Archive for the ‘Property News’ Category

IKEA Penang will open by Q1 2019

April 27th, 2017 1 comment

Picture for illustration only

We have found yet another job posting by IKEA Southeast Asia for their first IKEA store in Penang.

From the latest job posting, it seems IKEA is now targeting to open their new store in Penang by 1st quarter of 2019. The company is now looking for a Deputy Store Manager, who will be on the job training at IKEA Cheras for 12-18 months and relocate to IKEA Penang in late 2018.


If you are interested in the job, you may check out their latest job advertisement at LinkedIn. The application closing date is 5 May 2017.

About IKEA Penang

First announced in early 2014, IKEA Penang will be the forth IKEA store in Malaysia and the second one outside of Klang Valley after Johor Bahru. Ikano had teamed up with Aspen Group in September 2014 to purchase 245 acres of land in Batu Kawan from Penang Development Corp to develop the Aspen Vision City (AVC), where the IKEA store would be located.

The IKEA store will bring affordable range of functional home furnishings to the northern region, along with hundreds of job and economic spin-off opportunities for the local community. The construction of the new IKEA store was scheduled to complete by Q3 2018. However, the latest job posting indicated that the new store will only open in Q1 2019.


Register here to receive more development updates from Penang Property Talk

Categories: Property News Tags:

Majority of Malaysians want to own a home in next 6 months

April 26th, 2017 No comments

propertyMore than half of Malaysians surveyed want to own a home within the next six months, according to the Real Estate and Housing Developers’ Association Malaysia (Rehda).

However, stringent lending rules continue to be a major deterrent, association president Datuk Seri F D Iskandar said.

In a poll of 1,655 respondents, he said 56% were looking to own a home within the next six months, primarily within the KLCC area and Kuala Lumpur city centre.

“About 38% of them are first-time house buyers, 30% repeat buyers, 23% investors, 6% expatriates and 3% tenants,” he said last week at a media briefing on Rehda’s House Buyers’ Survey 2017.

According to the survey, over a quarter of respondents said they would purchase a property within the next six to 12 months, 12% were unsure and 6% said they would like to own a home immediately.

Iskandar said the respondents’ preference to purchase property within the KLCC area and Kuala Lumpur city centre was “unrealistic.”

“If you want to buy a property in Damansara Heights or even Bangsar … then you’re going to be prepared to pay for it,” he said.

Apart from KLCC or the city centre, other sought-after locations in the survey in ranking order were Petaling Jaya, Cheras and Bangsar, Puchong and Shah Alam, and finally, Cyberjaya.

Iskandar said the bulk of the respondents were looking for property for self-dwelling purposes. Other reasons to purchase (in ranking order) were for family dwelling, rental yield, upgrading, holiday homes and investment.

The preferred property of choice were apartments/condominiums, followed by terrace/cluster/townhouses. Semi-detached homes, serviced apartments, bungalows/villas and commercial/shoplots ranked third, fourth, fifth and sixth, respectively, in the survey.

In terms of preferred property size, 34% of respondents said they were looking for a home that ranged between 1,000 sq ft and 1,500 sq ft, while 33% preferred units that ranged between 800 sq ft and 1,000 sq ft.

As for pricing preferences, 41% of respondents said they were looking for property that ranged between RM300,000 and RM500,000, while 32% were eyeing homes priced between RM500,000 and RM750,000.



Categories: Property News Tags:

Residential supply expected to recover in three years

April 22nd, 2017 4 comments

napic-reportThe excess in supply of residential properties is expected to clear in three to four years, paving the way for a recovery in the property market, says housing industry experts.

The new National Information Property Centre (Napic) 2016 report shows that the incoming supply of residential properties has inflated to 94,124 units, compared to 82,837 units in 2015.

Incoming supply refers to those properties undergoing construction work to be completed in three to four years.

“The incoming supply figure looks alarming at first glance. In actual fact, however, about half of the amount has been sold.

“Developers would normally commence construction work only when they have sold at least 30% of a project.

“In 2016, the transactions of residential properties in Penang totalled 13,244 units worth RM5.36bil,” according to Napic.

“If the consumption per year continues at 12,000 to 13,000, it should take three to four years for the market to absorb the remaining 47,000 units,” Real Estate & Housing Developers’ Association (Rehda) Penang chairman Datuk Toh Chin Leong says.

Toh adds that the market could expect some signs of improvement in the second half of 2018.

Some 51,453 units of the 94,124 are in the higher price range category, comprising 2-3 storey terraces, 2-3 semi-detached houses, detached houses, and condominiums, indicating an excess supply of high-end properties.

