A developer has failed in its bid via judicial review to set aside the stay order issued by the Penang Appeals Board on its high-rise project in Pykett Avenue here.

A High Court here upheld the decision of the board in the issuance of a stay of implementation of planning permissions to Klassik Tropika Development Sdn Bhd, which prevents the developer from proceeding with the construction of condominiums.

The judicial review application filed by Klassik Tropika on Sept 7 last year had named seven respondents. They are the board, Penang Island City Council and five residents – Ang Sue Khoon, Goh Yee Hoon, Yeoh Soo Lin, Lilian Oh Lai Lin and Oh Chit Soon.

In its application, it sought to set aside the decision made by the board dated June 26, 2015 which suspended the implementation of the planning permission in response to the application made by the five residents.

In his judgment yesterday, Judicial Commissioner Lim Chong Fong said the board has the jurisdiction and power to make such an order.

He affirmed that the decision was properly made and ordered the developer to pay RM5,000 in costs to the Appeals Board, RM25,000 to Ang and RM25,000 to Lai Lin and Chit Soon.

The board was represented by Azlina Hashim and Charanjit Singh, MBPP by Karin Lim, Ang by Ong Yu Shin while Daphne Choy and Eric Cheah appeared for both Lai Lin and Chit Soon. Goh and Yeoh were unrepresented.

It was previously reported that Klassik Tropika had, in July 2010, demolished the 19th century Khaw Sim Bee Mansion which stood at the proposed development site in Pykett Avenue.

The then Penang Island Municipal Council (MPPP) issued a rebuild order on Feb 17, 2011 but the mansion was not rebuilt.

MPPP then approved the developer’s application for planning permission to build mega condominiums at the site on Nov 11, 2014.

Penang Citizens Awareness Chant Group (Chant) adviser Yan Lee said the decision has reaffirmed that the board could consider public interest and check on MBPP.

Sourse: TheStar.com.my

Penang Property Prices (1Q2011 – 2Q2016)

Things have been quiet on the Penang primary property market so far, although the secondary market has seen some activity, albeit slower.

“High-end products are struggling but properties below RM700,000 are still okay,” observes Raine & Horne International Zaki + Partners director Michael Geh when presenting the Penang Housing Property Monitor for 2Q2016.

Developments that performed fairly well are Ideal Property Group’s Queens Waterfront Residences and Eastern & Oriental Bhd’s The Tamarind. Properties in Butterworth, especially those below RM500,000, also did well, he adds.

On the mainland, an active hot spot was Simpang Ampat “because it is the secondary market for Batu Kawan, where prices are nearly on a par with those on the island”.

Geh’s advice to homebuyers is that it is a good time to cherry-pick properties. “Zoom in on the neighbourhoods that you like and make offers. Buy with 50% cash,” he says.

Nevertheless, the Penang property market does not appear to be in serious trouble, although, according to Raine & Horne’s State of the Property Market @ August 2016 report, it has seen a dip in transactions and value.

Penang Property Rental Rates

On the primary or developer’s market, the number of transactions fell from 4,095 in 2014 to 2,948 in the following year while the secondary market saw a drop from 14,315 to 12,343. In the same period, value on the primary market declined from RM1.8 billion to RM1.28 billion while on the secondary market, it fell from RM5.78 billion to RM4.89 billion.

Still, Geh feels this is no cause for concern. Jobs are still plentiful, he says, adding that the trigger point for fire sales is when there are retrenchments and factories close down.

Eventful second quarter

A number of unexpected events affected property market sentiment in the second quarter of the year.

“First, there was the continued delay in the issue of advertising permit and developer licences, which took a toll on the property market,” remarks Geh.

“Then, there was the ongoing chief minister’s court case, which caused anxiety among serious property players before they could move on to their next investment decision. News of a possible snap election also jolted the confidence of investors in the market. That this was not going to happen calmed things down.

“Then, there was the announcement of rent control, which rattled investors keen on buying prewar buildings. They are now waiting to see what the state government will do next.” The announcement was due to concerns over foreigners, especially Singaporeans, buying up too many of the prewar shoplots.

However, Geh believes the owners of prewar shoplots are selling because of stringent conservation requirements. They would rather dispose of the properties than renovate them.

“The current procedure for renovation is rather vague … heritage societies have a strong influence on the process. Often, the recommendations for renovation are uneconomic and non-business-friendly, prompting the property owners to just give up and sell out,” he explains.

He suggests that the state government and the George Town World Heritage Inc (GTWHI) review the process to make it viable for owners to renovate their prewar buildings. GTWHI was established by the state government in 2010 to protect, promote and preserve George Town as a sustainable city.

