PETALING JAYA: There should be a higher limit on monthly income and property prices under the Government's My First Home scheme in the Klang Valley and major urban areas like Johor Baru and Penang.

Property consultancy Rahim & Co executive chairman Datuk Abdul Rahim Rahman said it was not realistic to have the same limit on monthly income and property prices under the scheme across the country.

“While more research is needed, I think that it is justifiable to raise the monthly income limit to RM5,000 and property price to RM350,000 in major urban areas,” said Abdul Rahim in an interview.

Abdul Rahim said the current scheme was feasible in Kelantan, Terengganu, parts of Kedah and Johor, and remote areas in Selangor. “However, the scheme should reflect the higher land values, living costs and incomes in the Klang Valley.”

Real Estate and Housing Developers' Association president Datuk Michael Yam also shared Abdul Rahim's opinion.

“The minimum value of RM100,000 for the My First Home scheme should be set aside so that those who are not entitled to RM42,000 low-cost homes can also have opportunities to own a housing unit,” said Yam.

It had been reported that the Government was looking at providing land for private property developers to build affordable housing for those who qualified under the scheme.

“There are also issues such as land matters that come under the state's jurisdiction.

“If private property developers are charged market value for the land, this scheme is not going to be feasible – especially in the Klang Valley,” said Abdul Rahim.

Yam pointed out that land generally constituted 20% of the total gross development cost of stratified properties.

“The bulk of the cost – 60% to 70% – goes into construction, professional fees, utility contributions, interest cost and cross subsidies.

“The challenge that the Government and developers will face is to find the right location, building type and costing to make this work for the scheme despite the land being free,” said Yam.

SOURCE: The Star

Residences 21, located along Jalan Macalister, it is a landmark development. Combining hi-tech materials with aesthetic and functionality. Residences 21 consist of only 21 units that with a built-up area of approximate 5,500 sq. ft.

Property Project : Residence 21
Location : Jalan Macalister, Georgetown, Penang
Property Type : Super Condominium
Tenure : Freehold
Developer : Appresquare
Contact No.: 04-226 1357
Indicative Price : RM 2,700,000 onwards

KUALA LUMPUR: Eastern & Oriental Bhd (E&O) is confident of achieving stronger financial results in the current financial year ending March 31, 2012 in view of strong property sales from the past two years.

According to E&O deputy managing director Eric Chan, sales of the group’s property products over the past two financial years has reached close to RM1.4bil, and as at March 31, its unbilled sales amounted to RM810mil.

“Most of our property projects are high-end residential products located within 10km of the Kuala Lumpur City Centre and on Penang island.

“We are a lifestyle developer and will continue to pursue more of such developments in premium and highly sought after locations,” Chan said.

The property division used to contribute between 90% and 100% to group earnings prior to 2008, but in recent years contribution from the hospitality and lifestyle division had been rising.

For financial year ended March 31, 2011, Chan expected property development to make up 80% of group revenue and earnings, while earnings from lifestyle and hospitality, and property investment would make up the balance 20%.

“Over time, we hope to achieve a 60:40 spread between property development and the other two segments,” Chan added.

Income from the lifestyle and hospitality division are mainly from Penang now – the Eastern and Oriental Hotel and the Lone Pine boutique hotel; Straits Quay festive retail mall and marina in Seri Tanjung Pinang; and the E&O concierge services.

F&B, which also comes under the lifestyle and hospitality division, contributed some RM30mil to E&O’s turnover last year.

Chan said with the expansion plans underway for its F&B business, revenue from F&B should reach RM100mil in the next two years.

The F&B division operates five Delicious cafes, a Reunion Chinese restaurant, a DISH steakhouse and a Delicious Ingredients gourmet grocer in the Klang Valley.

The first Delicious cafe outside the Klang Valley opened at Straits Quay festive retail mall in Penang early this month.

Chan said more Delicious cafes were in the pipeline, including one in Sunway Pyramid to be opened in August, and the first offshore outlet will be opened in Singapore in November.

E&O has some RM500mil in its coffers, and the bulk of the cash will be used to launch new projects and buy more land.

“Our Seri Tanjung Pinang development in Penang has been very successful.

“We hope to replicate this in the Klang Valley. To do this, ideally the land should be at least 200 acres to be able to include some lifestyle features in line with our positioning as a lifestyle developer,” Chan said.

He said E&O had set its sight to have more multiple developments so as to generate higher sales.

“Our priority at the moment is to launch projects locally. We have more than RM4bil worth of high-end housing projects to be launched in Penang and Kuala Lumpur. We will make more launches as long as the market can take it. We expect the markets in Penang and Kuala Lumpur to remain positive,” he said.

Among the projects that E&O had planned in Penang are the final batch of seafront terraces and phase two of the Quayside condominiums in Seri Tanjung Pinang phase one.

E&O’s Seri Tanjung Pinang (STP) phase two is currently at the planning stage. It also owns a 365 acres at Gertak Sanggul on the southwest tip of Penang island.

Projects in Kuala Lumpur include the St Mary Residences that are slated for completion in 2012. Those set for launch included condominiums at Jalan Yap Kwan Seng and Jalan Kia Peng, as well as prime bungalow plots in Damansara Heights.

SOURCE: The Star

SOHO @ Gurney is a commercial building strategically located along Persiaran Gurney, Penang prominent waterfront. This building comprises 3 storeys of retail office, 2 storeys of skycourt, 23 storeys of SOHO office and a recreation floor. It also comes with 3 levels of  underground car park.

Property Project : SOHO @ Gurney
Location : Persiaran Gurney, Gurney Drive, Penang
Property Type : SOHO Offices
No. of Blocks : 1
No. of Storey : 29
Developer : Primo Corporation Sdn. Bhd.

Bank Negara’s move to let rates rise, when it may encourage more money to flow in and economic recovery is nascent, puzzles

IT’S easy to understand why Bank Negara raised the amount of interest-free deposits (SRR – statutory reserve requirements) that had to be kept with it by banks by another percentage point to 3% of total deposits. It is to mop up excessive inflows of money.

But it is puzzling why it decided to simultaneously increase the overnight policy rate or OPR, a gauge of the interest rates the central bank offers or pays when intervening on the money markets, by a further 0.25 percentage point to 3%.

This not only results in an across-the-board increase in the cost of doing business by an automatic increase in the base lending rate (BLR – the reference rate to which most lending rates are pegged), it also attracts further inflows of funds to take advantage of the increased interest rates.

Banks have already raised their BLR by 0.3 percentage point to 6.6% and their deposit rates by a similar amount.

The SRR basically restricts the availability of liquidity by tying up funds so that they remain with Bank Negara. This in turn restricts the ability of banks to lend money, helping to ensure that inflows of money don’t find their way into the system.

Bank Negara takes pains to explain that the change in SRR does not reflect a change in monetary stance and is simply a tool to manage liquidity. It adds that the OPR is the sole indicator used to signal the stance of monetary policy.

The simplest way to interpret the latest move then is that Bank Negara feels that there is some amount of excessive demand and this needs to be cooled down. But how can that be so when the overall economy is by some indications growing by less than 5%.

It would be imprudent to raise interest rates and raise costs for all sectors when say, only the property sector, and that too in only some areas, needs cooling off. This has already been dealt with via administrative measures such as 70% financing for those who already have more than two houses.

Perhaps, the central bank is concerned about inflation. Sure, everyone is. But most of this is caused by rising prices of inputs, especially of oil and commodities, rather than sharply increased demand. Raising rates won’t solve the problem but may curtail economic activity when more of it is sorely needed.

The last reason could be to help depositors get a real rate of return so as to encourage savings. But again, the idea is to get spending up which means one would want to discourage savings right now, especially with so much liquidity sloshing around the place.

One can only speculate about Bank Negara’s reasons for letting interest rates rise, especially since rising domestic interest rates and when US interest rates stay low and close to zero, will attract further inflows of hot money and make liquidity management more difficult.

Since the beginning of last year, the OPR has been increased four times, each time by 0.25 percentage point, to make in all a full-percentage-point rise in the OPR. The BLR would have mirrored largely this rise in OPR too.

If you were paying 5% a year for your housing loan a year ago, for instance, it would mean a significant 20% increase in interest costs. And that applies to businesses too.

Still, the OPR is a half a percentage point below what it was before the onset of the world financial crisis in 2008. From that vantage point, Bank Negara’s rate increase still seems within reasonable limits.

But it has to beware of further interest rate hikes during a period when both confidence as well as economic activity is still not strong, especially when a situation of easy liquidity warrants a lower – not higher – interest rate.

By all means, raise the SRR to rein in liquidity, but be more careful about increasing interest rates – there are many downside perils.

SOURCE: The Star