There are 10,968 high-end units coming to the north-east district, while a further 12,833 are heading to the south-west district.

Some 27,652 units of similar high-end properties are coming to Seberang Prai.

The planned supply (projects with approved building plans), however, has decreased to 48,120 in 2016, compared with 54,840 in 2015.

On the planned supply, Toh says developers would normally hold back new launches if there is a glut in the market, even if the projects are already approved.

“The positive side is that due to the excess in supply, the days of rapidly escalating property prices are over.

“We can expect Penang property prices to remain stable in the years to come.

“Due to the choices for properties in the market, the pricing of the incoming supply will be very competitive.

“Bank interest rates, however, will need to be maintained at a low level to stimulate interest in the property market,” he says.

Raine & Horne Malaysia director Michael Geh concurs that the local property market could recover in three to four years, provided that the market continues absorbing 12,000-13,000 units per annum.

However, the surge of unsold completed residential properties in Penang is a cause for concern.

“The unsold completed units have doubled to 1,896 in 2016 compared to 992 in 2015.

“The market value of the 1,896 units is RM1.47bil, compared with RM801.88mil in 2015,” he says.

There were 5,646 new launches in the primary market in 2016, compared with 2,348 units in 2015.

“However, sales of the newly launched 5,646 units is low at 9.9%, compared to 48.2% in 2015.

“Apartments and condominiums formed the bulk of the new launches, accounting for 56.4% (3,187 units), priced between RM500,000 and RM1mil,” Geh adds.

Unless foreign funds help to absorb the high-end properties, the pricing in this segment will undergo a correction.

As China has restricted funds from flowing out to purchase overseas properties, the scenario of a price adjustment in the high-end property segment is very likely.

“The demand most definitely will not come from locals as the average household income in the country ranges between RM4,585 and RM6,141 per month, making ownerships of high-end homes a dream.

“We welcome a pricing correction scenario in the high-end segment, as prices in the high-end category has peaked.

“All eyes are now on how Bank Negara will tweak interest rates to deal with inflation and pressure on the ringgit.

“In January 2017, Bank Negara has said it will hold on to the current benchmark interest rates at 3%, on expectation that inflation will average higher this year due to stronger oil prices.

“We hope Bank Negara will continue maintaining interest rates at a moderate level to sustain the property market,” he says.

In contrast to the high-end segment, the transactions in the sub-sales market are still encouraging.

“About 80% of the transactions in the property market today come from the sub-sales market.

“In George Town, the values of older apartments, built in early 2000, have more than doubled.

“A 700-800 sq ft apartment, completed 12 years ago in George Town, is now selling for over RM400,000, compared to the initial selling price of about RM130,000.

“Given the competition from the sub-sales market, the pricing of properties in the primary market will eventually be adjusted to a moderate level.

“Residential properties in the primary market are currently priced about 25% above those in the sub-sales segment,” he says.

CA Lim & Co principal Lim Chien Aun says it is not unreasonable to expect the property market to recover in three to four years’ time.

Bank Negara, however, must keep interest rates low to prevent a fire-sale situation in the property market.

“Many people have forgotten that there was a property crisis in Penang in the second half of 1980s, which saw property prices dipped by about 50%.

“Those with little or no memory of the crisis don’t think that property prices in Penang can take a deep plunge.

“The downside of a low interest rate regime is that it will create new bubbles in the property market, making it difficult for prices to undergo correction, while there is little improvement in the real economy,” Lim says.

The state authorities should plan for residential projects in neighbourhoods where there are reliable transportation connections to their work place.

“There must also be sufficient utility infrastructure to support an increase in the population size of a neighbourhood.

“With the minimum of two adult persons to a house, there will be about 20,000 people coming to stay in the north-east district.

“Can the existing utility infrastructure support the increase?

“How many people can afford to buy high-end homes?” Lim asked.

Lim says that Penang cannot be developed as though it is a financial centre like Hong Kong or Singapore.

“The difference between Penang and HK and Singapore is that the return on investment over here is unattractive.

“The current rental yield per annum for properties in general is less than 5%, and for residential properties, it hovers around 2.5%.“The yield should be around 5% to 6% in order to be attractive, emphasising the need for studies and policies to be carried out to address this very important criteria.

“The participation of foreign buyers in the local market is also small, less than 8%,” he says.Ideal Property executive chairman Datuk Alex Ooi says the new higher density policy will give developers the room to plan different pricing properties to correct the imbalance in the high-end segment.

The local authorities has recently increased the density per acre to 128 units from the previous 87 units.

