong Sin Kiat told NST Property that Shah Alam 2 is nearing completion with just a few phases left to launch.

“Shah Alam 2 is now almost 90 per cent developed. When we started, this place was a challenging market. Given that Puncak Alam was relatively a new area, not many developers wanted to be there.

“It came into prominence a few years ago, and today you see many developers in Puncak Alam. It is a well-planned and sustainable township with good connectivity to many highways. It was considered relatively far away (from the Kuala Lumpur city centre) in the early 2000s. Developers have caught up and the city has spread further,” said Chong.

Puncak Alam has easy access to Kuala Lumpur via the Shah Alam-Puncak Alam Highway, Guthrie Corridor Expressway, New Klang Valley Expressway, North South Expressway Central Link and The Kuala Lumpur-Kuala Selangor Expressway.

Chong said the completion of the Universiti Teknologi Mara campus has help boost vibrancy in the township.

“Puncak Alam is quite vibrant now. Many developers have come to the area with a multitude of properties. Road traffic is more heavier than before and this demonstrates the location’s potential as one of the corridors for growth,” he added.

IJM Land, OIB focus on affordable housing

Myra Alam by OIB Group. OIB PIC

 

By Sharen Kaur - Published in NST Property on October 18, 2018

IJM Land Bhd is gearing to launch the final phases of its Shah Alam 2 development in Puncak Alam, Selangor, with the focus still on affordable houses.
Managing director Edward Chong Sin Kiat said the key product in Shah Alam 2 will be landed residential that is catered for the mid-range market.
“We will not launch any high-range products. If you talk about high range products people would look at Bukit Jelutong or some areas in Shah Alam. We want to maintain what we have been building in Shah Alam 2 so that more people can afford to own a home,” he said.
Chong said the next launch in Shah Alam 2 is on November 18, which will be Phase 2 of Alam Suria Enclave (5C).
Phase 2 will comprise 96 units of linked houses measuring 20 x 70 with built-up size of 1,620 sq ft.
“Each unit starts from RM519,000. We are bullish on the take-up as we have been receiving a lot of enquiries on new launches in Shah Alam 2,” he said.
Chong said Phase 1 of 5C with 119 units launched in July was fully sold in less than four months.

 

IJM Land managing director Edward Chong Sin Kiat says the next launch in Shah Alam 2 is on November 18.

“We are the pioneers in Puncak Alam. Most of our products launched over the last 17 years have been fully taken up. Our project is conveniently linked to highways that include KL-Kuala Selangor Expressway (Latar) and Guthrie Corridor, putting you only a stone’s throw away from major hotspots. The township basically is more vibrant now than it was 10 years ago,” he said.
Chong said property prices have been also on the rise since 2001.
When IJM launched terraced houses in 2001, they had units selling for RM119,000. Today, the same units are worth about RM500,000 to RM600,000, he said.
Adding to Puncak Alam’s appeal will be the new Universiti Teknologi Mara (UiTM) Hospital on a 11.28ha site at the UiTM campus, which is currently under construction.
It was reported that the 400-bed hospital is being built at a cost of RM599 million and is expected to promote medical tourism and allow UiTM students to train.

 Oriental Interest Bhd general manager of sales and marketing Wendy Lim said Myra Alam offers a sweet deal for the average young professional.

Oriental Interest Bhd (OIB), a new developer in Puncak Alam, unveiled in June the first phase of Myra Alam.
Myra Alam is a residential project with a gross development value of RM300 million. It has 223 units of terraced houses, 364 condominium units and 394 units of Rumah Selangorku apartments.
The project, situated on a 14.36 ha plot of land which the company acquired for RM28 million, is expected to be completed by 2023.
The bookings for Phase 1 comprising 106 terraced houses started since early June with 50 per cent having been booked, said OIB general manager of sales and marketing, Wendy Lim.
Lim told NST Property that from the total number of units that have been booked OIB has converted 40 per cent into sales.
“We are positive about the take-up and confident they will all be sold out by the end of the year. Myra Alam caters to young adults who are seeking for quality, affordable homes in the areas they currently live and work in.
“Where current homes are sold at largely unaffordable prices, Myra Alam offers a much sweeter deal for the average young professional,” she said.
Phase 1 of Myra Alam consists of Type A and Type B double-storey terraced homes, with built up of 1,865 sq ft and priced from RM475,000.

