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E&O to build residential and commercial projects

August 25th, 2013 24 comments

GEORGE TOWN: Eastern & Oriental Bhd plans to develop residential and commercial projects worth RM25bil over the next 20 years for Seri Tanjung Pinang’s (STP) second phase. And this will generate some 15,000 jobs.

Group managing director Datuk Terry Tham said the ratio of commercial to residential properties for the entire scheme would be one to two.

“There would be some 28.45 million sq ft of mixed-use commercial area allotted for retail, office, serviced apartments and a tourism hub with seafront promenade, museum and an international marina for the entire 307ha reclamation scheme,” he said after a public dialogue on STP’s second phase’s detailed environmental impact assessment report at the Straits Quay in Tanjong Tokong here yesterday.

Tham added that E&O would ensure that some 30% of the residential properties in STP were priced from RM42,500 onwards.

“Some 12,000 residential properties will be developed for the second phase, of which 32% will be low-rise properties of four-storeys, 45% medium-rise, and 23% 10-storey high buildings,” he said.

On open spaces, Tham said there would be 26.7ha of land for green development projects and 8.9ha of landscaped buffer in between the second phase and 16.5ha of open space in Gurney Drive.

“The illustrative master plan will be submitted to the local authorities following the approval of the detailed EIA report’s approval from the Department of Environment at Federal-level.”

Tham said reclamation would be carried out in two stages. “The first involves reclaiming 102ha of land which would take about 30 months to complete and 10 years to develop. The second stage involves reclaiming the remaining 205ha and this would take four years to complete and 14 years to develop,” he added.

Tham said the group would cede to the state government 24.2ha of land in the second phase for the undersea tunnel and other supporting infrastructure projects.

“We will also reclaim for the state government 53ha of land in Gurney Drive of which 20.2ha will be used for open spaces.”

Source: StarProperty.my

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Residences make up bulk of Penang’s property sales

August 23rd, 2013 16 comments

GEORGE TOWN: Despite a softer property market in the first quarter of this year, Penang’s residential sector has continued to claim the lion’s share, or 75 per cent, of the total 5,756 properties transacted.

A research report by Henry Butcher Malaysia Penang shows that the total number of properties transacted in the first quarter of this year fell 18 per cent compared with the 7,007 transactions recorded in the same period last year.

“However, despite a drop in the number of transactions, the total transacted value of residential properties increased by 3.5 per cent in the first quarter of 2013, due to the relatively strong demand from home purchasers as well as property investors, coupled with the limited supply of residential stock in the market,” the report stated.

The Penang government last year imposed a guideline on the minimum purchase price of property for foreign investors.

On Penang island, the minimum prices for strata-titled and landed properties have been capped at RM1 million and RM2 million, respectively. For permanent residents, however, the existing limit of RM500,000 is retained.

Applicants under the Malaysia My Second Home programme are not affected by the new ruling as the minimum price remains at RM500,000, but with a limit of two units only.

Transactions involving foreigners numbered 774 in 2010, or 2.98 per cent of the total, while in 2011, there were 890 transactions, or 2.26 per cent of the total.

Stating that property investors are beginning to revive or resume their investment interests in Penang, which were placed on hold for about one-and-a-half years due to uncertainties over the date of the 13th General Election, the report further noted that astute investors are of the opinion that buying properties in choice locations in Penang appears to be the preferred mode of wealth creation.

“Consumer confidence of both local and international investors on Penang’s properties remain buoyant and, therefore, Penang’s property market is foreseen to be filled with more excitement soon.”

The report, however, cautioned that downside risks such as the global economic uncertainty, natural disasters and local political developments as factors that must be watched closely.

Source: Business Times

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Zeti denies that Bank Negara may impose more curbs on home loans

August 22nd, 2013 21 comments

Investment analysts reassured by this statement although they are cautious about potential Budget 2014 announcements.

Bank Negara Malaysia (BNM) will not introduce new measures to curb household debt as the current ones are sufficient and have produced the expected results, said Governor Tan Sri Dr Zeti Akhtar Aziz (pic) yesterday. This was reported by Bernama after Zeti announced the country’s second quarter growth.