Furthermore, the transport masterplan for Penang seems to have hit a snag with some parties fighting to preserve the Prangin Canal, where a transport hub is to be constructed, because ancient artefacts have been found at the site. Archaeologists have uncovered old sluice gates that had connected the canal, which was built in the early 1800s. Fragments and shards of pottery have also been discovered at the dig.

Geh says as the Prangin Canal was designated a transport hub some 20 years ago, a compromise is needed, where the preservation of the artefacts could continue along with the development of the transport system that Penang requires. Discussions on the matter are ongoing.

Terraced houses

The 1-storey terraced houses sampled for the monitor on both the island and the mainland showed little price growth from the last quarter and the year before. Prices rose only in Sungai Ara (+2.04% or from RM735,000 to RM750,000) and Tanjung Bungah (+2.56% or from RM780,000 to RM800,000) year on year.

The 2-storey terraced houses in all the areas surveyed showed no price growth from the previous quarter. However, some fared slightly better compared to last year, especially those in Pulau Tikus, Sungai Nibong and Sungai Ara. Elsewhere, the prices remained stagnant.

In Pulau Tikus, the prices rose 6.67% to RM1.6 million, in Sungai Nibong by 4.55% to RM1.15 million and in Sungai Ara by 5.26% to RM1 million.

Semi-detached and detached houses

Quarter on quarter, there was no change in the prices of semidees but they rose slightly year on year, except in Sungai Ara.

Prices rose 2.27% to RM2.25 million in Island Park, by 5.71% to RM1.85 million in Sungai Nibong and by 6.67% to RM1.6 million in both Sungai Dua and Minden Heights.

As for detached houses, only those in Tanjung Bungah saw an increase in prices quarter on quarter (+2.7% to RM3.8 million). Year on year, the prices rose 2% to RM5.1 million in Pulau Tikus, by 3.57% to RM2.9 million in Island Glades and by 2.86% to RM3.6 million in Green Lane.

High-rises

Only the prices of three-bedroom flats in Sungai Dua and Lip Sin Garden rose 8.57% to RM380,000 quarter on quarter and year on year.

The flats in Relau showed no price increase year on year while the prices of flats rose 17.65% to RM400,000 in Green Lane, by 9.09% to RM240,000 in Bandar Baru Air Itam and by 5.88% to RM180,000 in Paya Terubong.

As for 3-bedroom apartments and condominiums, the prices of only those in Pulau Tikus rose 1.47% quarter on quarter and 6.15% year on year to RM690,000.

Year on year, the prices of units in Island Park/Glades rose 6.38% to RM500,000 and by 2.22% to RM460,000 in Batu Ferringhi. Elsewhere, the prices remained unchanged.

Source: TheEdgeProperty.com.my

Have you always wished that your home is from the English architecture designs? Seeing is believing! You are cordially invited to the Official Launching of Eco Bloom on this Sunday (25 September) at EcoWorld Gallery @ Eco Meadows.

Eco Bloom, inspired by the scenic pastures of English royalty, is a sophisticated and lifestyle retreat that reflects magical merging of inspiration and architecture. This perfect, professionally-designed 33-storey residential block invites comfort, and exudes modern elegance. With at least 2 bedrooms, 2 baths, generous living space and high quality finishes, you’ll enjoy a perfect setting for relaxing and entertaining.

Prices of the English homes start from RM388,000, is a good balance between quality lifestyle and affordability, especially for first-time home buyers. It is also ideally positioned to enjoy the proximity to North-South Expressway, only 10 minutes away from Penang first and second bridges. The 2-storey commercial lots situated below the residential tower will be a good complement together with the 23,000 sq.ft. Bloom Garden for al fresco dining and leisure.

The maximum housing loan tenure of 35 years is more than sufficient for borrowers to settle their housing loans before their retirement, Bank Negara Malaysia said.

“For example, if a housing loan is offered when the borrower is 25-year-old, a financing tenure of 35 years will extend to the retirement age of 60,” it said in a statement today.

In addition, increasing the loan tenure to 40 years will further add to the total cost of financing without significant improvements in the affordability of one’s monthly instalment, it said.

The central bank said this in response to a news report on requests for the central bank to review the lending guidelines in relation to the extension of the loan repayment period from 35 to 40 years.

The central bank said the implementation of BNM’s responsible financing guidelines serves to protect individuals’ interests so that they borrow within their capacity to repay the loans throughout its tenure. This is to prevent borrowers from falling into financial hardship due to excessive debt burden that may lead to foreclosures, thus undermining the objective of house ownership.

Access to financing is not the main problem confronting potential buyers of affordable houses, BNM said, adding that the fundamental issues that required resolution were affordability and the shortage of supply of reasonably priced houses.

It stated that financial institutions would continue to lend to individuals who can afford to take a housing loan, including for the purchase of their first home.

