The Government is expected to adopt tighter regulations in the 2011 Budget to curb potential dangerous run-up in consumer credit card spending and speculative activities in the property market.

“We believe Bank Negara Malaysia (BNM) is focusing on tackling household debt in 2011 to promote healthy credit card spending,” said Kenanga Research.

In its 2011 “Wish List”, Kenanga said the central bank should consider imposing tighter borrowing limit for the property sector to avert potential over-leveraging on the household segment and speculations.

It said bank loans should be lowered to between 70 and 80 per cent value ratio for third mortgage, it said.

Bank Negara should also consider capping maximum of two mortgages for each borrower, it said, adding that such a rule would slow down housing price appreciation rate, going forward.

Should tighter borrowing rules be enforced in 2011, it would not have any impact on loan growth this year as borrowings are anticipated to remain strong till year-end, it said.

“But we are cautiously optimistic on business loans as businesses in the next six months may be negatively impacted by global economic turmoil and Malaysia''s economy is not immuned from moderating global growth,” it said.

The research house said it was cautious for the second half of this year due to healthy loan growth but increasing risk on slower growth in the business segment, namely manufacturing and exports.

"Profit margin squeeze is directly triggered by the wave of intensely- competitive pricing, moderate growth expectation and possibility of a slowdown on mortgages if 70 per cent to 80 per cent loan-to-value ratio (LVR) is implemented.

“We see the implementation of a blanket 70 per cent to 80 per cent LVR cap as a real challenge to the industry's loan growth next year and could put pressure on retail banks,” it said.

However, strong asset quality suggested lower credit charge-off, going forward, compensating net profit for the lower top line growth, it said.

As for credit cards, Kenanga said new measures should see tougher limits on the number of cards a person could hold and lower credit limit on each card.

Bank Negara should restrict a consumer to own only two credit cards from two banks of their choice and allow people with an annual income of above RM24,000 to own a credit card from the current minimum requirement of RM18,000.

The central bank should also reduce spending limit by 1.5 times their monthly salary (currently 2.5-3.0 times), set at the bank’s discretion for first-time applicants.

“In our view, stricter credit card rules are prudent and limit the risk of rising household non-performing loans. It will curb spending-spree cultures that have surfaced in certain segments of the population recently,” it added. — Bernama

SOURCE: Business Times

PJ Development Holdings Bhd (PJD) (1945) is set to unveil three new projects worth over RM2 billion next year as it is bullish that market will perform better on pent-up demand for high-end properties.

Managing director Wong Ah Chiew said he is confident that the new projects, located in hot spots like Sri Hartamas, Cheras and Kuantan, Pahang, will do well.

This year, PJD did not launch any new projects except for sub-phases in existing developments because of uncertainties in the market.

The company has five on-going projects, lasting it for the next five years. They are Swiss-Garden Residences at Jalan Pudu, Kuala Lumpur, Taman Putri Kulai and Mont' Callista in Johor, Taman Bukit Istana in Kuantan, and Ocean View in Butterworth, Penang.
"These projects have been selling well. For instance, Ocean View, a condominium development, is 80 per cent sold. We have a number of enquiries for new projects and that is why we are launching," Wong said.

In Sri Hartamas, PJD will launch Dutamas Kingsbury, located near Solaris, the bustling commercial centre of Mont' Kiara, by early next year.

Dutamas Kingsbury boasts over 200 condominium units, each with built-up of more than 2,000 sq ft, priced from RM650 per sq ft, and some 60 units of three-storey super link homes, with over 3,000 sq ft in built-up area, selling from RM3 million.

"Demand and choice are there and availability of land is scarce in the Mont' Kiara area. So we hope there will be good take-up," Wong said after the company's extraordinary general meeting in Kuala Lumpur yesterday.

In Cheras, PJD plans to launch an integrated development featuring retail lots, shopoffices, a mall and high-rise serviced apartments, by mid-2011.

Wong said the best project will be the resort-style development at Sg Karang in Kuantan, located close to Swiss-Garden Resort & Spa Kuantan.

The project, which is targeted for launch in the second half of next year, will comprise seafront condominiums, and a four- or five-star hotel.

"We expect that from 2011, when all these projects take off, our turnover from property development will increase. We have several other new projects in the planning stage," Wong said.

