GEORGE TOWN: Several foreign giants apart from China’s Beijing Urban Construction Group (BUCG), namely Citic Group of China, South Korea’s SK Group, as well as couple of Japanese conglomerates and one Singapore company have expressed interest to bid for some RM8bil worth of infrastructure jobs in Penang.

Penang Chief Minister Lim Guan Eng said the funding of these crucial road works would be done via a land swap.

“We will finance these projects by land swap as they are expensive. The land will be nearby reclaimed land, which means they will own a certain acreage. These companies appear to be interested (in these projects) even though they involve a land swap. We might as well use something to improve traffic,” Lim said in an interview after opening the one-day investPenang seminar organised by ECM Libra Financial Group Bhd recently.

The interested parties, according to Lim, had been told to submit their request for proposals (RFP) which would also include their recommendation on land usage by year-end.

In April, Prime Minister Datuk Seri Najib Abdul Razak and Chinese Premier Wen Jiabao witnessed the signing of a memorandum of understanding between the Penang government and BUCG for a proposed traffic-alleviation project. Even so, Lim said the RFP was open to other interested parties apart from BUCG.

The projects include the 6.5km tunnel job (from Gurney Drive to Butterworth) which takes up the bulk of the RM8bil cost, the 4.2km Gurney Drive-Lebuhraya Tun Dr Lim Chong Eu bypass, and 4.6km Lebuhraya Tun Dr Lim Chong Eu-Bandar Baru Air Itam bypass. The proposed tunnel project will be the third link between Penang and Butterworth.

“We need to find a way to disperse traffic and with these projects, we will complete the loop. We’ve revived the idea of a third link and want to get it done,” he said.

The pricing for the third link, said Lim, would be higher as “people still use tunnel as it’s shorter … about one quarter length of the second bridge.” He expects work on the project to start earliest by 2013 although he would like it to start the end of next year if he had his way.

Apart from congestion, the escalating property prices in Penang, largely due to land scarcity, is another issue of concern. Towards this end, Lim said the Government had set up the Penang Housing Board (PHB) to build affordable housing in the state. The board is largely modelled after the Singapore Housing Development Board (HDB).

“We are doing more than talking. We have visited them (Singapore) and they have come to do on-site inspection. In a few months’ time, it should take off the ground,” he said.

The pilot project, the first of its kind in the country, will be located on a 60.7ha site in Batu Kawan. According to Lim, it would comprise 10,000 units of about 750 sq ft each and steps would be taken to ensure that only first-time genuine housebuyers qualifed. “We will try to curb speculation … the buyers will only be able to sell after a certain time frame. We have to work out all these details.

“Most people’s concept of affordable housing is like ghetto or slum. But we want to build communities fully equipped with amenities like football fields and green spaces. We are currently working out the mechanism and the project will be funded by the state government. However, we will outsource the actual building of these houses.

“The units will be HDB quality and style and not necessarily HDB. Penangites want to live on the island but you must appreciate that we try to provide where we can but land (on the island) is limited and expensive,” he said, adding that once the third link was up, the island would become so much closer.

Meanwhile, CB Richard Ellis Malaysia managing director Allan Soo, in his presentation at the investPenang seminar on the Penang real estate, said there should be no concern of a property bubble in the making despite the seemingly high property prices. He pointed out that foreigners made up only a small portion of property buyers on the island and that the prices, relative to the hot spots in the Klang Valley as well as in Singapore and Hong Kong, were far lower.

Given the challenging economic times, he expects property prices to correct but not to a great extent. “For those interested in buying property in Penang and are waiting for prices to fall, they are better off buying at current levels and ride the uptrend as I don’t think the prices will correct significantly… in fact, I expect prices to remain resilient,” he said.

The seminar was held to pitch the appeal of Penang to a large group of fund managers from Singapore, India, Hong Kong and the Philippines with sizeable portfolio funds as well as major property developers in Malaysia, namely SP Setia Bhd, YTL Corp Bhd and IJM Corp Bhd.

Another growing attraction in Penang in recent years is medical tourism which has chalked up an average growth of 20% a year since 2005. According to Penang Health Association chairman Datuk Dr Chan Kok Ewe, the industry grew by some 25% in terms of revenue to RM136mil in the first half of this year from last year’s corresponding period.

