A soft property market is no stumbling block for Eco World Development Group Bhd which is roaring ahead with eight new commercial development projects under its Business Masterplan series.

Eco World president and chief executive officer Datuk Chang Khim Wah says that even in the toughest markets, there are still solutions.

The property developer exceeded its sales target of RM3bil with RM3.016bil secured for the financial year ended Oct 31, 2015 and says it is confident of securing RM4bil this year.

“People are definitely still buying – they may be more selective about what they buy but we see that the demand is still there.

“It is just a matter of how you present your product and convince people to come in,” he tells StarBizWeek in an interview.

It is with this in mind that Eco World plans offer business grants to buyers of its commercial property in the Klang Valley, Penang and Iskandar Malaysia this year.

“I think when you start a business, the first 12 months are definitely the most difficult.

“So this is where we think is the best time to offer them assistance.

“Rather than just being a developer that just produces buildings, we want to look at the other side of things as well,” he says.

The aim, he says, is to help make the overall environment conducive for business, as this will ultimately help boost the image of the entire development.

“For our eight new commercial projects, depending on the terms and conditions, we will be offering grants to our buyers. We encourage as many end-users to buy from us as possible, as we are offering pioneer grants.

“If the buyer, who is a end-user, sets up business within six months of taking over the keys of a new development, we will give them business grants of between 2.5% to 3.5% of their property value.

“This will be paid over 12 months from when they start their business,” he says.

The eight projects under the EcoWorld Business Masterplan Series are The Stride Strata Offices & Serviced Apartments 1 &2 @ Bukit Bintang City Centre, Eco Somerset @ Eco Sanctuary, Retail/Office and Sky Pod @ Eco Sky in the Klang Valley; Eco Bloom @ Eco Meadows in Penang; and Eco Business Park III, Eco Vantage @ Eco Tropics, Eco Palladium @ Eco Spring and Eco Galleria @ Eco Botanic in Iskandar Malaysia.

“When you start business in a new development, the visibility and the number of people coming into that area may not be very good, so we want to provide them with that initial support.

The developer also plans to provide franchising grants of up to 3.5% of the property value, to be disbursed over three months.

“If we feel that the franchise can spur business development within our projects, we will be happy to provide them with these grants.

“As for investors who buy the property and lease them out, we will be providing investment grants.

“If they can bring in a tenant that we like, and that Eco World thinks can contribute to the overall image of the development, we can give the tenant a rental subsidy for the first year.

“This makes it easier for investors to attract tenants as well, instead of leaving the property vacant.

They also plan to offer an investment grant to their customers and investors who lease their commercial units to businesses seen to add value to the project.

This will be in the form of a subsidy equivalent to 50% of one year in rental income.

Chang adds that the location of each project undertaken by Eco World is selected very carefully, and is usually located next to highways, amenities or public transport points. “We are placing the commercial developments within our projects next to highways or facing main roads, so it has high visibility and good accessibility.

“In that sense, for our customers who buy into the commercial areas, the immediate concerns of accessibility and visibility are already solved,” he says.

From past experience, he says, many who are purchasing factory units in their business parks were not just from the manufacturing sector. “We find that the trend for business parks today go beyond manufacturing.

“There are people who do catering businesses, or wedding-related businesses.

“They don’t need high visibility, they already have their own clientele, but they find that our factories are in gated and guarded areas, they get their own parking area for customers and a wide surrounding space where they can even put up fashion shows, for example,” he says.

Chang says they also want to “match-make” potential tenants with their commercial unit buyers and had set up a team to do this. “We have also evolved from traditional shop offices to what we call integrated shop offices.

“The back lanes of these shop offices, we convert them into street malls, where our businesses can hold exhibitions – they become centre courts for the offices.

All these additional services and incentives, he says, are the way of the future.

“You cannot sit in the office and wait for your customers anymore.

“You have to bring people to your projects,” he says.

The company currently has 11 projects ongoing and is expecting to complete its Eco Business Park I in Iskandar Malaysia and as well as the Eco Majestic development in the Klang Valley this year.

Among their big projects for this year, he says, is the Eco Marina in Penang which is a residential development on 300 acres of land by the sea in Batu Kawan – with over 2km facing the sea.

Behind these homes, Eco World will be building a golf course.

On one of the company’s most anticipated upcoming projects in the Bukit Bintang City Centre (BBCC), Chang says they are close to signing the heads of agreement on the project. “Negotiations are almost completed, so we will probably be launching in the middle of the year,” he says.

The BBCC project, a redevelopment of the 19.4 acre former Pudu jail site, will comprise of a mixed residential and commercial development with a proposed world-class masterplan, consisting strata offices, office towers, a hotel and serviced residences.