Recent reports cited industry sources expecting more measures aimed at “cooling” the property market, such as further tightening the loan-to-value (LTV) ratio for property purchases and the removal of the developer interest-bearing scheme (DIBS) in the fourth quarter or next year by Bank Negara.

“No, we have not introduced any such measures. We have already announced the measures much earlier and those are the ones in place and we have already seen that the household debt has moderated slightly.”

On July 5, BNM announced a set of measures aimed at curbing excessive household debts: a 10-year cap on the tenure for personal loans, a 35-year limit on both housing and non-residential property loans, as well as a prohibition on pre-approved personal financing products.

“We did not want to see a significant tightening that will cause an over-adjustment because we are depending on consumption activity which is sustainable and therefore, however, we did not want to see household indebtedness that was not sustainable that would, going forward, undermine our growth prospects,” Zeti said.

At this stage, BNM would continue to monitor closely the level of indebtedness and continue with its financial literacy awareness campaigns so that household financials were better managed, she said.

Kenanga investment research analysts commented that they are “positively reassured” by Bank Negara’s statement.

“This firms our theory that overly drastic measures on the sector may affect GDP growth, have a negative cascading effect on the banking system if asset values are affected and more importantly hinders the government’s ability to monetize their infrastructure projects (e.g. rail plus property for LRT and MRT) and their landbanks (e.g. TRX).”

Kenanga also mentioned concerns on the upcoming Budget 2014. “Potential measures include RPGT hikes which we opine is less detrimental to new launches (i.e. listed developers sales) vs. secondary market. Others include stamp duty hikes.

“Nonetheless we are likely to maintain ‘overweight’ on the sector because we believe there will be strong demand for new launches by virtue of better financing terms while many will try to hedge ahead of inflation caused by potential GST, subsidy rationalizations and implementation of Build-Then-Sell schemes. However, we qualify that this is caveat on no major changes in our House strategy.”

“We expect property stocks to rebound today from this reassuring news although we advice investors to be mindful of the Oct-2013 headwinds (UMNO elections and Budget 2014).

“However, if Budget 2014 property measures is not overly severe (e.g. seen in last 3 years), we can expect the sector to rally after a short knee-jerk/breather period.”

Source: StarProperty.my

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Moves to cap property prices could backfire

August 21st, 2013 11 comments

Imagine if a regulatory body decided to limit the number of durians purchased by each individual in order to lower the price of durians so that everyone would have the chance to taste the King of Fruits. What would happen?

If this campaign was successful to the point that prices fell to close to or below production costs, durian planters and sellers would rather walk away from their plantations and let the fruits rot on trees than to harvest the fruits, transport them to towns and sell them at a lost. Economics 101 tell us that when supply reduces, price increases.

This is what’s happening in the property industry especially in Asian countries today. As a developing and booming region, Asia has seen lots of activities in the property industry in the past 10 years.

The housing price increase in this region is also more significant due to rising input costs, strong economic conditions and growing populations.

To prevent the property prices from surging further due to growing demand and worldwide quantitative easing (money printing) government policies, several governments in this region have introduced various “cooling off” measures with the most insistent being China, Hong Kong and Singapore.

In China, the State Council stepped up a three-year campaign to “cool off” home prices in March. Measures included raising first-time buyers’ down payments from 20% to 30%, and second-home buyers’ down payments from 50% to 60%, and ordering stricter enforcement of a 20% capital gains tax on sales. The government also limited home purchases in certain areas, tightened credit-quota limits and raised benchmark lending rates.

However, according to a recent report by the National Bureau of Statistics (NBS) China, residential and commercial property sales totalled 3.34 trillion yuan (RM1.77 trillion) in the first six months, jumping 43.2% compared to a year earlier.

The pace of China’s year-on-year home price rises in April, May and June was also the strongest this year in spite of the March initiatives. Average new home prices in 70 major Chinese cities climbed 0.8% in June from the previous month based on data released by NBS. New home prices rose 6.8% in June compared to a year ago, the sixth consecutive rise and the fastest pace since January 2011.

In Hong Kong, the government introduced a series of steps to curb prices since 2009. Its measures included a 15% property tax on foreign buyers, mortgage restrictions and taxes on quick resale.

The government also limited the maximum term of all new mortgages to 30 years, and mortgage payments for investment properties could not be more than 40% of the buyers’ monthly incomes, compared to 50% previously.

According to a Knight Frank report for the first quarter of 2013, property prices in Hong Kong were 28% higher on average, compared to one year ago despite measures to “cool off” escalating prices.

As for our neighbouring country Singapore, the government just unveiled its eighth round of “cooling off” measures in June. The new rule states that home loans should not exceed a borrower’s total debt servicing ratio of 60%. Lenders will also be required to deduct at least 30% from all variable sources of earnings, such as bonuses, and rental revenue when determining an applicant’s income streams.

Prior to this, the Singapore government made seven attempts to cool off the residential real estate market since 2009. In January 2013, the government implemented an extensive round of tightening measures by imposing higher stamp duties, lowering loan-to-valuations for mortgages, and implementing stricter rules on permanent residents (PRs) buying their first home.

Nevertheless, despite a series of “cooling off” measures, Singapore private home sales in January 2013 continue to hit a high note, with a 42.8% increase from December 2012, and a 7.5% increase year-on- year.

In our home country, the Government has also introduced a number of “cooling off” measures.

These include the 70% loan policy for third property purchases, requiring the housing loan limits calculated based on net income instead of gross, and the loan tenure reduced from 45 years to 35 years previously, etc.

The “cooling off” measures introduced in various countries are believed to have some impact when they were first implemented, however the overall effectiveness has yet to materialise.

While we understand the good intentions behind these measures, they result in further heating up of the market because the fundamental issue of the shortage of affordable housing is not addressed.

There is fine line between “cooling off” and heating up the market, when the market is having a strong, genuine demand. “Cooling off” measures will constraint supply, and when demand is higher than supply, the prices will eventually increase.

In Malaysia, according to NAPIC, there is only a supply of about 100,000 new houses a year throughout Malaysia, while the demand in Greater KL alone is projected to be an additional one million units if Pemandu achieves its target of increasing the population from six million to 10 million by 2020.

Therefore, if our authorities are pondering further “cooling off” measures, it is beneficial to look at the real experience from other countries and not just the “short term” effects, the different environment of property development in our country should also be taken into account.

The original intention of controlling the price of durians in my earlier story is to allow more people the chance to taste this unique fruit at an affordable price.

However, such good intentions often backfire and worsen the current conditions. “Cooling off” could eventually lead to heating up!

FOOD FOR THOUGHT by Alan Tong Kok Mau | feedback@fiabci-asiapacific.com
Property developer and group chairman of Bukit Kiara Properties Datuk Alan Tong is also FIABCI Asia-Pacific regional secretariat chairman.

Source: StarProperty.my

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Wet World Wild Adventure Park in Batu Ferringhi touted as Asia’s first open sea water park

August 15th, 2013 10 comments

Example of Wet World Wild Adventure Park in Spain.

GEORGE TOWN: The Wet World Wild Adventure Park (WWW) in Batu Ferringhi will soon be the place to go.

Touted to be the first open sea water adventure park in Asia, WWW is a project by Theme Park Concepts and Services Sdn Bhd (TPCS) and supported by the Penang Global Tourism Board – a set-up by the state government to promote tourism.

The water adventure park, to be located in the sea between Parkroyal Hotel and Hard Rock Hotel, is slated to open in late September.

“The park consists of several obstacles that include rock climbing, running track, a trampoline, swings, slides, ponds, walls and a human catapult – just like the ‘Wipeout’ TV show,” TPCS chief executive officer Datuk Richard Koh said at a press conference with Chief Minister Lim Guan Eng at the latter’s office in Komtar yesterday.

Koh said the WWW would only operate during non-monsoon seasons and with a maximum of 80 persons per session.

He added that the WWW adventure park concept would also be expanded to other locations in Asia.

“We may even consider holding competitions similar to the TV show ‘Wipeout’ to be competed regionally and globally,” Koh said.

Lim said the state government was focusing on new products, new events and new experiences in its bid to promote tourism.

Source: StarProperty.my

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