“Medical tourism in Penang started in earnest in 2005. Today, it accounts for two thirds of the medical tourism market in the country and has proven itself to be extremely resilient even in a recession as its services are more of a need than a want,” he said, adding that there were much opportunities to be tapped in dental hospital, rehabilitation centres, retirement villages and medical supplies.

“Malaysia is one of the top five destinations for people looking for affordable medical treatment with a large chunk of it coming from Penang,” said Chan.

SOURCE: The Star

SUBANG JAYA: The Housing and Local Government Ministry hopes to table the amendments made to the Housing Development Act 1966 before the year-end in a bid to further regulate the property industry and safeguard the interest of house buyers.

“We want to introduce more stringent rules to reduce the rate of abandoned housing projects,” Minister Datuk Chor Chee Heung said after delivering his keynote address at the 14th National Housing and Property Summit yesterday.

The amended Act is expected to reduce the cases of developers abandoning their projects and abscond with house buyers’ deposits. Currently, there are 161 such abandoned projects, of which only 72 have been revived.

Initially, the amendments were scheduled for tabling in March. However, it was delayed to allow for more time and feedback from industry players.

Chor also said the authorities would introduce an element of criminality to weed out fly-by-night developers and hold errant property developers accountable for their acts.

Recently, Chor said that some of the suggestions for the amendment was to take legal action against the developers and, if found guilty, they would be slapped with a fine of RM250,000 to RM500,000 or up to three years’ jail, or both.

The deposit required to obtain a developer’s licence will also be increased from the present RM200,000.

Chor said as part of the Government’s initiative to prevent abandoned housing projects, the authorities were also promoting the build-then-sell (BTS) business model to developers.

“By 2015, all developers should be on a BTS basis, and abandoned housing projects will be a thing of the past by then,” he said.

Meanwhile, Chor dismissed reports that the Government might consider restricting individuals to purchase only one house.

“This is a democratic country and if people are able to afford, why not? It has been taken out of context,” he said.

Source: The Star

GEORGE TOWN: A leading property expert said he does not expect property prices in Penang to see a major correction if there is a global downturn because the prices have not escalated as much as in other markets.

Another reason is that demand far outstrips supply, said CB Richard Ellis (CBRE) managing director Allan Soo.

"In 2008 when the property prices in Hong Kong, Singapore and Kuala Lumpur took a stiff correction due to the global financial crisis, Penang was largely unaffected because the property market was relatively slow compared with the other cities.

"But in the past two years, although property prices have picked up sharply in Penang, there is insufficient supply. This is due to developers focusing on niche and high-end properties," he said during a seminar on InvestPenang organised by ECM Libra Financial Group Bhd.

Property prices in Penang have shot up in the past two years with numerous high-end condominium projects and integrated developments undertaken by big players such as Eastern & Oriental Bhd (E&O), IJM Corp Bhd and S P Setia Bhd.

Soo said prior to E&O's Seri Tanjung Pinang project, the developments in Penang were largely confined to parcels involving two or three acres and were not planned schemes.

The developers were also local players who did not pay much attention to infrastructure such as access roads and amenities like security.

Soo suggests that investors keen on acquiring properties in Penang for the longer term look at high rise integrated and comprehensive schemes that include amenities and infrastructure covering a few hundred acres of development.

He also said that as far as pricing is concerned, the levels seen in Penang are still relatively cheap.

"It is relatively cheaper to invest in Penang and Malaysia as even the most expensive condominium project here is relatively cheaper than a similar project in Hong Kong or Singapore," he said.

Another speaker at the seminar, Datuk Seri Dr Kelvin Kiew said the biggest weakness of the small and medium enterprises (SMEs) in Penang is that the owners are easily satisfied and do not look to grow their companies beyond the local borders.

"The owners prefer to pass on the company or wealth accumulated to their children. This is unlike in Taiwan where the founders of large SMEs install a professional management to see that the business grows.

"The children are not allowed anywhere near the company," he said.

Another setback for the SMEs is that they do not do enough to promote themselves.

Kiew said the SMEs in Penang should look towards positioning themselves globally because they have some good factors going for them such as operational excellence and are proven good manufacturers of equipment and precision tooling.

SOURCE: The Edge Property

PETALING JAYA: UOB Kay Hian has downgraded the local property sector due to slower residential home sales, especially in the second half of the year, coupled with an anticipated tightening of property measures.

The research house, which downgraded the sector from “overweight” to “market weight”, said in its latest note that sales launches by property developer might had slightly dampened with average take-up rates of 50% to 65% compared with 80% to 90% a year ago.

It said there could be cooling measures on the sector, namely the re-introduction of a real property gains tax (RPGT), loan-to-value cap at 70% for second mortgage and mortgage approval criteria based on net salary.

Although these measures might not have been put in place, it added that the impact had already been felt as most of the property stocks had fallen about 10% to 25% since last month and were now trading sideways.

UOB Kay Hian noted that most companies were trading at a 10% to 20% discount to their respective revised net asset value (RNAV). Selectively, the research house said it liked property developers that could still benefit from the rollout of the Economic Transformation Programme (ETP) and positive news flow from Iskandar Malaysia.

It is maintaining its “buy” calls on MRCB (target price: RM3.02) and UEM Land (target price: RM2.68). The near-term catalysts for MRCB is the contract awards for phase 1 of River of Life and clinching parcels of RRI Land in Sg Buloh by year-end.

UEM Land, as the flagship developer of Khazanah, will continue to benefit from the land price appreciation through the materialisation of Iskandar Malaysia, which is currently very much on track, according to UOB Kay Hian.

It recently downgraded Mah Sing to “hold” with a target price of RM2.51 (10% discount to RNAV) and also maintained a “hold” on SP Setia with a target price of RM4 (10% discount to RNAV).

The research outfit is currently reviewing the target price and notes that there could be further downside if the market continues to fall, given its relative premium valuation compared with its peers.

Nevertheless, UOB Kay Hian said it expected mainstream property developers’ valuations to hover at between mean and one standard deviation (SD) above mean.

This healthy valuation range reflects the positives of a low mortgage rate environment (of 4%-5%), the ability to secure coveted federal landbank, potential merger and acquisition activities within the sector (for example,IJM Land and MRCB), and in the intermediate term, the positive spill-over to land prices from mega projects like the MRT lines and River of Life.

Most of the property companies in UOB Kay Hian’s coverage had also experienced positive changes in their business models, which justified higher above-historical valuations, it added.

Meanwhile, a property analyst at MIDF Research said it would maintain a “neutral” call on the sector this year unless there were policy changes that would impact demand for properties, like the reintroduction of the RPGT, loan-to-value cap of 70% for second homes and approval of mortgage loans based on net salaries.

He said the current low interest rate environment with the overnight policy rate maintained at 3% was still attractive and would spur demand for properties barring any unforeseen circumstances.

Source: The Star

PROPERTY developer Equine Capital Berhad is making its debut as a main sponsor for Penang Starwalk this year.

The company is sponsoring RM25,000 for the Sept 18 walk.

Its assistant general manager (sales and marketing) Josephine Lee said the company wanted to be part of the premier sporting event.

?Starwalk promotes a healthy lifestyle and we want to be a part of it,? Lee said after she and Equine senior sales and marketing executive S.C. Koot handed over the sponsorship to The Star regional operations manager (north) Chung Chok Yin and IT manager Khoo Boo Taik at Equine Home Gallery in Batu Kawan on Thursday.

Lee said the company had printed 25,000 flyers of its Callisia 2 project in Batu Kawan to be distributed to the Starwalk participants.

Penang Starwalk 2011 is jointly organised by The Star and the Penang Amateur Athletic Association.

A record number of 20,000 people have signed up for the event which will be flagged off from the Penang Times Square at 6.30am for competition walkers and 7.15am for non- competition walkers.

Those who complete the walk within two hours will be eligible for a lucky contest.

The platinum sponsor for the event is Genneva Syariah while the other main sponsors are 100Plus, AmBank, BP Diagnostic Centre, Golden Screen Cinema, Magnum, Malta, Maxis, Milo, Modenas, Nikon, One Community Worldwide, Pallas, Sunquick and Sunshine Wholesale Mart Sdn Bhd.

Penang Global Tourism is the supporting partner while Penang Times Square is the official venue provider. Rapid Penang is the official transport provider.

SOURCE: The Star