Archive for the ‘News & Articles’ Category

Penang, Sabah picked as top investment regions for leisure/hotel sub-sector

February 22nd, 2017 No comments

penang-propertyPenang and Sabah remain the most attractive regions for investment in the hotel or leisure sub-sector, according to respondents of Knight Frank’s Malaysia “Commercial Real Estate Investment Sentiment Survey 2017” (CREISS).

“Looking into the most attractive regions for investments in 2017, Sabah and Penang were voted as the most attractive regions for hotel or leisure investment.

“Also, the attractiveness of investing in the hotel or leisure sub-sector leapt from 65% in 2016 to 93% in 2017,” said the survey.

The survey had gathered responses from property developers (77%), fund or real estate investment trust (REIT) managers (16%) and lenders (7%).

Knight Frank also noted that industry players expected the hotel or leisure sub-sector to remain resilient in 2017, while 53% expected the average room rate to remain steady this year.

More than half (56%) of the respondents thought that the yield performance of the hotel or leisure sub-sector will be stagnant for 2017

Meanwhile, Kuala Lumpur will continue to be the focus of investments in the office and retail sectors.

“Despite the challenges in the office and retail markets, 12% of the respondents continue to see potential for office investments in Kuala Lumpur while 20% think there is a potential in the retail sector in Johor,” said Knight Frank on the findings.

According to the survey, respondents were not satisfied with the performance of the office and retail sub-sectors in 2016 and expected the outlook to remain cloudy in 2017.

Meanwhile, majority of the respondents said the capital values for the office and retail sub-sectors will hold steady, with more than half of them expecting both sub-sectors to remain stagnant this year.

Slightly more than half of the respondents thought rental values for the office (56%) and retail (54%) sub-sectors will decrease while 64% (office) and 59% (retail) of the respondents expected occupancy rates for these sub-sectors to decrease.

On yield performance, 55% and 42% of the respondents expected yield compression in the retail and office sub-sectors respectively.


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Making George Town pedestrian-friendly, one back lane at a time

February 21st, 2017 No comments

back-lane-upgradeThe unkempt and inaccessible back lanes of George Town will soon be upgraded, beautified and opened up for easy access to pedestrians and cyclists.

Starting with three small lanes first, the Penang Island City Council (MBPP), together with Think City, plans to renovate these, upgrade the drainage systems and widen them in accordance with the heritage zone’s Special Area Plan (SAP).

MBPP secretary Yew Tung Seang said the plan was to turn these back lanes into recreational and relaxation spaces for the residents and passers-by.

“Currently, some of these back lanes are blocked, dirty and dark so we hope to open it up to make it easier for people to use these lanes to access another road safely without using the main roads,” he said during an open dialogue with residents on the proposed back lanes project at Komtar this morning.

The opening up of these back lanes, which includes adding lighting, will turn these into easy and safe connections within the inner city for pedestrians and cyclists.

Yew said the council wanted to engage with the affected residents and house owners through a dialogue session before implementing the project, however.

The MBPP selected three back lanes for this initial proposal: from Jalan Magazine to Jalan Gurdwara, from Jalan Cheong Fatt Sze to Jalan Dr Lim Chwee Leong and from Lebuh Tamil to Jalan Dr Lim Chwee Leong.

All three lanes are near to the city centre around Komtar, where the state government’s administrative centre is located.


The backlane of Jalan Magazine leading to Jalan Gurdwara will be turned into an access lane for the public

Amongst the proposed upgrades are to turn these spaces into gardens, open air cafes and creative art corners.

“We are now obtaining feedback from the stakeholders before implementing it,” Yew said.

The dialogue session was disrupted when a resident, Lim Eng Chew, started voicing safety concerns regarding the project.

“Have you asked the Bomba? What happens when there’s a fire if you close up the lanes? How is the Bomba going to get in? Is the Bomba here today? You didn’t even ask the Bomba,” he shouted.

He went on about how he has lived there all his life and witnessed over 19 fires in the area in that time.

“Do you know if some vehicle blocked the entrance, the Bomba couldn’t get in? I’ve complained to the council so many times about these vehicles blocking the lanes but nothing was done,” he said.

He then continued telling the council in Hokkien that these back lanes are not spaces for “fancy cafes” and gardens but are meant as escape routes for residents in case of emergencies.


Backlanes, such as this one, will be upgraded for easy access by pedestrians and cyclists

“These back lanes are for the people living there to get in and out, not for some project,” he said and continued to create a ruckus without waiting for Yew to reply. Lim was finally ushered out after several minutes of continuous shouting.

Yew explained to the remaining stakeholders in the hall that the project will not close up the lanes or block access to the residents.

“The project was to open it up, beautify it and upgrade the lanes for the people there,” he said.

Think City chief operating officer Neil Khor, who was also present, explained that the project will be similar to Think City’s pilot Armenian Street back lanes project.

“This is not just a beautification project but a larger upgrading project for the whole of George Town according to the Special Area Plan and this also means improving the drainage system, creating a trench for the utilities so they don’t dig up the back lanes when conducting their repairs and using special porous concrete to allow rainwater to drain off faster,” he said.

In Think City’s Armenian Street Back Lanes project, Khor said they worked with all the residents and stakeholders to get their participation in the whole project.

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EcoWorld sees property market improving in 2017

February 20th, 2017 No comments

EcoWorld’s upcoming development @ Batu Kawan, Penang

Premier lifestyle developer Eco World Development Group Bhd (EcoWorld) is optimistic about the overall property market this year, which it expects to improve, partly anchored by factors that include low interest environment and positive buying sentiment.

“I acknowledge that the property market is still challenging. But this year is going to be a positive year, as compared to last year. Despite volatilities from the goods and services tax, we still managed to garner good sales.

“This year, we are confident of achieving our sales target of RM4 billion,” its chief executive officer Datuk Chang Khim Wah (pictured) told reporters, after the company’s extraordinary general meeting here today.

In the financial year ended Oct 31, 2016 (FY2016), EcoWorld clocked in RM3.8 billion sales, with unbilled sales at RM4.9 billion. To date, the group’s unbilled sales, inclusive of subsidiary Eco World International Bhd’s numbers, is at RM6 billion.

“The low interest regime is stable and attractive for the current property market for now,” he added. Currently, Malaysia’s interest rate level, as measured by the overnight policy rate, stands at 3%, after Bank Negara lowered it by 25 basis points on July 13, 2016.

This year, Chang said EcoWorld will be focusing on 17 of its core developments projects that spans across three growth areas: Penang, Klang Valley and Iskandar Malaysia in Johor.

EcoWorld’s upcoming development @ Batu Kawan – Eco Horizon

“We have our hands full with the current projects and that is going to keep us busy for this year,” he said, adding that for now, Eco World has no plans to make a foray into Sabah and Sarawak.

EcoWorld is currently developing some 8,052.7 acres of land, with total gross development value (GDV) of RM87.5 billion. Its undeveloped landbank stands at about 5,500 acres, which an estimated GDV of RM77.5 billion.

“If we are to acquire and replenish more of our landbanks, the price has to be right and the location has to make sense. The land must be situated closer to highways,” Chang said, adding EcoWorld is always on the lookout for exciting opportunities.

On gearing, EcoWorld chief financial officer Datuk Heah Kok Boon said it is still accomodative and relatively stable for the company at the moment, but Eco World is always mindful of it and that it will pare down debts to ensure a healthy balance sheet.

“We will always ensure that our debt and gearing level will be at a comfortable level to ensure the sustainability of our financial position. As and when the need arises, we might want to either gear up or gear down, but we must do it cautiously to ensure that our financial health is always at an optimal level,” Heah added.

As at end-Oct 2016, Eco World’s total interest-bearing borrowings stood at RM2.86 billion, equivalent to 0.76x or 76% in gearing ratio.

Meanwhile, Chang was tightlipped when asked about speculations that Eco World was in talks over a potential merger with Sime Darby Bhd’s property arm.

“No comment,” he said, adding that EcoWorld “does not comment on rumours and market speculation.”



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Another six months to get approval for Penang Transport Master Plan

February 16th, 2017 1 comment

PTMP LRT & PILThe Penang government has extended by six months the validity period of the award letter for SRS Consortium, the project delivery partner (PDP), of the Penang Transport Master Plan (PTMP) project.

The award letter was to expire by the end of this month but will now be valid until June to allow the PDP more time to obtain the necessary approvals from the relevant authorities.

State Local Government, Traffic Management and Flood Mitigation Committee chairman Chow Kon Yeow said the state did not anticipate the long time needed in getting the approvals.

“This is just a technicality and we will continue to extend the award letter until they obtain the necessary approvals from the various authorities for the project,” he said in a press conference yesterday when asked about the issue.

The RM27 billion PTMP is an ambitious undertaking to link Penang Island and the mainland with rail transit systems, new highways, trams, rapid bus routes and water taxis.

Funding the project hinges on reclaiming some 1,618ha of land but approval has to come from the federal government as reclaiming more than 100ha must be referred to the National Physical Planning Council.

In April last year, the state submitted plans for a light railway transit (LRT) system linking Komtar and Bayan Lepas to the Land Public Transport Commission (SPAD).

The LRT line, a Pan Island Link (PIL) highway and the proposed reclamation are the first phase of the PTMP.

In a related issue, Chow said the public display of the PDP request for proposal (RFP) documents has been extended until Feb 28 at the Dewan Sri Pinang.

He said 70 people have viewed the documents to date and feedback from 13 people, questions and suggestions have been recorded.

“Out of the 13, four suggested the display period should be extended,” he said.



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Penang developers can now use corporate guarantees

February 16th, 2017 No comments

cny-gatheringDevelopers in the state can now choose to settle 60% of contribution charges using corporate guarantees.

Real Estate & Housing Developers Association (Rehda, Penang) chairman Datuk Toh Chin Leong said previously 60% of the contribution in the form of development and infrastructure charges had to be settled using bank guarantees, while the remaining 40% by cash.

“This new policy allow 60% of the amount to be settled using corporate guarantees, while the remaining 40% is settled by cash.

“This help to ease the cash flow situation of developers and will also reduce the risk bridging loans for their projects,” Toh said.

He added that the recently adopted housing density guideline for the island is expected to stimulate more property launches over the next two years.

Toh said at a Rehda Chinese New Year dinner that Kuala Lumpur-based and Penang-based developers were now exploring how to best implement projects under the new density guideline, which had increased the density per per acre to 128 units from 87 units.

“The additional 41 units per acre allows the developer to build more 600 sq ft to 700 sq ft units.

“The pricing for these properties is over RM400,000.

“Under the old guideline, developers, due to the lower density of 87 units per acre, have to focus on building larger units of 1,000 to 1,400 sq ft to sell at a higher price to generate a reasonable margin.

“If they build more smaller size units with a lower selling price under the old guideline, they would not be able to generate a decent margin,” Toh said.

On property prices in 2017, Toh expected prices to remain stable.

“There are two factors influencing property prices.

“On the one hand, the development charge of RM15 per sq ft to be paid, and the high cost of land and raw materials will influence developers to raise property prices.

“On the other hand, in order to stay competitive, however, developers would not raise prices drastically.

“They are likely to absorb these charges to be competitive.

“Prices would remain stable due to the soft property market and the difficulty in obtaining a bank loan,” Toh said.

There is also the forthcoming measure requiring the early payment of the stamp duty fee, which requires buyers to fork out the fee – which is usually over 2% of the purchase price of the property upon the signing of the S&P agreement.



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