“In terms of absolute price, we are on par with many of our competitors such as LBS Bina, IJM and MKH, but about 30 per cent cheaper than Eco World. Product-wise though, we offer bigger built ups, 400 sq ft extra while most others are looking at 1,300-1,500 sq ft. That said, it effectively brings down our per sq ft pricing,” Lim added.
Type A offers 50 units that come with four bedrooms and three bathrooms with a backyard garden, which is a rare addition when it comes to terraced in general, she said.
Lim said Type B emphasises more on space and privacy which would better suit slightly older families with 56 units featuring four bedrooms and four bathrooms.
“Taking much pride in offering real and practical homes, Myra Alam promises to deliver affordable real spaces for families to live and grow in.
“A lot of buyers only focus on the bottom line price. So while some developments seem bigger in terms of the overall project and cheaper in terms of the individual house, they often miss the fact that the houses being offered are far too small for landed homes and growing families. With us, you’ll find the right amount of space at the right price,” she added.

'It's more about income level, not pricing'

Luxury properties have been harder to sell because of loan margin issues and the soft market. FILE PIC

 

By Sharen Kaur - Published in NST Property on October 18, 2018

 

HAS the expectation of Malaysia’s failure to achieve high-income nation status by 2020 been, to some extent, the cause of affordable housing issues in the country?

In 1991, the government, led by Tun Dr Mahathir Mohamad, formulated a long-term national development blueprint under which Malaysia aspired to be a developed nation within 30 years.

The 11th Malaysia Plan (2016-2020), charts a path toward a high-income status, focusing on increasing productivity and innovation, as well as stressing the need for equity, inclusiveness, environmental sustainability, human capital development, and infrastructure.

It also seeks to raise the living standards of the Bottom 40 per cent (B40) income group, as well as reduce income and infrastructure gaps between rich and poor states.

Fast-forward to this year, and with just over one year to go before 2020, Malaysia is still a few steps behind the high-income status target, said Real Estate and Housing Developers’ Association Malaysia (Rehda) council member Datuk N. K. Tong.

Datuk NK Tong.

 

The World Bank said recently that Malaysia is expected to achieve a high-income nation status at some point between 2020 and 2024.

To make this vital breakthrough, the country has to undertake some major reforms or greater socio-economic transformation.

The World Bank defines high-income economies as those countries with gross national income (GNI) per capita of US$12,236 (RM49,916.76) or more.

Last year, Malaysia’s average GNI per capita stood at US$9,660, just short of US$2,576 of the defined threshold level.

“The previous government promised to achieve a high income economy by 2020 but we haven’t got there yet. I think 2020 is too short a time frame now. The previous government had failed to get us to where we should be on the way to 2020.

The exemption of Sales and Service Tax for construction materials will bring down property prices.

 “If we continue to reform, there is some potential. It is a question of income and not the pricing of the properties. If you look at everybody’s take-home (pay), at the end of the day after taking care of the basics, there is not much left,” Tong told NST Property.

Statistics Department data showed that Malaysian workers received average salary of only 35 per cent of the gross domestic product (GDP) in 2016. This included wages, bonuses and other income. Workers in China, Singapore and the United States enjoyed a higher share of

57, 42 and 43 per cent, respectively.

Singapore achieved its high-income status in 1987.

Tong, who is also Bukit Kiara Properties group managing director, said housing affordability issues in Malaysia are not about product pricing, but more about the income level of the people.

“The overall market is soft basically because incomes are not high enough. We have that vision of a high-income nation but we just haven’t executed it. There are many issues but these are a legacy from many years of the property industry being somewhat dysfunctional.

“In the current market where there are many affordably-priced properties and you still see slow take-ups, that’s got to do with the economy,” he said.