“It will have a transit hub – the LRT and monorail already exist and runs along the boundaries of the site.

“We will build a transit hub there that will house the stations for these, and the upcoming MRT will be only about 500m away.

“The shopping mall will have Japanese elements in it and there will be a grand bazaar with Malaysian elements in it.

“It will be a very different kind of experience, compared with any other place in Malaysia,” he says.

Chang says the company will build underground access and exits into the development and onto the main roads to ease traffic, as well as pedestrian walkways across to various points.

“It will be city-defining for us,” he says.

Source: TheStar.com.my

Rising development costs are driving property prices upwards in Penang, but affordable housing schemes may help Penangnites own their dream home.

Increasing economic development has driven up property prices in Penang, but the state government has taken measures to mitigate this and make affordable property accessible to Penangnites.

Penang is a remarkable state in many ways. With excellent medical facilities and connectivity, a vibrant cultural centre, delectable cuisine, and a wide range of enterprises, it has become the melting pot for residences, businesses, and investment opportunities. Its surge as an international tourism destination in recent years has been nothing short of being impressive. Based on a hotel survey by Tourism Malaysia, with a 45.63% increase in hotel guests from 4,502,099 (2013) to 6,847,569 (2014), Penang has the third-most hotel guests in Malaysia after Kuala Lumpur and Pahang, beating Johor, Sabah, Sarawak, Melaka, and other states.

Given Penang authorities’ ambition to transform Penang into an international intelligence city, no effort has been spared to drive development in Penang. Efforts are being made to enhance Penang’s transportation system and infrastructure, attract foreign investments, and training its local workforce, which could eventually drive the increase in population, as well as create demand for consumer goods and property in the state.

The surge in tourism and economic activity has resulted in a burst in growth for property prices, posing a challenge to Penangnites to own homes. However, the Penang state government had introduced several cooling measures since December 2013.

Cooling Measures

A moratorium for low and middle-income developments, where the state government will not allow certain types of properties to be sold within a certain period of time, was among one of those measures to prevent property speculators from buying those properties at a cheap price, and selling them two to three times higher than their original value.

Read more here – iProperty Focus

Another proposed high-rise development by Palmex Industries Sdn. Bhd. in Sungai Ara, Penang. It is located off Persiaran Kelicap, next to the company’s ongoing Stramax Residences gated and guarded housing scheme.

This development comprises two blocks of 35-storey condominium with 320 residential units.

More details to be available upon project launch.

Project Name : (to be confirmed)
Location : Sungai Ara, Penang
Property Type : Condominium
Total Units: 320
Land Tenure: Freehold
Indicative Price : (to be confirmed)
Developer : Palmex Industries Sdn. Bhd. (IOI Properties)

Location Map:

Bank Negara Malaysia (BNM) said a maximum loan tenure of 35 years is “more than sufficient” for borrowers to settle their housing loan by their retirement age.

It said increasing the loan tenure will further add to the cost of financing without significant improvements in the affordability of the borrowers’ monthly instalments.

In July 2013, the central bank capped the maximum loan tenure at 35 years for the purchase of residential and non-residential properties as part of its responsible financing measures.

In a statement yesterday, BNM said for a new borrower who takes a loan of RM42,000 for 35 years at 4.65% per year and can get 90% margin of financing, the equated monthly instalment (EMI) will be RM182.42. If the loan tenure is extended to 40 years, the EMI would be RM173.60. This means an additional cost of RM8.82 per month.

The total cost of financing for 35 years, meanwhile, stands at RM76,616.40. Choosing a longer tenure loan of 40 years will result in an additional cost of RM6,711.60 to a total cost of financing of RM83,328.

Recognising that the overall economic slowdown may impact housing affordability, BNM said it has been engaging the various state authorities in the issue of financing for affordable homes. The government is forecasting the Malaysian economy to grow between 4% and 4.5% this year, down from an earlier forecast of between 4% and 5%.

“The central bank, together with the state governments and the banking industry, is working to align the criteria used in approving house financing and improving the affordability of the applicants,” BNM said.

The central bank also said it is important for borrowers to disclose accurate material information about their financial position, including their credit history, when applying for house financing to ensure objective assessment by financial institutions.

“The assessment by banks on borrowers is partly to assist [the latter] in ensuring that they have the capacity to service the loan throughout its tenure. The assessment takes into account the applicant’s income after statutory deductions, expenditure on necessities and all debt obligations from banks and non-bank lenders.

“This is to ensure that borrowers can continue to service their obligations, have sufficient financial buffers for living expenses, and are able to protect themselves against rising costs and unexpected adverse events, including the foreclosure of homes,” it added.

BNM also advised borrowers to compare housing loan packages offered by various financial institutions for the best price. “Some banks have introduced housing loan products such as first home schemes for specific target markets, including young married couples, youths and low-income groups.”

The central bank also pointed to the Credit Counselling and Debt Management Agency, which it said has been providing advice to applicants to rationalise their debt levels and educate them on prudent financial management.

For those who do not have the capacity to own a house, BNM said they may consider the option to rent.

Source: TheEdgeProperty.com.my

Due to the shortage of resources in the state, it is only rational for the state government to use reclaimed land to finance the infrastructure projects, according to two key business organisations in Penang.

Real Estate & Housing Developers Association (Rehda) Penang chairman Datuk Jerry Chan said it was the only currency available as the yearly revenue of the state could not pay for such infrastructure projects.

“The justification is that the reclamation works and the infrastructure projects will generate jobs and business for Penangites, offsetting some of the negative consequences of the reclamation.

“The state government should look into other ways for the affected fishermen to generate an income from fish farming activities.

“Lacking funds and ready land bank should not be used as an excuse to stunt Penang’s economic growth,” he said.

Chan spoke recently in response to the implementation of the Penang Transport Master Plan (PTMP), which would see the development of a light rail transit (LRT) system on the island and the Pan Island Link Highway, deemed to be high-priority projects under the PTMP.

Financing the projects under PTMP would involve reclaiming two man-made islands, located near Permatang Damar Laut and Teluk Kumbar, spanning 930ha and 566ha.

The PTMP has raised concerns from certain quarters, particularly from fisherfolk.

The PTMP is a result of the request for proposal (RFP) called by the state government after the Transport Master Plan Strategy Report was unveiled in 2013. The strategy report has recommended plans till 2030, estimated to cost RM27bil.

The original plan was put up with inputs from AJC Planning Consultants Sdn Bhd, Halcrow Consultants Sdn Bhd and Singapore Cruise Centre.

Penang Chinese Chamber of Commerce (PCCC) president Datuk Seri Choot Ewe Seng said the state government needed to resolve the traffic congestion problems as soon as possible, as every minute or hour spent trapped in a traffic jam was a loss in economic terms.

“The business community and the public can only benefit from the project. The advantages will outweigh the cost of reclamation.

“However, the state government must ensure that the cost of riding the LRT is minimal and not a burden to the people,” Choot said.

Property valuation and management company CA Lim & Co principal Lim Chien Aun said the state government should set up a fund using the proceeds raised from selling the reclaimed lands to subsidise the maintenance costs of the proposed infrastructure of the PTMP inclusive of the LRT.

“Otherwise the cost of maintaining the LRT would have to fall on Penangites.

“The LRT qualifies as a state project as reclaimed land owned by the state will be auctioned off to fund its implementation,” Chien Aun added.

However, not all are in favour of the move to use reclaimed land to fund infrastructure projects.

Penang Island City Council councillor Dr Lim Mah Hui said the PTMP was planned till 2065. “The plan overestimates the population growth in Penang, compared with the Department of Statistics population projection.”

Lim said the PTMP focus should not be on building roads and tunnels to move cars, but on moving people through public transport.

“The original TMP Strategy Report envisaged 60% to be spent on roads and tunnels and 40% on public transport. This priority should be reversed with public transport accounting for at least 70% to 80% of the total budget,” he said.

Lim said there were faster and cheaper ways of reducing traffic congestions that had been successfully practised in other countries.

“For example, Penang’s traffic congestions are mainly concentrated during peak hours. These can be reduced considerably by imposing charges on vehicles entering the city during peak hours,” he said.

Meanwhile, state local government, traffic, and flood mitigation committee chairman Chow Kon Yeow said the rapid growth of towns such as Batu Kawan, Butterworth and Seberang Jaya would boost Penang’s population and the demand for an integrated transportation system.

“The Department of Statistics projects a population of 1.86 million for Penang by 2030, the anticipated higher number of 2.45 million people by that year (as projected in the plan) was derived by applying the same average annual population growth rate of 2.3% (which was recorded in the period of 2010-2020),” he said.

Chow said before the move to charge motorists entering the city during peak hours or ’congestion pricing’ could be implemented, there must be an  effective public transport system in place.

“Singapore for example only enforced electronic road pricing (ERP, an electronic toll collection scheme for congestion pricing) in 1998 after building its first MRT line in 1982,” he added.

The PTMP proposes seven public transport lines for the island and the mainland, including two LRTs, three monorails, heritage tram and bus rapid transit, which adds up to a total of 151km of public transport network.

“There are eight highways, including the undersea tunnel, planned under the highway network, in addition to several local road enhancements in Seberang Perai, which adds up to 71.5km of highways and roads proposed under the PTMP,” Chow said.

Source: TheStar.com.my