At the very centre of Penang’s new CBD and Lifestyle Hub, Utropolis Batu Kawan is a 44.15-acre self-contained integrated development comprising offices, retail shops, residences, hotel and KDU Penang University College. The commercial component, comprises retail shops/offices,  will be opened for booking soon.

Click here to find out more about Utropolis @ Batu Kawan

At a recent property seminar organised by Asian Strategy & Leadership Institute, several developers and property consultants had a debate predicting when the property market will pick up.

Real Estate and Housing Developers’ Association Malaysia (Rehda) patron Datuk Jeffrey Ng Tiong Lip reckoned the residential sector should recover next year or in 2018.

Ng was the moderator for the session on The Future Outlook and Challenges of the Housing and Property Sector.

Property consultants Savills Malaysia managing director Allan Soo, who specialises in the retail malls, expects a 2019 recovery.

Office market specialist Jones Lang Wootton executive director Malathi Thevendre declined to make any predictions. “It all depends …,” she says.

Ng says the current slow housing market is actually good over the long term, although it is painful in the short term. It all depends on how we manage “the noise”, he says.

There are lots of noises at present, both on the national and international level.

“If next year is election year, the recovery – if there is one – will be after that because between now and then, there are so many uncertainties.

“There is a lack of clarity at the moment,” says Ng.

His reading of the property crystal ball of a 2017/2018 turnaround is by far the most positive and contrasts with Kenanga Investment Bank Bhd equity research head Sarah Lim Fern Chieh.

Lim expects house prices to be flattish or slightly weak depending on locations “over the next four to five years, if there are no major policy changes”.

Her rationale for a longer down-cycle is simple. If your destination is Genting Highlands, but you are driving in the opposite direction, you will need a longer time to arrive there when you finally realise you are driving in the wrong direction.

Although it is widely accepted that the property cycle is between eight to 10 years, within this cycle are “mini two-year cycles. There were two-year up-cycle in 1999-2000 after the Asian Financial Crisis, and another in 2003-2004 and 2007/2007.

But after the 2008 Global Financial Crisis, Malaysia had an extended five-year up-cycle between 2010 and 2014 with prices peaking in 2013, and this was largely due to quantitative easing (QE).

She is, therefore, expecting a longer consolidation period of between four and five years, starting from 2015, before the next up-cycle, barring any policy changes and the global economic climate.

She is also expecting the property market to experience structural changes due to affordability and liquidity factors, among others.

More realistic pricing

Notwithstanding the fuzzy horizon, there are nevertheless a few certainties which may well put the sector on a better footing.

First, home ownership has become a national issue.

Second, the government, at both federal and state levels being landowners, are stepping up on affordable housing.

Third, prices are expected to be more realistic going forward.

Rehda president Datuk Seri FD Iskandar Mohamed Mansor is seeking government cooperation to reduce or waive development charges and other charges, collectively known as compliance costs, in order to bring down prices as this is “too challenging” for private developers to go it alone, considering today’s high land prices.

“If the Government wants developers to build more affordable housing, give us cheaper premiums or don’t charge at all.

“We will then see more stability in prices, or even a reduction, if development charges and all sorts of other charges imposed on developers come down,” said FD Iskandar at a Rehda first half-year review recently.

He says property development and land matters have been the biggest revenue earner for every state. Both federal and state governments own large tracts of land. Although FD Iskandar had made this call before, he was very passionate and firm this time around. Other developers, previously silent, are also quite vocal about the various land and development charges they have to fork out.

This is probably the first time developers are coming together to make a collective public call to seek a waiver or reduction of development and other aspects of compliance cost. The effectiveness of that call depends on the Government’s will to act.

While developers can clamour for such waivers, what is facing the market today is weak sales and this in turn is forcing developers to tweak pricing and strategy a bit, hence the drop in the number of launches as they try push unsold stock.

Andaman group managing director Datuk Seri Vincent Tiew says developers will be offering “more realistic pricing” from now onwards with location being a paramount factor.

There will be more affordable housing and this can be seen from the various affordable housing projects being planned by both the federal and state government although the end-products are slow in coming.

This, says Tiew, can be seen in the various agencies under the federal and state governments, among them being PR1MA Corp mandated to build 500,000 units of affordable housing units by 2018, as outlined in Budget 2013.

A total of 240,000 houses were due by end-2015, with an annual mandate for 80,000 between 2013 and 2015. The number of completed units was 883 at the end of 2015, says Tiew. By the end of this year, 10,000 units are scheduled to be completed. The number of units approved to date are 232,807 against 1.24 million PR1MA registrants as of February 2016. All eyes will be on the affordable segment in the coming Budget 2017.

Healthy demand

The demand for housing has always been there. The issue is affordability, says Kenanga’s Sarah Lim.

“Of late, developers are beginning to price units at RM500,000 and below,” she says.