IJM Land Bhd’s Rimbun Ara project in Seremban 2 has been well received because of its value-for-money products. FILE PIC

Meanwhile, Rehda patron and immediate past-president Datuk Ng Seing Liong said banks should not only depend house buyers’ payslip when approving a loan as their potential clients may have other income.

“If banks just look at their salary, then getting a loan to be approved with a 90 per cent margin is out of the question as their income level has either maintained or increased by only a small percentage in the last few years, while cost of living has gone up.

“A lot of people these days are doing second or third jobs, so they have more income to support their family. Banks should look at that when approving loan margin,” said Ng.

END-FINANCING ISSUES

Getting end-financing is still a major hurdle for first-time house buyers, even if properties are priced between RM150,000 and RM500,000.

Developers launched a total of 12,522 residential units during the first six months of this year, with over 65 per cent of the units offered at below RM500,000, thus it is no surprise the take-up was low.

Rehda president Datuk Soam Heng Choon said getting end-financing remained a big challenge for first-time buyers and upgraders.

Datuk Soam Heng Choon.

 

Contributing to the financing issue are factors such as lower margin of financing offered, ineligibility due to buyers’ income and adverse credit history, he said.

“I am not saying that banks are out rightly rejecting housing loans. First-time house buyers are just not getting 90 per cent margin. Banks are only offering them 70 per cent margin because of their income level. This is why the loan rejection rate is high because buyers cannot afford 30 per cent downpayment,” Soam said at the “Rehda Property Industry Survey 1H 2018” briefing here last week.

The survey showed that respondents (152 Rehda members) facing end-financing problems increased to 89 per cent in the first half (H1 2018) and that 39 per cent of the loan rejections were for properties priced RM500,000 and below.

The survey also revealed that unsold units rose to 75 per cent in H1 2018 from 66 per cent in H2 2017.

Majority of the unsold units were properties priced between RM250,001 and RM500,000, mostly in Kuantan, Pahang, and Alor Star, Kedah.

There were also a significant number of unsold properties in the

RM500,001-RM700,000 range in big cities like Johor Baru and Shah Alam.

DEVELOPERS BUILDING MORE AFFORDABLE HOUSES

Soam said developers are lining their business with what buyers want and what they can afford.

“Developers are building more and more affordable houses. Most of them have 30 per cent and above in their projects, but yet they face difficulty selling out the units,” Soam said.

Housing and Local Government Minister Zuraida Kamaruddin has expressed optimism about the property industry’s outlook, given the various policies and efforts being made to enable people to own a house.

She recently said the government would introduce three pricing categories of affordable houses which would be developed under the National Housing Policy by mid-November, the latest.

The three pricing categories are houses worth RM150,000 and below, RM150,000 to RM300,000 and RM300,000 to RM500,000.

The Forest City development in Johor is starting to focus on affordable housing. FILE PIC

Zuraida also said the government was mulling a reduction in compliance costs for affordable housing developments.

The government has “principally agreed” that utility companies will construct their own amenities to reduce the compliance cost, she said. This would make houses more affordable as there will be cost-savings for developers which will then be passed on to buyers.

Meanwhile, Soam expects increased activities in the property market in the second half of this year and in 2019.

Nearly half of the 152 Rehda respondents planned to launch a total of 15,852 units in H2 2018, comprising 8,991 strata units, 6,433 landed units and 428 commercial units.

Most of the states will be launching properties in theRM100,001-RM500,000 range with the exception of Penang and Selangor, where majority of the units will be priced fromRM500,001 to RM700,000.

AFFORDABLE HOUSING IN FOREST CITY?

Forest City, a 1,400ha project developed by Country Garden PacificView Sdn Bhd (CGPV) in Johor, has also started to look at building affordable housing within its US$100 million (RM415.75 million) development.

Its strategy director Ng Zhu Hann told a Malaysian news portal that the Housing Ministry had given suggested it build products that cater to and can be afforded by Malaysians.

Ng Zhu Hann

“They hope we can come up with products that are custom-made, not only in terms of pricing, but also flavour and design. Although we cater to international markets, we understand there are certain things that Malaysians particularly favour. For example, (Malaysians) like many rooms instead of common space. They also like landed products versus high-rise products,” said Ng.