For fiscal year ended June 30 2010, PJD posted a net profit of RM52.8 million on revenue of RM666 million, whereby 40-odd per cent was contributed by property development.

PJD also runs a profitable power cable manufacturing business and owns the Swiss Garden chain of hotels.

"We will definitely perform better in the current year," he said.

SOURCE: Business Times

Group managing director Tan Sri Leong Hoy Kum said the company is on an aggressive land acquisition trail.

For government land, Leong said Mah Sing is open to cooperation with relevant government-linked companies, but he declined to disclose the name of the company it is talking to.

"We are confident that we will lock in more land soon. We do not want to miss the chance to buy government land, more so with the mass rapid transit (MRT) project that is coming up.

"There are also many government projects being tendered out from now until the middle of next year … so we must get ourselves ready to capitalise on the opportunity," Leong said.
The three-line MRT project, costing more than RM30 billion, is to improve public transport in the Klang Valley.

Mah Sing has RM300 million cash in hand, some of which will be used to buy land. By early next year, it expects to receive RM215 million from the sale of an eight-storey building to Koperasi Permodalan Felda Bhd.

"We have enough funds," Leong said yesterday after the company's extraordinary general meeting in Kuala Lumpur.

Mah Sing has 21 ongoing projects worth RM6.3 billion in the Klang Valley, Penang and Johor. It is planning 10 more projects, expected to be launched from year-end.

Among them are Kinrara Residence, a RM830 million medium- to high-end housing development in Puchong, featuring 836 bungalows as well as semi-detached and super-link homes.

Leong said he is confident the company's sales this year will surpass the RM1.5 billion mark, due to strong numbers already locked in from its balanced and diversified property portfolio. Up to July this year, it had raked in RM1.02 billion.

Leong also said that he is bullish on the property market for the next one to two years.

"We should not worry too much about over-heating. We are promoting Malaysia 'My Second Home' scheme in China, Singapore, Hong Kong, Taiwan and Europe. Some 10 per cent of foreigners contribute to our sales and we expect more going forward," he said.

Mah Sing also hopes the government will further open up its policies to encourage foreigners to buy properties in Malaysia, especially those in the high-end segment, he added.

SOURCE: Business Times

PETALING JAYA: The property market, especially in the Klang Valley and Penang, are showing signs of getting frothy, so much so that talks about higher tax on property gains are getting louder as Budget 2011 announcement gets nearer.

Re-introduced earlier this year at the rate of 5% after a three-year hiatus, there are those who view that the real property gain tax (RPGT) should be implemented back on a original progressive scale where short-term gains are taxed the heaviest.

But industry players, understandably, are not too thrilled about the prospect on higher taxes.

“Personally, I don’t think the Government will increase it,” Master Builders Association of Malaysia (MBAM) president Kwan Foh Kwai told StarBizWeek in a telephone interview.

“But you’d never know what will happen next week,” he said.

The Government will table its Budget 2011 in Parliament on Oct 15.

From the contractors’ point of view, Kwan said, a healthy property market would benefit the whole economy.

“Prices had gone up in the past few quarters, but can be still considered relatively low because the market was stagnant in 2008,” said Kwan, who is a director at Sunway Holdings Bhd.

OSK Research, in a recent report said one potentially negative news for the sector could come in the form of a cap on loan to value ratio.

Such a move would probably be aimed at second or third home purchases, while first-time house buyers would probably be allowed to continue to borrow up to 90% of the property value.

Meanwhile, Bank Negara had increased interest rate three times so far this year from a record low level.

The Government re-introduced RPGT in the Budget 2010, but at concessional rate of 5% for disposal of properties held less than five years.

SOURCE: The Star

PETALING JAYA: High-end properties, especially condomimiums costing RM1mil and above, are still enjoying good sales backed by favourable financing, although some buyers are turning cautious in anticipation of upcoming budget measures to cool the property market.

“Currently, we do not feel there is pull back on banks in financing for high-end projects and the property overhang in this sector is not as serious as perceived,” Real Estate And Housing Developers’ Association Malaysia (Rehda) president Datuk Michael Yam told StarBizWeek.

The overhang could be in specific locations that refer mainly to strata titled properties such as condominiums in prime locations that cost RM500 per sq ft, and these comprise probably less than 5% of all properties sold in Malaysia,

Under this category, there may be some high-end properties in Mont’Kiara, KLCC and possibly, some condo projects in prime areas located in Penang and Johor.

On a possible financial crunch on developers post budget, he said: “That is left to be seen but it is likely that financial institutions would apply due diligence in giving out credit, based on track records of individual developers.”

However, Yam pointed out that this small high-end segment should not be overlooked.

“This high-value property segment can have a significant impact on economic growth. The economic stimulus vis-a-vis the Economic Transformation Programme are critical to the future vibrancy of this segment,” he said.

On the Government’s proposed deposit requirement on homebuyers to cool down property speculation, Yam said Rehda suggested that for the first and second properties, it would be better to allow the banks to assess the homebuyers’ financial position for deposit requirement on the property.

Real estate property consultant Amy Chung, who focuses on high-end condos in the Golden Triangle area in Kuala Lumpur, said more locals were buying these condos, backed by access to financing and the rental market.

“They mostly buy from foreigners, who are the first homebuyers, paying a minimum of 25% above the foreigner’s purchase price about one and a half years ago,” Chung said.

However, the situation was different during the downturn when most of the buyers were foreigners.

A property agent in the Golden Triangle agreed that the take-up rate for high-end condos was improving each year.

“But we feel it could be much better. There are still many high-end condos not sold and many of these properties are above the means of locals.”

She estimated the occupancy rates in various property projects as: K-Residence (less that 5%); Hampshire Residence (about 50%); Pavilion Tower 2 (30% to 45%); Marc Residence (70% to 75%) and Berjaya Times Square (90%).

According to Chung, high-end condos in the Golden Triangle would sell for RM850 per ft to RM1,200 per sq ft.

In Johor, developers are more worried if the ruling were to be imposed on the non-high end residential properties.

“Buyers of high-end residential properties are those with money and coming out with 30% downpayment (should the property loans be capped at 70%) is not a problem to them,” Johor Real Estate Housing Developers Association chairman Simon Heng said.

In Johor Baru, high-end properties comprised those just RM400,000 and above.

Curbs on property loans are not likely to affect Singaporean buyers because of the strong Singapore dollar.

“In fact for years, Singaporeans and foreigners taking up housing loans from local banks have only been getting 70% from the banks,” said Heng.

Berinda Properties Group sales manager Lim Sung Heng said demand for high-end houses in Johor Baru was good with many wanting to upgrade from mostly single-storey terrace houses.

From Berinda’s experience, most buyers of its high-end residential properties paid more than 10% downpayment for their houses.

Berinda’s projects in Johor Baru include Taman Molek, Molek Pine, Impian Molek, Molek Groover, Taman Redang and the houses are prices between RM500,000 and RM3mil.

He said the property market there also benefited from Iskandar Malaysia due to rising demand for high-end residential properties in southern of Johor.

In Penang, SP Setia property (North) general manager S. Rajoo said sales of high-end properties had increased in the past two to three months.

Sales of SP Setia’s residential landed properties priced between RM647,880 and RM1.4mil had registered RM102mil in sales revenue over from July to August compared with RM60.4mil three months earlier.

“The higher sales in the second half were mainly due to the introduction of the easy home ownership campaign where the buyer pays up to 3% down payment. Since the beginning of this month, sales have hit RM208mil,” he said.

The bulk of SP Setia’s sales came from its Setia Pearl Island three-storey semi-detached houses which are priced from RM1.4mil onwards and Setia Vista double-storey houses which are going from RM647,880 onwards.

IJM Land’s sales for July and August were about 40% higher than May and June.

This was due to the launch of The Light Collection 1, comprising 176 units of condominiums and water villas, priced from RM800,000 to RM2.6mil.

To date, IJM Land has sold about 60% of The Light Collection 1.

However, a Penang-based valuer said investors were now taking a cautious approach when buying residential properties priced from RM1mil onwards.

“They want to know more about the directions of the Government first before making further commitments,” he said.

Another property consultant based on the island said there was a slow-down in the high-end property segment priced between RM600,000 and RM3.5mil.

“This is due to concerns about the property market being over-heated. The forthcoming budget will have a lot of impact on the future trends of the property market,” he said.

SOURCE: The Star