The current change in direction is attributed to societal and government pressure. Unsold stock and government pressure forced developers to relook their pricing strategy.If developers keep building RM1mil homes, when the threshold is RM500,000 and less, they will be left holding unsold stock. In order to move stocks, creative marketing/financing strategies are employed to move these stocks.

Lim says if developers were unable to meet at least 40% of their sales target by mid-year, they would be unable to meet this year’s targets.

More than two-thirds missed their sales targets last year.

“Prior to this, what was booked was considered sold. Now, this is no longer true,” Lim says.

Lim says there are two issues here, the pressure on the sector as the rate of aborted sales crept up and the people’s demand for realistic prices.

“What we are seeing today is the government’s influence. It is actually steering the market in the right direction,” she says.

Renting the way forward

The other certainty is observed in the rental market, which is expected to continue to be soft next year.

There will be “low occupancy rate” for projects completed last year (2015) and this year, with rental yield at less than 3% a year, says Andaman group’s Tiew.

It is cheaper to rent than to buy. There is so much supply going around and the purchasing power of the ringgit is shrinking.

Selangor State Development Corp (PKNS) senior manager (corporate planning and transformation) Norita Mohd Sidek advocates renting.

She says if there is a 50% loan rejection rate for affordable housing, and considering the limited supply by private developers, renting may be the only option.

She suggests building affordable housing cities the likes of Stuyvesant Town’s Peter Copper Village, Manhattan New York and counters the argument that there is no money to be made from affordable housing.

In October 2015, Blackstone led a deal that put Manhattan’s biggest apartment complex in the hands of the world’s largest private equity firm and maintain some affordable housing at the property.

Blackstone and Canada’s real estate company Ivanhoe Cambridge Inc acquired the 80-acre enclave for about US$5.3bil. Rent is kept below market rates for some 5,000 units. Public transport and other amenities must be part of the development for it to succeed. “Government grants and resources are needed to identify the right location to built more council homes,” she says in her paper.

In today’s low yield environment, pension funds around the world are looking at other ways to generate dividends besides equities and fixed income securities. They are buying into infrastructures and large township developments where there are economies of scale for maintenance.

Malaysia’s national housing dilemma cannot be solved by profit-oriented private developers alone. The golden property years between 2010 and 2014 have been intoxicating, having resulted in expectations of 20% to 30% rise in sales year-on-year, like the manufacturing sector. But the property sector is quite unlike manufacturing. The reflection point was seen in 2014 after the government introduced certain cooling measures and anti-speculation sales gimmick.

Going forward, the emphasis on housing priced RM500,000 and below means developers have to sell more units to make the same sales value as previous years.

“They have to sacrifice some of their margins. Higher profit margins can be had from the mid- to high-end segments,” says Lim. They will have to work harder to help buyers secure loans.

This search for some form of cohesion in the national housing arena has taken a bit of time. Hopefully, the coming Budget 2017 will pave the way for more positive action.

Source: TheStar.com.my

Non-landed residential projects on Penang island have performed better than landed homes on the island in recent years.

There were more non-landed residential projects that recorded a cumulative annual growth rate (CAGR) of above 20% from 1Q2012 to 1Q2016 compared with landed housing projects.

Over on the mainland, however, the reverse was true as landed homes fared better in terms of capital growth compared with non-landed homes.

There were more landed projects with CAGR of more than 30% on the mainland than non-landed homes from 1Q2012 to 1Q2016, according to Alvin Ong, TheEdgeProperty.com director of business and product development.

“Areas such as Ayer Itam, Sungai Ara and Jelutong on the island have multiple non-landed projects priced more than RM300,000 with more than 20% CAGR while on the mainland, landed projects priced more than RM500,000 in areas such as Kepala Batas and Berapit have more than 30% CAGR,” said Ong, who was speaking on the Penang subsale market trends and opportunities at the Penang Maspex (Malaysian Secondary Property Exhibition) 2016 last Friday. The event was organised by the Malaysian Institute of Estate Agents (MIEA). TheEdgeProperty.com was the media partner and sponsor.

Some of the projects on the island with high CAGR from 1Q2012 to 1Q2016 include Sea Breeze Tower at Bukit Dumbar/Jelutong with 35% CAGR, Fairy Heights at Ayer Itam/Bukit Bendera with 33% CAGR and Ara Mas at Sungai Ara with 23% CAGR.

Meanwhile, on the mainland, for the same period, some landed projects which have shown high CAGR include homes at Bukit Jawi Golf Villa at Sungai Jawi with 59% CAGR, homes at Taman Bukit Noning at Berapit with 58% CAGR and homes at Taman Seri Rupawan at Kepala Batas with 51% CAGR.