CGPV is a joint-venture between Guangdong-based Country Garden Holdings and Esplanade Danga 88 Sdn Bhd.

Country Garden owns the majority stake in CGPV through Malaysian subsidiaries, while the remaining stake is owned by the Johor government, state ruler Sultan Ibrahim Sultan Iskandar, as well as his associates.

Ng said the affordable houses can be built within the Forest City area, or beyond — depending on government recommendations.

He said the company wants to provide residential enclaves for Malaysians to enjoy, like the ones enjoyed by international buyers.

“We do not want to build affordable houses far away where locals cannot even stay... we want to make sure that when we devise any schemes to cater for locals, it must be something that can benefit them directly,” he told the online news portal.

Ng also said CGPV was in talks with both the federal and Johor governments to use Country Garden’s construction technology, including its Integrated Building Systems (IBS) plant in Forest City, to build the affordable units.

The construction technology, including the IBS, has been used in nine towers in Forest City, he added.

Big number of affordable homes unsold

By Sharen Kaur - Published in NST on October 11, 2018 

PETALING JAYA: DEVELOPERS launched more affordable houses in the first half of this year (1H2018), but a large number of these homes, priced below RM500,000, remained unsold.

According to the Real Estate and Housing Developers’ Association Malaysia (Rehda), more than 65 per cent of the total 12,522 residential units launched during the first six months of this year were affordable homes. This is higher than the 52 per cent of affordable homes launched in the second half of last year.

Rehda’s Property Industry Survey 1H2018 showed that unsold units had increased from 66 per cent in 2H2017 to 75 per cent in 1H2018. The majority of unsold units were properties within the RM250,001 to RM500,000 price- range, located in Kuantan, Pahang and Alor Star, Kedah. There was a significant number of unsold properties in the RM500,001 to RM700,000 price range in cities like Johor Baru and Shah Alam.

Datuk Soam Heng Choon

Rehda president Datuk Soam Heng Choon said the two main issues that led to unsold units were end-financing and unreleased Bumiputera units.

“The survey showed that respondents facing end-financing problems increased to 89 per cent in 1H2018, and 39 per cent of the loan rejections were for properties priced RM500,000 and below. So, to say that Rehda is not doing affordable housing is a misstatement,” he said at a media briefing yesterday.

Contributing factors to the financing issue include lower margin of financing offered, ineligibility due to buyers’ income and adverse credit history, he said.

Rehda patron and immediate past-president Datuk Ng Seing Liong told the New Straits Times recently that banks should not depend on a housebuyer’s payslip in approving a loan, as their potential client might have other sources of income.

“Banks have to think out of the box. There may be people with other sources of income. Those earning below RM50,000 a year don’t have to submit their earnings to income tax . However, that doesn’t mean they don’t have other sources of income,” he said.

Soam said a review of the Bumiputera housing quota policy was one of Rehda’s three wish-list items for the 2019 Budget. The others are reduction of compliance costs and for the government to take on a bigger role in providing social and public housing.

“We believe that if there is a release mechanism for Bumiputera units in housing projects nationwide, there will be lesser stock in the market,” Soam said.

The Housing and Local Government Ministry is looking to review the Bumiputera housing quota policy and the release mechanism to ensure that they are in line with current market needs.

Of the 152 Rehda members in the peninsula that participated in the survey, up to 25 per cent of them had 30 per cent of unsold stock compared with 27 per cent in 2H2017.

Menta banks on connectivity, accessibility

(File pix) Menta’s new project will dominate the Kuchai Lama skyline in the next few years. Pix courtesy of Menta Construction

By Sharen Kaur - Published in NST Property, October 11, 2018

TRAFFIC congestion in Kuchai Lama, Kuala Lumpur, may have worsened in the last few years especially on the internal roads, but this is mainly due to narrow streets and haphazard parking.

Common sense, courtesy and stricter law enforcement will solve the problem. Other than that, Kuchai Lama is very attractive to property investors as it is strategically located and has good access via the Kuala Lumpur-Seremban Highway, the New Pantai Expressway, Maju Expressway and the Shah Alam Expressway.