In July 2016, outstanding housing loans extended by financial institutions continued to grow at 10.1 per cent year-on-year and amounted to RM460.2 billion. About 75 per cent of borrowers or approximately 1.5 million borrowers with housing loans are first-time house buyers.

Financial institutions are responsible to establish that borrowers’ income after statutory deductions, expenditure on necessities and all other obligations are able to meet debt repayments, it said.

“This is to ensure that borrowers can continue to service their loan and have sufficient financial buffers for living expenses and deal with any future increase in financing rates and rising costs,” it added.

Source: Bernama

As controversy rages over the suggestion for developers to lend money to prospective buyers who have difficulties getting financing to purchase properties, one question remains unasked: Will lower property prices help resolve the buyers’ financing problem?

The logic is that by reducing prices, prospective buyers will be eligible to get a margin of financing that is sufficient to buy the developers’ products. For example, a prospective buyer who can only get 75% financing for a property priced at RM600,000 may not be able to afford it, but lowering the price to RM500,000 would see him seal the deal as the financing would now cover 90% of the revised price.

It could be the right thing to do, according to the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS).

“There is a mismatch between house prices and what people can afford,” PEPS president Foo Gee Jen tells The Edge over the phone. “The government has to look into this matter.”

Several property industry professionals The Edge spoke to concur.

While the intention — ostensibly to help more people own homes — is good, some quarters believe the proposal by Minister of Urban Wellbeing, Housing and Local Government Tan Sri Noh Omar earlier this month would only address the symptom rather than the cause.

“Over the years, wages have crept up slowly but property prices have risen tremendously, especially in the five years up to 2013,” says Mani Usilappan, former director-general of the Valuation and Property Services Department in the Ministry of Finance. “Will this lending [idea] help ease the burden? I don’t know, but I don’t think so.”

Wage growth aside, from the economic perspective, the slowdown is an indication that the demand curve for properties has shifted: Malaysians will only pay lower prices, compared with three years ago, for similar homes.

This is the scenario facing the local property market after the boom in the years before, which was fuelled by the ease of financing.

For the buyers, they may wait until the price drops to a level they can afford. After all, it is a buyer’s market now.

The developers, however, can either delay their launches until property prices go up or adjust prices downwards to boost sales.

Tighter margins

Cutting prices at the expense of profit margin is probably the last resort for the developers, particularly those who had bought land at the height of the property boom.

Several developers contacted by The Edge have dismissed the idea of lowering prices, saying that margins are already thin these days and prices are not so easily adjusted.

“Nobody will do that as margins today are not as high as before,” says a public-listed property developer. “Developers would rather launch fewer projects than cut their selling prices.”

More than half of the 157 developers surveyed by the Real Estate and Housing Developers’ Association Malaysia (Rehda) say they are not planning to launch any project in the second half of the year.

Another developer says for the smaller players, the price range that the market wants is not profitable. For those without holding power, they have no choice but to revise their designs for smaller units — thus, a lower price tag — to accommodate, the developer adds.

However, in some cases, there is a limit to how low prices can be adjusted, says another developer. Some local authorities fix the price range for developments when issuing approvals and lowering prices below that would require the Housing Ministry’s permission, adds the developer. “Without permission, the developer would be breaching the law. That’s why the minister’s idea could work … for marginal buyers, we can help bridge the difference when prices are at the lower limit.”

One developer says homes priced around RM500,000 are still affordable, so developers should be smart enough to do the right thing. “We won’t set prices that we don’t think can sell.”

The onus, however, cannot be on the developers alone, says PEPS’ Foo.

He adds that many developers are also trying to cope with problems such as rising land prices and compliance cost. “It is a struggle for a lot of developers. Sometimes, they even complain about having to foot the bill for utility infrastructure.”

Preventing fire

The emerging picture is that loan application rejections and insufficient access to end-financing — the main reason for lacklustre property sales for the past 3½ years, according to biannual surveys conducted by Rehda — are not the core issues plaguing the property market today. Would it be, then, that the market is overheated?

Industry observers say having developers extend loans to marginal homebuyers will not help much. “If these (loans by developers) are secured, then they are effectively acting as secondary mortgage providers. It becomes mezzanine financing,” says one corporate source. “It adds risk to the market, in the sense that the developers’ capital bases are much smaller than the banks’. As the name implies, you won’t be doing mezzanine financing if it does not carry a higher risk.”

In fact, such easy credit policies — which had raised Bank Negara Malaysia’s concern years ago and prompted the central bank to take pre-emptive measures — may exacerbate the situation at the moment by heating up the market further.

Such a scenario would be nightmarish, just like the subprime mortgage crisis in the US and the property crash that hit Japan in the late 1980s. Three decades later, Japan has yet to recover from that debacle. It would be wise for Malaysia not to flirt with the same risk.

Source: TheEdgeProperty.com.my