Ong also presented the top five highest rental yields among non-landed projects of less than 10 years old and priced more than RM300,000 in Penang. (See table)

“Infinity at Tanjung Bungah has an indicative rental yield of 8.3% followed by Ocean View Residence at Butterworth with a 5.6% indicative rental yield while Fettes Residence at Tanjung Tokong has a 5.3% indicative rental yield. The fourth and fifth placing go to Hillcrest Residence at Bukit Jambul and Birch Regency at Minden Heights with indicative yields of 5.3% and 4.6%, respectively,” said Ong. (See table)

He also noted that projects priced at less than RM300 psf tend to have higher CAGR compared to projects of more than RM300 psf.

“The gains decline with the average price psf of a project. This is because they have lower entry price points which means more people can afford to buy them, which translates to more transactions,” he added.

ERROR: Birch Regency at Minden Heights?

Source: TheEdgeProperty.com.my

Affordable housing is one of the hottest topics in Penang property market these days. As of today, Penang has more than 38 affordable housing projects proposed, 16 out of which are opened for application and registration. The chart below shows the 5 most popular affordable housing projects in Penang, based on the total number of project page views recorded in 2016 (01 Jan – 28 Sept 2016).

1. i-Santorini @ Tanjung Pinang (35,875 views)

Affordable housing development by Ideal Property Group in Tanjung Tokong, Penang. It is located behind Vantage Desiran Tanjung, just a short walk away from Tesco.

The development comprises three residential towers with 8-level multi-story carpark and 68 units of shop offices at the lower floors. There will be a total of 1,320 affordable units, with a standard built-up size of 850 sq.ft.

2. One Foresta (25,933 views)

The first i-Condo affordable housing by Ideal Property Group in Bayan Lepas, Penang. It is strategically located along Lengkok Kelicap, only a few minutes away from Penang Internation Airport, It is just a stone’s throw away from Setia Pearl Island housing scheme.

The residential component comprises 2 blocks of 40-storey towers with a total of 1343 affording housing units. Each unit will have a built-up area of 900 sq.ft. and comes with 3 bedrooms.

3. The Park @ Mak Mandin (25,768 views)

A new affordable housing scheme by Penang State Government at Jalan Mak Mandin, Butterworth. This project is undertaken by Silver Channel Sdn. Bhd., comprising 4 blocks of 14-storey towers with 780 apartment units.

Featuring spacious layout with a built-up area of 1,002 sq.ft., each unit comes with 3 bedrooms and 2 bathrooms. It also comes with various facilities such as swimming pool, children playground and more.

It is worth mentioning that the Chinese version of this project post has received an overwhelming response.

4. Mutiara Jesselton (18,958 views)

Affordable housing development by Berjaya Land at Batu Gantong, also known as the parcel 2 of Jesselton Villas. It is just a short drive away from Penang Turf Club and easily accessible via Jalan Scotland.

This development comprises a 32-storey residential tower and 16 units of shop offices, with an indicative price starting from RM150,000.

5. TRI Pinnacle (17,900 views)

Affordable homes located at Jalan Persiaran Halia 3 at Mount Erskine. The first of its kind by Aspen Group that create a high quality affordable housing development and help to enhance the surrounding area to provide the residents with a well conceptualized, modern, airy environment to live, relax and work!

This is one of the first private-initiated affordable housing project in Penang. Standard unit price starts from RM299,000, with option to upgrade it with full IKEA furnishing.

Sunday morning – Eco Bloom official launch

Eco World Development Group Berhad (EcoWorld) launched four new projects concurrently under its EcoWorld’s Firsts campaign today. The campaign showcases two new projects in the Klang Valley which are Eco Grandeur and Eco Ardence, one project in Penang, namely Eco Bloom@EcoMeadows and Eco Business Park II (EBP II) in Iskandar Malaysia.

Set in a charming corner of Penang mainland, the residential component of Eco Bloom @ EcoMeadows,  is a 4.86-acre freehold mixed development comprising a single tower project with residential units split into two wings. It offers three different types of units with prices starting from RM388,000. The condominium, which is also the first high-rise development within the corridor with an unobstructed city view, will include facilities such as a swimming pool, gym, beautiful gardens, jogging tracks, BBQ area, multi-purpose court, multi-purpose hall and children’s playground in addition to the convenience provided by the 2-storey retail portion of the development situated below.

The official launching of Eco Bloom is today, however, the queue for booking already started to swell since yesterday morning. Many decided to sleep over at EcoWorld Gallery just to ensure they are ahead of others for a better unit selection. Eco World was helpful by providing meals to keep the momentum in the gallery as lively as possible. By Sunday morning (see picture), the gallery was fully packed with buyers waiting to select their unit. It was full house! Many had their difficulty to even get a parking spot. Again, it is worth to mention that the interests in property continue to be remain high despite the fact that buyers are now more selective.

Obviously, branding is still one of the most influencing factor.

Click HERE to find out more about Eco Bloom @ Eco Meadows