Developers with the landbank to develop creatively designed projects with moderate pricing stand a better chance of competing in the market, Ooi says.

“Our land bank in the south-west district will be used to develop properties of various sizes and pricing.

“We always need to ask… if we build large properties in a strategic location, can we sell them?

“What is the demand for these properties?” he asks.



Categories: Property News Tags:

Homebuyers to bear the brunt of rising building costs

April 20th, 2017 3 comments

construction3Property developers have warned that home prices may rise following the government’s recent move to slap a safeguard duty on the import of certain steel products for three years.

If the safeguard duty leads to a rise in steel prices, Real Estate and Property Developers’ Association (Rehda) president Datuk Seri FD Iskandar Mohamed Mansor said they will have no choice but to pass on the extra costs to homebuyers.

While the intention of the safeguard duty is to protect the local steel industry, the move is not good for the property industry, he said.

“At the end of the day if the contractors and developers can’t absorb the steel price increase, what happens? The increase will be passed on to consumers,” FD Iskandar told a media briefing to reveal the findings of the association’s Property Industry Survey 2H2016 and Market Outlook 1H2017 yesterday.

The government last week announced the implementation of safeguard measures, which see imports of steel concrete reinforcing bar (rebar) being slapped with a 13.42% duty and a 13.9% duty for steel wire rods (SWR) and deformed bar-in-coils (DBIC), starting April 14.

However, the duty for rebar will be reduced to 12.27% after a year and eventually down to 11.1% two years later, while that for SWR and DBIC will be cut to 12.9% after one year and eventually down to 11.9%.

FD Iskandar said the safeguard duty has resulted in a significant increase in raw material costs.

“We used to pay about RM1,700 per tonne for the smaller steel bars and now we are paying anything from RM2,300 to over RM2,500 per tonne,” he noted.

He also pointed to the price of steel bars, which used to cost an average of RM1,712 per tonne in Johor, RM1,847 per tonne in Selangor and Kuala Lumpur, and RM1,729 per tonne in Penang. However, contractors are now paying RM2,570 per tonne.

“Definitely this will increase the price of construction, and construction is the main cost in the gross development cost of a project,” said FD Iskandar.

Besides the rise in prices of steel products, he said the price of a bag of cement has also risen to RM18.40 compared with RM17.30 per bag in Selangor and Penang previously, while that of river sand — which is used in concrete production — has also risen.

According to Rehda’s Property Industry Survey 2H2016, developers have indicated that material and labour costs remain as the top cost components affecting their cash flow, especially with the increase in prices of certain steel products due to the safeguard duty.

Meanwhile, 29% of respondents said the overall increase in the cost of doing business due to higher material, labour and compliance costs, has been the main challenge in providing affordable housing.

In addition to higher raw material costs, FD Iskandar said contractors and developers are also facing higher labour costs. He noted that the labour cost index had risen to 117.4 as at December 2016 from 111.1 a year ago.

“It’s very hard for developers to lower prices [of properties] if costs keep going up. Obviously, developers’ margins are being squeezed,” he said.

FD Iskandar also urged homebuyers to be more realistic when it comes to choosing a preferred location for their potential homes.

“Wanting to own a home in the Kuala Lumpur city centre for less than RM500,000, that is not very realistic. That’s why we also urge the media, the National House Buyers Association and the government to help educate our buyers,” he said.

In Rehda’s inaugural house buyers’ survey that was carried out during the association’s Mapex Property Showcase 2016 held on April 14 to 16, Kuala Lumpur city centre topped the most preferred locations list for homebuyers, followed by Petaling Jaya-Damansara; Cheras and Bangsar; Puchong and Shah Alam; and Cyberjaya.

FD Iskandar also highlighted that accessibility trumps all other home features and facilities when it comes to buying a home.

“Our respondents said the light rail transit (LRT) or mass rapid transit (MRT) [44%] and distance to a transportation hub (30%) are important considerations when it comes to buying a home.

“This is why we urged the government to allocate 40% to 50% of lands near to a transportation hub to build affordable homes because people who are looking to live in these homes are the ones who will use the public transportation [the most].

“In Kuala Lumpur, we have KTM, LRT, MRT and monorail. But if you keep on selling lands near them for top prices, [developers] cannot build affordable homes. It’s great to build transportation hubs. But we also must be certain that the right target market stays near to these transportation hubs,” he said.

Meanwhile, Rehda once again called on the government to review its property cooling measures to boost property sales.

FD Iskandar added that based on feedback from Rehda members, loan rejections continue to pose a problem to potential buyers.