Kuchai Lama is also directly accessible from the Stormwater Management And Road Tunnel.

The connectivity and accessibility has made it convenient for residents in Kuchai Lama to travel to neighbouring areas like Taman Pagar Ruyung, Taman Continental, Taman Gembira, Taman Indrahana, Taman Lian Hoe, Taman Desa, Bandar Tasik Selatan, Salak Selatan, Taman Sungai Besi, Taman OUG, Bandar Baru Sri Petaling, Desa Petaling, Taman Bukit Angkasa, Bukit Kerinchi, Taman Desa Kerinchi, Taman Esplanad, Alam Sutera, Bukit Jalil, Technology Park Malaysia, Serdang and Seri Kembangan, as well as Bangsar and Petaling Jaya.

Contractor-turned-developer Menta Construction Sdn Bhd is banking on these advantages to launch aRM1.4 billion mixed-use development in Kuchai Lama and is bullish on sales.

The project will feature four residential towers of between 38- and 42-storeys and a net lettable area of 80,756 sq ft, atop an elevated retail/office and car park podium. The development sits on a 2.8ha site which was acquired by Menta Construction for RM15 million in 2012.

Its chief executive officer Tan Choon Hock said the project will be developed in two phases. Phase 1 comprises Tower A and B and will house a total of 941 serviced apartments and 40 duplexes. There will also be 45 retail outlets.

Tower A will be launched this month, and depending on the market condition Tower B will follow suit, said Tan.

“We are targeting both the young and old generation, as well as upgraders and investors.

There will be attractive pricing for early birds. We are quite bullish on sales as Kuchai Lama is a matured market. It is fast becoming the latest hotspot thanks to infrastructure development in the last few years.

“We believe the timing is just right to launch after holding the land for six years.

There are many high-rises in the area and most of them have high occupancy.”

Tan said Menta Construction has completed earthwork and started piling.

The apartments in Tower A come in four layouts—the smallest unit at 656 sq ft with 1+1 bedroom and one bathroom while the biggest at 1,312 sq ft with 3+1 bedrooms and three bathrooms.

The duplexes have a built-up of 714 sq ft.

The units will come partially furnished with kitchen cabinets, hood and hob, water heaters, shower screen and air-conditioning units.

Tan said the unique selling point is that all four towers will be the tallest in Kuchai Lama once they are fully completed.

“Every unit will have a good view. Some will overlook the one-acre park, which we are developing as part of the development.

We also have a good car-park strategy where there will be 1,000 bays for visitors. We want this to be a meeting place and parking must be hassle-free for boththe residents and visitors,” he added.

Kuchai Lama — latest hotspot

(File pix) An aerial view of Kuchai Lama.

By Sharen Kaur - Published in NST Property, October 11, 2018

KUCHAI Lama, a matured suburb situated off the Old Klang Road in Kuala Lumpur, used to comprise a collection of low-cost flats, medium-cost apartments and houses.

The older houses in the area are mainly single-storey terraced units which turned middle-cost just a few years ago but are worth more now, thanks to the property boom.

Due to its strategic location and infrastructure, there has been an increase in residential properties in Kuchai Lama over the last few years, especially in Taman Lian Hoe, Taman Continental, Happy Garden and Taman Kuchai Jaya.

These areas now have a wide range of properties, including gated-and-guarded semi-detached houses, luxury apartments and condominiums, uplifting the whole image of Kuchai Lama.

The prices of properties in Kuchai Lama have risen fairly sharply, resulting in investors casting their eyes there.

For condominiums in the older scheme, they range from RM250 to RM400 per square feet (psf) depending on types and location, while the newer ones are priced between RM350 and RM600 psf.

Recent completions in Kuchai Lama include KL Palace Court and Spring Avenue.

The KL Palace Court, developed in 2016, comprises two blocks of 23-storey apartments totalling 496 units and the launch price was from RM502,000. However, a look at a few online property portals shows that the sub-sale price for the leasehold units starts as low as RM420,000 (RM335 psf).

Spring Avenue, on the other hand, has 2,016 units, launched from RM550,000 or about RM560 psf, and the current market price is above RM570,000 (about RM580 psf).

Another development is GenKL, a 30-storey tower with 325 condominium units sized between 1,150 and 1,894 sq ft. The units were launched in 2016 from RM738 psf and could be one of the highest-priced properties in Kuchai Lama.

This project, which includes seven units of exclusive three-storey villas, has a gross development value (GDV) of RM362 million. GenKL is sited on the hillside of Taman Lian Hoe and is a joint venture between Juta Asia Corp and Singapore’s Capital Land.

The latest venture in Kuchai Lama is Menta Construction Sdn Bhd’s project, the first phase of which is slated for launch before the end of this year.

Menta Construction chief executive officer Tan Choon Hock said the company will bring a well integrated living-and-business development in Kuchai Lama that will include high-end retail, coupled with 3,000 parking bays, of which two thirds are for residents. Hesaid the project is within a walking distance to the upcoming Kuchai Lama mass rapid transit station and will be a new destination and meeting place.

“The project will offer the first of its kind duplex suites in this sought-after neighbourhood. We believe the market is ready. We will offer close to 2,000 units which are reasonably priced,” Tan told NST Property.

House purchases: Need for easier financing schemes

(File pix) Buying a house was a big commitment and flexible financing schemes would make it easier for more people to own a property. Pix by Muhd Zaaba Zakeria

By Sharen Kaur - Published in NST Property, October 5, 2018

BANK Negara Malaysia should work out easier financing schemes for all property buyers instead of just focusing on first time house buyers and the Bottom 40 (B40) group.

Real Estate and Housing Developers’ Association (Rehda) patron and immediate past-president Datuk Ng Seing Liong said buying a house was a big commitment and flexible financing schemes would make it easier for more people to own a property.

Ng told NST Property that banks should also not just depend on a house buyer’s payslip in approving a loan, as their potential clients might have other income. “Banks have to think out of the box. There may be people with other income. Those earning below RM50,000 a year don’t have to submit their earnings to income tax. However, that doesn’t mean they don’t have other income.

“There are people with multiple side income that they do not declare like part-time landscaping, working in a restaurant or driving a taxi.

“The banks should not be so strict and just look at their payslip. The government should look into this and help the market,” Ng said.

“The government is emphasising on affordable housing. When financing is in place, the housing market will definitely be better off.”

On the exemption of the Sales and Service Tax (SST), Ng expects there would be savings for developers.

He said as some building materials were not subject to SST, developers could pass on their savings to house buyers.

“Price increase goes by demand and supply. But in the immediate scenario, there should be a slight reduction because of SST exemption. We hope the market will improve accordingly,” Ng said.

Finance Minister Lim Guan Eng said recently during the Annual Property Developers Conference Rehda Institute CEO Series 2018 that developers should lower house prices as construction materials and services had been exempted from SST.

Lim also reminded developers that if they did not lower their selling price, the government would review the waiver.

“I’m still waiting for a reply from Rehda since the government waived SST on all construction services, such as rental and electricity bill. We hope to see the savings passed on to consumers, or we will review the decision (to waive the SST).

“The government wants to see the reduction of house prices. We are not interested to see developers giving out freebies from their savings.

It is meaningless. All the people hope to buy is cheaper homes,” said Lim.

Rehda president Datuk Soam Heng Choon said the association was studying how much house prices could be reduced.

He also urged all developers to pass on their savings to their customers.

Rehda Institute chairman Datuk Jeffrey Ng Tiong Lip believed that property prices were unlikely to inch upwards in the second half of next year, saying the broad national economy would always impact house prices. “Given the slower economic outlook, house prices will not do better than what we are achieving this year.

“However, there are various caveats to this,” he said.

Many developers due for re-rating?

(File pix) Tan Sri Lim Kim Hong founded I-Berhad which has about 43 per cent of its total assets as non-operating in the form of cash and investment properties under development. Pix by Faiz Anuar

Published in NST Property, October 5, 2018

ARE property companies due for re-rating? There are 98 companies listed on Bursa Malaysia under the Property sector as at September 13 this year. A survey of 93 of them by a local consultancy firm concludes that there are many companies trading at prices below their respective book values.

The survey showed that 87 per cent trade below their respective 2017 financial year end book values.

The price to book value ratio (P/BV) of the companies ranged from 0.02 to 2.84 with an average of 0.61.

“When the companies with prices less than book values include industry leaders such as SP Setia, IOI Properties, UEM Sunrise, Mah Sing and MRCB (Malaysian Resources Corp Bhd), one can wonder whether the negative sentiments have swung too far down and a re-rating is likely.

The firm said with such a high percentage of the companies trading below the book value and considering that 18 out of the 93 companies have negative three years average earnings, the P/BV ratio alone cannot be the only factor to when considering a company’s market returns and re-rating.

The other approach in estimating the intrinsic value of a company is via earning perspective. It thus looked at the earning power value (EPV) of these companies based on the past three years’ average return on equity. It then compared the EPV with the asset value (AV) or book value and the market price and used the results to make the case for re-rating.

It said if a company’s market price is less than both the EPV and AV, there is a case for re-rating.

On the other hand, if the market price is equivalent to both its EPV and AV, the company is fairly valued.

RE-RATING CANDIDATES

The consultancy firm said based on the analysis on the companies it covers whose prices are below their respective book values, the candidates for rerating are UOA Development, Mah Sing, Guocoland, Hua Yang and Titijaya.

“Those companies whose market prices are 20 to 30 per cent below the EPV are potential candidates for re-rating. They would cover MRCB, OSK and SP Setia.”

It said there are some companies — such as Ecoworld and UEM Sunrise (in the Top 10 category) and YNH (in the 75th percentile category) — which have market prices above their respective EPV, thus, the case for re-rating is not so clear-cut.

“MK Land’s market price is equivalent to the EPV and can be considered as appropriately rated. For the rest of the companies, their market prices are below their respective EPV.

“For those EPV

The firm said I-Berhad (EPV

Based on I-Berhad’s 2017 accounts, it has about 43 per cent of its total assets as non-operating, in the form of cash and investment properties under development.

The bulk of the earnings is currently from its property development division that uses about 30 to 40 per cent of its shareholders’ funds.

“Given that the majority of its RM1 billion investment property portfolio will only be coming on stream over the next one to two years, it can be concluded that there is a strong likelihood of increasing its EPV. Thus, its current market price of about half of its book suggests a case of potential re-rating,” said the firm.

BETTER METHODOLOGY

I-Berhad deputy chairman Datuk EuHong Chew said that at the company’s last AGM, its shareholders were informed that the group’s focus was on growing its intrinsic value rather than market price.

“While the market price tends to be sentiment driven, in the long run it will reflect the intrinsic value.

So, we have spent considerable efforts on growing the intrinsic value, such as improving our profitability, ensuring a long-growth runway and being financially prudent,” he told NST Property.

Eu said there are two approaches in estimating the intrinsic value of a property company—an earnings-based approach (using information from the profit and loss statement) and an asset-based approach (using the balance sheet as the primary source).

An example of the former is a valuation based on some multiple of the earnings as used by some analysts, while an example of the latter is the RNAV (Revalued or Revised Net Asset Value) method that is favoured by many analysts.

Eu said in the Malaysian context, the RNAV of a property company is estimated by adding to the net assets the profit that can be generated from projects under development as well as those that can be developed from landbanks. A discount to the RNAV is then applied to arrive at the target price.

“While there is some debate of whether the earnings-based approach or the asset-based approach is the more appropriate one for valuing property companies, one better alternative would be to use both the information when estimating the intrinsic value of a company.

“So, we agree with the analysis of comparing the EPV with the AV as it provides insights into the intrinsic value of the company. In I-Berhad’s case, it is not surprising that the EPV is smaller than the book value as we only started to grow our earnings about five years ago. So, using historical returns to estimate the EPV is sort of understating the potential EPV,” he said.