Categories: Property News Tags:

Property Marketing Report 2016 indicates property prices remain steady

April 19th, 2017 No comments

jpph-reportsHouse prices have remained steady despite a slowdown in property sales and a huge overhang of unsold units.

According to the Valuation & Property Services Department’s (JPPH) Property Market Report 2016, prices of residential property continued to grow, albeit moderately despite the current market glut.

“The Malaysian House Price Index (MHPI) continued its moderating trend. As at the fourth quarter of 2016, the MHPI stood at 243.3 points, up by 5.5% on an annual basis.

“The responsible lending measures by the central bank have shown a positive outcome in ensuring sustainable price growth in years to come.”

On quarterly movements, the report, which was launched here yesterday had shown a contraction of 0.7% in the fourth quarter of 2016.

It added that the slow market absorption of the primary market led to the increase in the residential overhang.

“There were 14,792 overhang units worth RM8.56bil, up by 43.8% in volume and 70.7% in value, against 2015. About 42% (6,052) of these overhang units were in the price range of RM500,000 and above.

“By state, Johor saw an increasing overhang market share of 24.8%, which mainly was made up of two- to three-storey terraced houses priced at RM500,000 and above (43.2%).”

It said unsold units under construction and not constructed had also succumbed to an increase of 29.3% and 44.7% to 64,077 units and 11,622 units, respectively.

“Selangor, Johor and Penang held more than half of these unsold under construction units, which were predominantly made up of double-storey terrace and apartments/condominiums priced at RM500,000 and above.

“As for the unsold units not constructed, Kuala Lumpur (27.2%) and Penang (25.1%) held the most, which were mainly apartment/condominium units.”

According to JPPH, the Malaysian property market would endure another challenging year in 2017 as the enduring global political uncertainty and low domestic economic growth will continue to have an impact on the sector.

However, it said the performance of the local property market will continue to be sustained with the implementation of various property-related incentives and accommodative monetary policy.

At the launch of the Property Market Report yesterday, JPPH director-general Rahah Ismail said developers would need to come up with the right product and pricing to withstand the property market slowdown.

“The main segment would be the affordable housing segment. That is what is most in demand and the developer has to respond to that need,” she said.

According to JPPH, affordable houses continued to be in demand last year, with more than 65% of the residential transactions within RM300,000 and below.

Deputy Finance Minister I Datuk Wira Othman Aziz did not provide a timeline of when he expected the local property sector to improve, saying only that the market is cyclical and should recover over time.

“It’ll take a while, and will depend on the global performance.”

According to the Property Market Report 2016, the local property sector recorded a 11.5% decline in volume and a 3% drop in value last year compared with 2015.

“The residential sub-sector dominated the overall market, with a 63.4% contribution in volume and 45.1% in value.”

There were 203,064 transactions worth RM65.57bil last year compared with 235,967 transactions worth RM73.47bil in 2015. The performance of all states recorded declines in market activity except for Kelantan.

New launches in the primary market dropped 9.8% to 52,713 units last year, with sales performance hitting a low of 31.4% compared with 42.1% in 2015.

“By property type, condominiums/apartments formed the bulk (37% share), followed by two to three-storey terraced houses (36.2%), which were mostly priced in the range of RM500,000 to RM1mil,” said JPPH’s report.

It said all states saw substantial declines in their new launches last year except for Johor, Penang, Melaka, Terengganu and Sabah.

“For Kuala Lumpur, nearly all its new launches comprised condominiums/apartments, whilst Selangor saw a fair share of two to three-storey terraces and condominiums/apartments. Both states saw sales performance below 40%.”

The report said construction activities remained on a low tone, which reduced by 15.1% to 121,326 units.

“All major states except Kuala Lumpur recorded lower commencements. Completions were up by 9.3% to 78,216 units, whilst new planned supply units saw an 11.3% increase to 120,089 units.

“As at end-2016, there were 4.95 million existing residential units with nearly 830,000 in the incoming supply and 600,000 in the planned supply categories.”

The report also said the residential rental market in Kuala Lumpur portrayed mixed movements.

“Residential units that are within the vicinity of the LRT and MRT routes as well as higher learning institutions experienced rental gains, whilst those in older neighbourhoods saw downward rentals.

“Similar upward trends were seen in Selangor, where schemes located along the MRT routes have the advantage of fetching higher rentals.”

In the office and retail sector, vacancy continued to increase, with Kuala Lumpur and Selangor recording 2.74 million sq m of vacant office space, an increase of 16% compared with 2015.

Vacant retail space also increased to 2.7 million sq m, which was an increase of 11.9% against 2015.



Categories: Property News Tags: