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/// COVER STORY

Riverson Walk Be Inspired. Be Different The Only Themed Boutique Retail Shops in East Malaysia

APR 2014

ISSUE 53 RM5.90

/// HOT TOPIC Sandakan a Town Fuelled by the Golden Crop Coupled with Tourism Wealth /// MICHAEL YEOH 4 Sure Ways to Get Your Loan Rejected

High Street of Penampang • What is Your Definition of Affordability? • Sejati Walk Welcomed by Over 90% Take Up Short After Launching • 70% Sold on Ashton Tower Launching Day • Property Hunter Gives Back to the Community


06  07 | Cover Story /// Contents

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What’s inside... Disclaimer, Permission & Reprints This publication is not an investment advice. It is intended only to inform and illustrate.

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Hot Topic Sandakan a Town Fuelled by the Golden Crop Coupled with Tourism Wealth

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Cover Story Riverson - Gleneagles , Kota Kinabalu’s Medical and Premium Lifestyle Hub

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Exclusive Interview Sandakan’s Property Driving Force Since 1979

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Feature Property Showcase High Street of Penampang

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Hot Topic Property Hunter Gives Back to the Community

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Hot Topic Property Hunter Adopts New Property Search Function on Facebook

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Hot Topic Property Hunter E-Magazine

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Special Feature Development Milestones

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Hot Topic Sabah a Top Travel Hotspot but Lacking Tourism Properties

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Feature Property Event Beaufort Flood Relief Efforts by Kimis Development Sdn Bhd

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Hot Topic What is Your Definition of Affordability?

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Feature Property Event Property Hunter Expo Kota Kinabalu Showcased Top-Notch Properties

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Feature Property Launch Sejati Walk Welcomed by Over 90% Take Up Short After Launching

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Feature Property Launch 70% Sold on Ashton Tower Launching Day

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Contributor: Dr Daniele Gambero Affordable Housing and the Malaysian Middle-Class: The Unmatched Demand

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Contributor: Michael Yeoh 4 Sure Ways to Get Your Loan Rejected

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Contributor: Ahyat Ishak Property Bubbles (Part 2): Lessons from my Property Exploration in Spain & Portugal

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Victor Yong Sam Lee

Exclusive Coverage SHAREDA Property Hunter Expo Sandakan 2014

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12 Riverson - Gleneagles , Kota Kinabalu’s Medical and Premium Lifestyle Hub

Shopping. Does it make your heart skip a beat? Do you get a sudden surge of happiness?

36 Sabah a Top Travel Hotspot but Lacking Tourism Properties

Sabah recorded an increase in tourist arrivals last year despite several security related incidents that happened

50 Property Hunter Expo Kota Kinabalu Showcased Top-Notch Properties

The 2014 Property Hunter Expo (PH Expo) took place last weekend at the Sabah Trade Centre in Kota Kinabalu.

Sneak Peek of May Issue

What Has Tawau Got To Offer For Property Investors? Feature Interview

Step Into The Shoe of A Seasoned Investor Turn Developer

Hot Topic

Apartments and Condominiums Now Trending in Sabah

Hot Topic

A Closer Look At The Northern Corridor of Kota Kinabalu


/// Exclusive Coverage

SHAREDA Property Hunter Expo Sandakan 2014 Guest of Honour

Message from

Message from

SHAREDA President (2013-2015)

SHAREDA Council Member (2013 - 2015) Organising Chairperson of SHAREDA Property Hunter Expo 2014 Sandakan

Mr. Francis Goh Fah Shun, A.S.D.K.

Message from

Y.B. Datuk Au Kam Wah ADUN N45 Elopura

I would like to personally welcome all exhibitors and visitors to the SHAREDA PH Expo 2014 Sandakan, which is jointly organized by the Sabah Housing & Real Estate Developers Association (SHAREDA) and Maxx Media (S) Sdn Bhd. I would like to thanks SHAREDA for inviting me to grace and officiate the opening ceremony of this event which aims to bring investors and home buyers to property developers with the ever growing demand in premium property. Being held in Sandakan for the second year, I hope that this event will help contribute to the booming real estate industry in Sandakan. The city is growing and becoming more prosperous, not only as the main eco-tourism destination in Sabah, but also as an up and coming commercial centre. With the centre of gravity moving towards suburban areas such as Mile 3, Mile 4, Mile 6 and Mile 8, the property development scene is evolving and both homebuyers and property investors are expecting higher quality products. To maintain this steady growth in the market, I would like to remind our local developers to ensure high quality control in the construction progress of the buildings. This is of utmost importance to upgrade the architectural appearance of the city, improve safety and durability of the building and to fulfil the needs and aspirations of the community. Since the Eighth Malaysia Plan, the government has spent RM5.46 billion to build affordable homes for the people. In order for the plan to materialize, there will be implementation in the next five years based on several housing schemes, including the MyHome, PPR for civil servants and those on the low and moderate income brackets. I would like to encourage more local developers to commit to building affordable homes as a means of fulfilling its corporate social responsibility rather than profit motivated, despite marketing risk being a constant issue in such projects. In regards to affordable homes, I would like to congratulate SHAREDA on their work of building more low to medium range priced homes that would enable people from the lower income groups the opportunity to own their own home.

It is my pleasure to welcome all exhibitors and visitors to the SHAREDA Property Hunter Expo 2014 Sandakan, an iconic property showcase jointly organised by the Sabah Housing And Real Estate Developers Association (SHAREDA) and Maxx Media (S) Sdn Bhd. On behalf of the SHAREDA Council Members and the Organising Committee, I would like to extend our sincere gratitude to the Guest of Honour, Y.B. Datuk Au Kam Wah, ADUN N.45 ELOPURA, for gracing and officiating the Opening Ceremony of the inaugural SHAREDA PH Expo 2014 Sandakan. The SHAREDA PH Expo Sandakan marks another year has passed with achievements and challenges shouldered by the real estate and housing industry. Despite the speculation that the property industry in Sabah will be adversely affected by the government cooling measures and stringent regulations by Bank Negara and local financial institutions, I strongly believe that Sabah property market will continue to grow and gain momentum this year. SHAREDA has raised various emerging issues affecting our industry, especially in the matter of building more affordable homes in a more sustainable manner among other issues. SHAREDA is looking forward to a stronger level of partnership with the government to build more affordable homes in Sabah, particularly through collaboration between JPN, PR1MA Berhad and local government linked agencies such as LPPB, KKIP, SUDC with SHAREDA. Besides that, SHAREDA has pledged to the Ministry of Local Government and Housing (MLGH) that more than 10,000 units of affordable homes located in different districts in Sabah will be built by SHAREDA members in the next five years.

Thank you.

Furthermore SHAREDA is undertaking a close-knit working relationship with the relevant Authorities/Government Ministry/Departments in the special task force committee spearheaded by MLGH. This special task force will assist the Government to formulate various incentives and schemes, to urge and encourage developers to build more affordable houses in Sabah. We, in SHAREDA will look forward to a closer collaboration with the Ministry and relevant Authorities concerned for the implementation of affordable home schemes in Sabah to be realised.

Y. B. Datuk Au Kam Wah

With these notes, on behalf of SHAREDA, I wish to thank Maxx Media (S) Sdn Bhd once again to work in close collaboration with SHAREDA and its members to showcase their properties during the Sandakan expo.

Due to the increase of property prices in Sabah, it is becoming more and more difficult for those earning less than RM2,500 per month to purchase a house. Including the units to be provided by SHAREDA, there would be almost 50,000 affordable homes to be built across the state in the coming years. I wish SHAREDA and Maxx Media the utmost success in the SHAREDA PH Expo 2014 Sandakan and I continue to applaud and support their effort in promoting and growing the property and real estate industry in Sabah.

ADUN N45 ELOPURA

Mr. Quek Siew Hau

It is my pleasure to welcome all exhibitors and visitors to the SHAREDA Property Hunter Expo Sandakan 2014. This will be the third year that this exhibition will be held here. The SHAREDA Property Hunter Expo aims to showcase the vibrant property developments in Malaysia and beyond. Despite the cooling measures from the government, the local property market still remains strong with the influx of properties being built across Sabah. The property prices in Sandakan have increased throughout the years and we foresee that it will further rise in the future so this is the perfect time to purchase properties. However, I would like to advice buyers to be cautiously aggressive. Don’t be too speculative and be sure to buy within your means. If buyers can afford it I would also like to encourage them to purchase landed properties because it will become rare in the future. The face of Sandakan will further transform in the future and the centre of gravity is moving towards Mile 4, Mile 6 and Mile 8. This is a natural process and the shift of population will see more development and commercial activities concentrated in that area. In 2014, Sabah is expected to receive the arrival of approximately 3.8 million domestic and foreign visitors. With the Sandakan Airport due for completion by the end of this year, the city will definitely see more tourists and foreign investors coming in. This will help contribute to the economic growth of the state. We hope that events such as the SHAREDA Property Hunter Expo will create more awareness about what Sandakan has to offer. The event will highlight over 56 booths consisting of developers, property agents and banks. On behalf of SHAREDA, I would like to thank you for your continuous support. May you have a fruitful visit to the SHAREDA Property Hunter Expo Sandakan 2014!

Quek Siew Hau SHAREDA Council Member (2013 - 2015) Organising Chairperson of SHAREDA Property Hunter Expo 2014 Sandakan

Wishing everyone a fruitful exhibition and property shopping. Thank you.

Francis Goh SHAREDA President (2013-2015)

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/// Hot Topic

/// HOT TOPIC

Sandakan a Town Fuelled by the Golden Crop Coupled with Tourism Wealth development in Mile 3, Mile 4, Mile 6 and Mile 8 more and more people have been gradually moving there. The environment there is better and people can get nice properties which are also affordable.” Because of the boom at this area which is also known as the Golden Belt, a lot of new developments are coming up to cater to the shift of population. And because there is an increase

many landed properties and low rise apartments are doing well too.” Tourism Boom When the war ended, Sandakan town Sabah received a 17.6% increase in tourist arrivals or 3.38 million visitors in 2013 compared to the previous year, the highest growth ever recorded. And in 2014, with the Visit Malaysia Year campaign on a roll, the

Thriving Mile 4, Prima Square and Bandar Indah, Sandakan

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lso known as Little Hong Kong, Sandakan is the second-largest city in Sabah after Kota Kinabalu. It is located on the east coast of the island and is known as the gateway for ecotourism destinations in Sabah. In the early years, Sandakan served as a major port for early settlers to Sabah. Sandakan is a captivating town with its very own charm, and it has an intriguing history that traces back to the early 1870s. In the early 1900’s modernization began in Sandakan with the building of rows of corrugated iron roofs brick shops. Roads were metalled and by 1912, motor cars had made their appearance on the roads of Sandakan The timber industry which made its debut in 1885 was to become Sandakan’s biggest money earner and the timber was marketed mainly to Hong Kong and China. The Sulus and the Bajaus mainly concentrated on fishing, collecting forest product and trading. It was a thriving little town, but all business came to an abrupt

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end when the Japanese invaded Borneo during World War II in 1945 Rising from the Ashess When the war ended, Sandakan town was nearly totally destroyed, partly from the bombings in the process of liberation and the rest. As a result, when North Borneo became a British Colony in 1946, the capital was shifted to Jesselton, now known as Kota Kinabalu. Three years after the war, nearly the whole of Sandakan town site was reoccupied. Businesses were revived and facilities such as the “Padang” (field) and the Sandakan Recreational Club were also restored. The timber industry was reorganized and resulted in benefiting the timber businessmen of Sandakan as well as boosting the local economy. With an estimated population of 222,817 people, Sandakan’s economy today has diversified into the agricultural base especially in the oil palm industry. It has also ventured into

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the tourism industry, concentrating on ecotourism and wild-life conservation. As such, Sandakan is now usually referred to as “The gateway to Borneo’s Wildlife.” The Shift In recent years, Sandakan has moved the centre of gravity from the city centre towards areas such as Mile3, Mile 4, Mile 6 and Mile 8. According to Quek Siew Hau, Managing Director of Wah Mie Group, this is a natural process. In the olden days there was not much development in the outskirts of town, but many businesses have shifted their operations to areas such as Bandar Ramai-Ramai, Bandar Leila, Bandar Nam Tung, Bandar Maju, Bandar Kim Fung, Bandar Pasaraya, Bandar Letat, Bandar Indah Jaya, Bandar Utama, Bandar Perdana, Bandar Labuk Jaya, Bandar Sibuga Jaya, and Prima Square. Quek said, “20 years ago everyone liked to stay close to the city and their business. But due to the

With an estimated population of 222,817 people, Sandakan’s economy today has diversified into the agricultural base especially in the oil palm industry. It has also ventured into the tourism industry, concentrating on eco-tourism and wildlife conservation. As such, Sandakan is now usually referred to as “The gateway to Borneo’s Wildlife.”

of residential areas, the commercial activities have also rise and is now more vibrant than the city centre itself.

state Tourism, Culture and Environment Minister Datuk Panglima Masidi Manjun expects an increase up to 3.8 million visitors.

“Although the main city centre is not very popular anymore, prices of residential properties have dropped a lot. However the commercial activity is still going strong so prices of commercial properties are still good,” said Quek.

To cater to this influx of arrivals, the RM170 million Sandakan Airport (LTS) upgrade is underway and is expected to be completed by the end of this year. Deputy Transport Minister Datuk Ab Aziz Kaprawi said the project was aimed at providing comfort to passengers.

He added: “Prices are better than KK (Kota Kinabalu), but still not cheap. And this is mainly due to the increase of land prices and building cost. However, a lot of local developers are still building

“Upgrading includes work on the terminal facade, Central Utility Building, internal and external finishing for the walls, ceiling and floors, fixed

Sandakan Harbour Mall rising above Sandakan downtown bridge, walkway/ramp, land works, as well as drainage. “To increase the efficiency of operations and passenger safety, the project also involves additional checkin counters, immigration counters, closed-circuit television cameras, new lifts and escalators,” he said. The upgraded airport is expected to accommodate around 1.5 million passengers per year compared to 800,000 at the moment due to its huge capacity. The project is proceeding smoothly and the government is committed to complete it within the expected period. Commercial Growth In January 2003, the Sandakan Harbour Square (SHS), an urban renewal project, was launched in an attempt to revive the town centre as the commercial hub in Sandakan. It features a shopping mall, shop lots, a new central market and fish market, and hotels. The new RM500 million commercial focal point the Sandakan Harbour Mall is poised to further strengthen the town’s position as a major commercial and tourism hub in Sabah. SHS aims to be the enabler and catalyst for Sandakan’s

economic growth, business activities and urban development. The Sandakan Harbour Mall and the Four Points by Sheraton Hotel, which are in Phases 3 and 4 of SHS is making yet another new era for Sandakan town. Since then a lot of new shop lots have been coming up, and Sandakan is also expecting a brand new street mall, Sejati Walk in Mile 7. Estimated to be completed in 2017, this twostorey mall will consist of 340 retail units, plus the first food street in Sandakan. As the project is located about 10 minutes away from the airport, it aims to also be a tourist driven centre with various activities and festivals expected to be held throughout the year. The second phase will also include Sejati Walk 2, hotels, a large supermarket and a wet market. These efforts will hopefully help revive the city to its former glory and further strengthen Sandakan’s position as Sabah’s second biggest urban metropolis and as one of the key tourist and economic destinations in the Malaysia. Increase of Foreign Investors The leisure properties development related to tourism industry will be the

The latest highrise development, Sri Utama Condominium developed by IJM Land in Bandar Utama

PR1MA billboard seen along Sandakan’s highway upcoming trends in Sabah especially in Sandakan and this is expected to entice more foreigners to reside in Sabah under the Malaysia My Second Home (MM2H) Programme. The Ministry of Tourism, Culture and Environment Sabah is working hand in hand with SHAREDS to

boost the high-end tourism market in Sabah and to produce more leisure properties to attract more MM2H applicants to stay and spend monies and make Sabah as their second home. This will help stabilize the slowdown of the property sales in the local market.

Quek predicts that investors from China will definitely play a role as there is a lot of interest from them in Malaysia especially since our country is located close enough to China and communication is easy as a lot of locals can converse in Chinese.

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/// Cover Story

Riverson Walk Be Inspired. Be Different

/// COVER STORY

The Only Themed Boutique Retail Shops in East Malaysia

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hopping. Does it make your heart skip a beat? Do you get a sudden surge of happiness? If your answer is yes, then you will be glad to know that the shopping scene in Kota Kinabalu is about to get even moreexciting, especially with the arrival of Riverson Walk. The one of a kind boutique retail mall is schedule to be completed by the end of 2014! Located in the up and coming Southern City Hub along the coastal highway, this boutique retail mallwill be a onestop lifestyle center unlike any other in

Kota Kinabalu.It will be the first mixedintegrated development in Malaysia that incorporates retail / commercial units with Asia’s largest medical chain, the Gleneagles Kota Kinabalu Medical Centre. At the Riverson Walk, quality exceeds quantity. The three-level shopping mall has distinctive architectural and interior features and a well-planned layout. Each floor is meticulously designed and boasts of a unique theme including Asian, Middle Eastern, Rustic English and Continental. And to complement the elegant and

Jesselton Twin Towers

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revolutionary design, the boutique mall will also have features such as modern artwork displays, and light fixtures with soothing and dimming effects, which will definitely elevate your shopping experience. 247 retail outlets ranging from 100 square feet to 937 square feetare available for sale and lease. For Riverson Corporation, the important thing is the comfort, ease and to provide maximum level of excitement for both business owners and shoppers.

Ashton Tower

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/// Cover Story

Riverson Walk iswhere allvibrance and indulgences gather – from an eclectic mix of lifestyle retail escapade, fashion extravaganza, entertainment outlets, to cafes and dining galore at The Walk’s central plaza. The central plaza is designed as the core or heart of social centre of the mall. It is a place to hang-out, to be seen, to connect with people and/ or to enjoy and revelthe ever pulsating scene and ambience, while relishing over scrumptious food. The Walk is the place to be! With other new developments such as the Imago Mall and Sutera Avenue located closed by, the entire Southern City Hub is expected to be the next focal destination. This entire area is deemed to be Kota Kinabalu’s very own Orchard Road. Conveniently a stone’s throw away from the city centre and the central bus terminal, Riverson will definitely be the place for both locals and tourists to convene and enjoy anew shopping experience! Photo by Rustam Razali aka Ankol Tom

At the Riverson Walk, quality exceeds quantity. The three-level shopping mall has distinctive architectural and interior features and a wellplanned layout.

For enquiries: visit www. riversoncorp.com/contact.html, call +6088-247 299/248 299 or email info@riversoncorp.com. Central Plaza of Riverson Walk

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/// East Malaysia Property News

Plans to Expand Kuching Sentral Awaiting Approval

EAST MALAYSIA

View of Likas and Likas Bay from Kurnia Perdana Apartment

PROPERTY NEWS

Artist impression of Kuching Sentral There are plans to expand the Kuching Sentral bus terminal pending approval to acquire a nearby land.

Keep track of the latest property and real estate news plus reviews in the property market in Sabah and Sarawak

Sabah Needs More Five-Star Hotels

Sandakan Airport Upgrade to Be Completed End of 2014

“We are planning to extend our facilities to cater to the increasing number of users in the future,” said Permodalan Assar Sdn Bhd (PASB) board of directors chairman Tan Sri Bujang Mohd Nor yesterday. He said talks were underway with the Defence Ministry about taking over the plot next to Kuching Sentral currently occupied by an army camp.

Sandakan Airport

Sutera Harbour Resort Minister of tourism, culture and environment Sabah Datuk Panglima Masidi Manjun has called on local companies and entrepreneurs to to take up he challenge of providing five-star accommodation and other tourism-related services to cater to the growing number of high-end tourists coming to Sabah. He said the state is in a dire need for more upscale hotels to meet the demand of holiday makers such as those from China whose buying power is high and on the rise. He noted the occupancy rate of highend hotels in Sabah was the highest in the country last year with 92%.

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And with tourist arrivals expected to increase, demand for hotel rooms will remain strong. The tourism industry is an important economic sector he said. In addition to hotels, the state also needs to offer more variety of related service including, food and beverage, plus entertainment. This will keep Sabah competitive compared to other destinations in the region. “Businesses need to keep reinventing themselves and give new attractive offerings, so that tourists will keep coming back for more,” he said adding that local businesses should take advantage of the booming tourism industry.

The Sandakan Airport upgrading project is proceeding smoothly and expected to be completed by the end of this year. Upgrading work has reached 53.27% as of mid February. Deputy Transport Minister Datuk Abdul Aziz Kaprawi, who visited the RM170 million project assured that it would be completed on time as it is being closely monitored by the ministry. The upgraded airport is expected to accommodate around 1.5 million passengers per year compared to 800,000

Property Sector to Sees Rebound

at the moment due to its huge capacity. “The project is proceeding smoothly even though we have received complaints regarding the uncomfortable environment being endured by passengers presently. “The uncomfortable situation is only temporary while awaiting for the project to be completed soon. We hope the public, especially the passengers, can bear with the intensified work of the airport upgrading project as the government is committed to complete it within the expected period,” he said.

He continued by saying if the suggestion was given a positive feedback from the ministry, he hoped the state government would also give PASB the green light to carry out this plan. “We also developing a long-term plan to introduce the same concept of Kuching Sentral to other towns in Sarawak.” Bujang requested the state government to give exclusive mandates to build and handle bus terminals in other places around Sarawak as the development of more bus terminals could provide more benefits to the

users and increase the socioeconomic level of the people. PASB plans to include development of bus transit areas like the one at the Sri Aman junction and construction of rest and relax stops at strategic locations along the Pan Borneo highway. Since its completion in March, 2012, Kuching Sentral has garnered much attention and interests from state and government agencies in Peninsular Malaysia which are considering this operating system. PASB has been actively involved in property development and projects in places like Samarahan, Sri Aman, Lubuk Antu, Sarikei, Bintulu and Miri. “We have always been on the lookout for ideas and concept which suits well with current trend and development pace in Sarawak. Kuching Sentral is a one-stop centre which combines public land transportation facility with shopping centre, which is considered a new concept here in Sarawak,” said Bujang during the launch. The development of the bus terminal costs about RM90mil and it has benefitted not only

local residents but also people from outside Sarawak who rely on bus transportation as a means of getting around. Bujang said the current location of Kuching Sentral was strategic and helped reduce traffic congestion in the city. This also boosted economic activities in the surrounding areas. “Kuching Sentral is the only public terminal in Sarawak which employs a computerised ticketing system whereby the boarding passes and collection of payments to all bus companies are managed by the terminal management,” he said.

The property sector could see a rebound by the second half of the year, as buyer and investor confidence is expected to improve after a brief lull, experts said. Malaysian Institute of Estate Agents president Siva Shanker admitted that the cooling measures announced in Budget 2014 have sent the property market into “a tailspin”. “I believe there will be some consolidation in the first and second quarters of this year, whereby the market will remain soft,” he said, adding that buyers will remain cautious in the first half of the year. “By the third quarter, the market will find its own level. Malaysians have a short memory and activities will start picking up,” he quipped. Siva said he expected full confidence to return to the local property market in 2015. On whether there would be any impact to the sector once the goods and services tax (GST) is implemented in April 2015, he said: “It will depend on how the education and acclimatisation process is done. If done well, people won’t panic.” One industry observer concurred, saying that he expected the property market to remain soft “for just a while”. “It’s a normal thing. When some policy is announced, it creates a kneejerk reaction, causing people

to adopt a wait-and-see approach. But after a while, they get used to the changes and life goes back to normal,” he said, adding that he expected the local property sector to “start picking up” by the second half of the year. HwangDBS Vickers Research, meanwhile, said it expected the GST to have an impact on commercial properties. “Residential properties, while exempted, may be affected by higher building material costs,” it said in a report yesterday, adding that the various cooling measures will likely be felt at least up to the first half of 2014, as “both buyers and developers turn more cautious”. “Sales of landed properties, affordable housing and those in prime areas, nevertheless, should remain resilient, given pent-up demand.” Among the cooling measures are a higher real property gains tax of 15% to 30% for disposals within five years and the discontinuation of the developer interestbearing scheme. HwangDBS said it expects property sales this year to decline by 5% to 10% due to slower volume. However, it added that property prices are likely to hold as a result of cost-push inflation. “House price growth may moderate to 3% per annum, as rising new supply meets weaker demand.”

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/// East Malaysia Property News

Taib Touches on Development and Systematic Planning

Sabah Can Be ‘Dubai’ in BIMP-EAGA – Fernandes

Taib’s short speech was a far cry from what he told the audience at a Chinese New Year gathering held by the Chinese Chamber of Commerce and Industry on Monday night.

Permodalan Assar Sdn Bhd chairman Tan Sri Bujang Mohd Nor (right) presenting a memento to Taib at the opening of the Kuching Sentral regional bus terminal After several days of holding forth about his retirement, it was very much back to business as usual for Chief Minister Tan Sri Abdul Taib Mahmud. Opening the Kuching Sentral regional bus terminal here yesterday, he made no mention at all of his imminent departure from office. Instead, he spoke about development and the need for systematic planning to benefit the people, themes he usually touched on during official functions. “Kuching is the hub of transportation in the state. From here people can travel by bus all the way to Sabah, Lawas, Limbang, Brunei and west Kalimantan. “Whatever development we plan, we must take into account our growing population which is becoming more prosperous and mobile, as well as our connections with our neighbours,” he said. Taib also said Kuching Sentral was designed to provide wider services to passengers travelling from one place to another, including enabling them to plan

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their journeys with an information display system and other amenities in place. In other words, he said, passengers could see which bus they want to take and check destinations and departure times, while the shopping outlets in the terminal enabled them to buy goods and necessities while waiting for a bus. “Every sector of our community has to be planned with a system to achieve mobility for our people because people who are more prosperous will always be more mobile. “Then we have to make them able to plan ahead on how to go about doing what they want to do. This terminal, in a small way, shows how we are able to plan for the people in manifest details, even though the people do not realise it,” he said. He added that with Kuching’s population at 800,000 and growing, more care and foresight would have to be given to planning in order to ensure prosperity and convenience for the people at all times.

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Then, he had said that he wanted to retire 10 years ago after formulating the policy that would become the Sarawak Corridor of Renewable Energy (SCORE), but was persuaded to stay on by his PBB colleagues. “Now SCORE is far exceeding our expectations. Today, I say to you it is time for me to retire. I am confident my successors can make Sarawak a success,” he said. Taib is expected to meet Head of State Tun Muhammad Salahuddin on Saturday to convey his intention of stepping down as Chief Minister.

Mammoth RM1 Billion Project to Help Transform Miri Into a Resort City

Work to Upgrade Miri Airport to Commence This Year, Says Lee

do renovation … so my preferences would be the Terminal Two,” he said. Fernandes, who is on a day’s working visit to Sabah, said that he had met up with Chief Minister Datuk Seri Musa Aman, and the state’s premier leader seemed “positive” on the matter.

Tan Sri Tony Fernandes featured on the cover of Forbes Asia Sabah can be the “Dubai” of the Brunei, Indonesia, Malaysia, Phillipines – East Asean Growth Area (BIMP-EAGA), if Tan Sri Tony Fernandes gets to fulfill his plans. With a plan to expand the low cost carrier AirAsia operations, and bringing in AirAsia X, and adding more aircraft here, the budget airline’s chief executive officer (CEO) hopes to develop the Terminal Two Airport, which he believes will also boost the tourism sector in the state. “When we first started, we brought some 20,000 passengers to Sabah. That was 12 years ago. Today, we are thinking of bringing in 13 million passengers in the next five years, so we need to find a solution to the terminal issue. There are two options – one we develop Terminal Two (which currently operates as the low cost carrier terminal) or build a new terminal. We do not want to go to the Kota Kinabalu International Airport Terminal One because it will be overcrowded and passengers have to pay RM65 for the airport tax. “Why do Sabahans or tourists need to pay more when our main objective is to offer them cheap fares so travelling is affordable. To me, personnaly, just because it (Terminal Two) is an old building, why tear it down when you can

“He (Musa) has been very supportive of our operations in Sabah, right from the very beginning, and we are forever grateful with the RM1 million loan he offered us to start off the business. Today, we believe he had played a great role throughout AirAsia’s operations in Sabah. “However, we can only make plans but it is up to the authorities here to decide, and we hope to hear from them soon,” he said, adding that the north wing side of the airport would be a suitable location for the Terminal Two expansion project. Touching on AirAsia X, Fernandes said it would be the final piece of Sabah’s adventure, with the hope to make the state capital as the centre between North Asia and Australia, a hub for most locations in Indonesia, and flying to other parts of the world such as Melbourne, Tokyo or Shanghai and Beijing. “This will turn Kota Kinabalu the Dubai for BIMP-EAGA, where everyone can fly to any part of the BIMP-EAGA area with AirAsia or AirAsia X. “We want to make Sabah stand out and we want to make it finacially attractive. I came across a couple from China at the hotel lift. When I asked them why they came to Sabah, they told me because it was cheap. When they go back, they will tell their friends and come back here. This is what we want to offer potential tourists, and make Sabah as the best destination,” he said.

Miri Airport, Sarawak

Miri, Sarawak Miri is set to have a new business, recreational and leisure centre, a water theme park befitting its status as a resort city. The proposed mammoth project will help to transform Senadin in the northern part of the city not only into a lively residential estate but also a business, recreational, leisure and educational centre. The first of its kind and to be the largest theme park in East Malaysia, the project is the brainchild of prominent businessman Datuk Lau Siu Wai. Sprawling over 500 acres close to Curtin University, it will exceed Sunway Lagoon in terms of size. On the drawing board are giant waterslides, water tubes, swimming and wading pools. Chief Minister Pehin Sri Abdul Taib Mahmud is expected to perform the earth breaking

ceremony of the project this Sunday. The ceremony will be nostalgic and historic as it will be done during Taib’s last working visit to Miri as chief minister. The proposed project will not just be a theme park but also a new resort township of sorts because it will feature two hotels, six blocks of condominium towers, a commercial centre and a mega mall boasting two million square feet of retail space. The mammoth project will cost about RM1 billion and will be developed in three phases. Phase I is slated to kick-off after the earth breaking ceremony, and the whole project is scheduled to be completed in five years time. An old folk healthcare centre will also be thrown in. Once completed, this project will transform Miri, particularly Senadin,

into the ‘Venice of the East’, complete with lakes and water canals for canoes and small boats to ply all the way to the South China Sea. Miri Housing Group envisioned that this place would eventually become the hub for water sports, kayaking and canoeing activities. The construction of a water theme park in Senadin is timely and appropriate as the economy of Miri is developing fast, especially in the northern part of the city.

The Transport Ministry is expected to start work to upgrade Miri Airport by this year to better serve passengers, said Assistant Minister of Communication Datuk Lee Kim Shin. Being a resort city, he said, it was important that Miri had good facilities, such as an airport, which was able to function efficiently to cater to the needs of its visitors and business community. “We hope the upgrading can start as soon as possible,” he told reporters after attending a briefing on the proposed upgrading work for Miri Airport by Zailan Jauhari, the special officer to acting Transport Minister Datuk Seri Hishammuddin Hussein and Malaysia Airport Berhad (MAB) officials here yesterday. He said Miri city also needed the airport to be upgraded because it served as the hub of all rural air services with the most number of flights to the rural areas, including routes to Bario, Ba’kelalan, Marudi, Lawas, Limbang and Mukah.

He said Miri Airport registered a growing passengers’ traffic volume with more than two million passengers using the airport since 2012. Miri Airport currently handles more passengers than its maximum capacity of only two million domestic passengers annually, he said. He was confident that more international direct flights would use Miri Airport as as one of it landing points once upgrading works were completed as presently Miri has two international direct flights to Singapore and China. The proposed upgrading work of airports in Sarawak and Sabah was announced by Prime Minister Datuk Seri Najib Tun Razak when tabling the Budget 2014 last year. Najib, who is also Finance Minister, said airports in Miri, Sibu and Mukah in Sarawak as well as Kota Kinabalu and Sandakan in Sabah would be upgraded.

Lee said Miri Airport now needed separate terminals catering to domestic, international and rural air services including separate check-in counters, the departure hall and arrival lounges.

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/// Exclusive Interview

Sandakan’s Property Driving Force Since 1979

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he Wah Mie Group (WMG) has been in operation for the last 35 years and today, it is one of the largest property developers in Sabah. Its home base is in Sandakan, where its name is popular among the locals. In 1995, WMG ventured into the property market in Kota Kinabalu. The founding members of WMG were active in the timber and plantation industries in Sandakan, but they had a vision to venture into the property development business. When they first began, property development was still at an infancy stage. It was not the ‘in-thing’ in Sabah, but they saw its future potential. Since its inception, WMG has built more than 20,000 units of housing of various types, from low-cost apartments to affordable homes, luxurious detached and semi-detached houses as well as multi-storey luxury condominiums. Plus, they also started venturing into mixed developments and commercial properties such as the highly anticipated Sejati Walk in Sandakan. According to Managing Director Quek Siew Hau, the company went through tough times especially during the economic recessions, but with hard work and determination, they managed to rise further and become what it is today. He said, “The property market in Sabah has been booming in the last 10 years, and this is mostly due to ease to get loans, low interest rates and rapid infrastructure developments. Because of the roads connecting to the suburbs, areas such as Donggongong, Tuaran and Putatan have become very prosperous. This is part of the reason why property prices have been rising steeply especially over the past three years.” He adds: “However, I expect the property market to slow down except for niche properties. Because of the new restrictions and tightening of government policies, a

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lot of genuine buyers are turned off from buying properties. The lower income can’t afford it anymore. Even affordable homes are difficult for them to purchase because of the restriction.” “Both the federal and state government need to support this industry and not be too strict. It’s unfair that the regulations are applied across the board. It is right to have these rules for expensive properties, but not for affordable homes. It’s almost impossible for first time buyers especially young couples and new families to own their own homes. I suggest that the government reformulate the procedures and break it down according to sector, pricing and area. You can’t compare Sabah to Kuala Lumpur of Penang,” Quek said. The property sector contributes largely to the economy of the state and according to Quek, the government cannot let the market die down. And one way to make the state more prosperous is to get more foreigners to invest in Sabah properties. Quek believes that our state has a lot to offer foreigners, and Sabah is naturally blessed. There is a lot of potential to tap into this market however it should be controlled by the government to avoid speculation. To cater to the influx of population in the future, WMG is in the midst of both completing and planning a lot of upcoming projects. This includes Sejati Walk in Mile 7, Sandakan which is estimated to be completed in 2017. Sejati Walk will connect the surrounding community which consist of 30% of the Sandakan population. This includes residents from Taman Sejati Ujana, Taman Fajar, Taman Khong Lok, Taman Sri Rimba, Taman Megah and Taman Sri Wijaya. Quek said, “This two-storey open-air mall consists of 340 units, plus a 54 feet walkway in the centre which has vegetation, natural light and 24 feet fans that will provide ventilation. It will also have ample parking, and round the clock security. The

/// EXCLUSIVE INTERVIEW

Quek Siew Hau,

Managing Director of Wah Mie Group

Both the federal and state government need to support this industry and not be too strict. It’s unfair that the regulations are applied across the board. It is right to have these rules for expensive properties, but not for affordable homes. It’s almost impossible for first time buyers especially young couples and new families to own their own homes. I suggest that the government reformulate the procedures and break it down according to sector, pricing and area. You can’t compare Sabah to Kuala Lumpur of Penang.

average size of a unit is between 300 to 500 square feet, with prices at RM700 per square foot. We launched only in January this year and we have already sold all the units on the ground floor and 50% of the units upstairs.” “We aim for Sejati Walk to be the next iconic destination in Sandakan. Wah Mie itself is keeping over 48 units to be developed into the first food street in Sandakan. We are getting all the famous restaurants and coffee shops to come in and rent an outlet at a reasonable price. Malaysians love food and this will surely bring in the crowd. We are also looking forward to have activities such as exhibitions and festivals,” he added. WMG is also in the process of developing the concept for the second phase which will include Sejati Walk 2, hotels, a large supermarket and a wet market. Quek wants to develop the area into a one-stop centre that will not only cater to locals but to tourists as well. The Group is also looking towards building more residential and commercial properties on their large land bank in Sandakan. This includes a mixed development on a 260-acre land in Karamunting which overlooks

the bay, plus over 700 residential units of condominiums in Mile 4. In Kota Kinabalu on the other hand, WMG is currently planning to further develop the Sepanggar area with two affordable high-rise developments which will be selling at RM35 onwards per square foot for 800 square feet units. Other areas that will be developed by WMG include a 770-unit condominium in Likas and landed properties in Bandar Sierra. Allthough it is not easy to build affordable housing anymore due to the new regulations, the inflation, the depreciation of the Ringgit and the increase of land prices, Quek said that WMG will continue to do their best in providing for the people and the market place. WMG previously received the SHAREDA Platinum Award for their efforts in selling affordable housing below RM250,000.

PHOTO: LOUIS PANG STUDIO

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/// Feature Property Showcase

/// FEATURE PROPERTY SHOWCASE

High Street of Penampang

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ounded in 1989, Glowbest is one of the leading property developers in Sabah which have built many residential and commercial projects in Kota Kinabalu, Beaufort, Papar, Kota Marudu and Tenom.

Ariel view of Lido Plaza

Their latest development located in the centre of the Penampang residential hotspot is Lido Plaza, an ultra modern shoplot which was designed to serve the high density residents living around the Nosoob area. According to Executive Director Benny Ng, Lido Plaza aims to be a mixed used shopping precinct is the melting pot that binds the community together. It will house one of the biggest tuition centres in the city, a church, a high-end supermarket, a modern boutique hotel, a pharmacy, and multiple restaurants and coffee shops.

...Lido Plaza aims to be a mixed used shopping precinct is the melting pot that binds the community together.

Ng said, “Although we have clusters of commercial developments within a three kilometre diameter around Lido Plaza, traffic is terrible. Thus we wanted to create something that is self sufficient. Lido Plaza is very much based on a post-war model, a centrepiece where all basics, independent stores, market, education hub, residential and office knit the community together.” The central plaza which is the heart of the development has an eight-foot sculpture designed by local artist Aks Kwan. This monument will be one of the main highlights in Lido Plaza, whereby the developers hope it create a modern and playful space that can be enjoyed by patrons to the development. The robot like statue called Kawan Lido is based on Kwan’s series of Kawan (which means friends) figurines. Kwan explains, “Kawan Lido is symbolic to this development as it will be a place of gathering where you can come and bond with your family and friends. When you travel overseas, you can see a lot of modern sculptures and artwork on the street which becomes iconic and popular. Everyone wants to go there to take a picture with it, and I hope that Kawan Lido will be one of the icons for KK’s art scene.”

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The concept of Lido Plaza is modern yet simplistic and comfortable. Architect AR. Paul Lau was behind the design of this new shoplots. To ensure the easy flow of the development, two units of shops worth RM4 million was removed from the initial sketch. By reducing the units and perfecting the circulation, this ensured extra parking and landscape for business owners and visitors to enjoy. Building history shows that small shoplots easily blend into the community and are more desirable and necessary compared to big malls. RM2 million worth of top range cosmetic building materials were also used to give Lido Plaza a modern and fresh look unlike any other shop lots in Kota Kinabalu. Lau said, “There is only one word that describes Lido Plaza: simplicity. Our priority was to create a space that is comfortable for everyone to enjoy. That’s why we installed sun shading device to prevent glaring, designed a nice outdoor space and a good proportioned structure that is user-friendly.” To ensure smooth traffic, Lido Plaza has a one-way double-lane street and four disabled parking spaces. Glowbest has always strived to be society sensitive and take social responsibility very seriously. Lido Plaza is a perfect place to set up an office, with extra car parks and no parking fee. Glowbest also joined efforts with two Telecommunication Company, namely P1 and Telekon Malaysia to provide the best communication infrastructure available. For more information, visit www.glowbest.com.

From left: Benny Ng, Jane Ng and Howard Ng

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/// Hot Topic

Property Hunter Gives Back to the Community

/// HOT TOPIC

“We can volunteer in many ways to help build homes, build hopes & build lives. We can help many who are in need of decent housing and it begins with ensuring that they have a proper roof over their heads.” Said Mr Allen Tong. “Property Hunter is excited to embark on this project in partnership with Habitat For Humanity Kota Kinabalu branch. This will be our key CSR project for the year. We will continue the donation drive in our upcoming expos in Sandakan & Tawau.” Said Property Hunter’s Director Mr Michael Hiew. He added “it has always been our dream to assist the poor by putting a roof over their family, and we are committed to see this project come to realisation.”

George Chong, President of Habitat For Humanity KK (fourth from left) receives cheque from Victor Yong, Senior Marketing Executive of Property Hunter (third from right), witnesses by HFH Malaysia National President Mr Allen Tong (fourth from right)

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he 2014 Property Hunter Expo (PH Expo) saw over 15,000 visitors during the three-day event. A total of 200 units were sold which collectively were worth over RM150 million. Organizer Maxx Media (S) Sdn Bhd made an earlier pledge to donate RM50 for every unit sold to Habitat for Humanity. Through the sales, they managed to raise RM10,000 for the non-governmental organization that helps eliminate poverty housing by building affordable houses for the less fortunate. Apart from this, public donation coupled with donation made by speakers at the expo amounts to RM4605.55. Speakers who donated the money from their book sales are Ahyat Ishak, Chris Tan, Miichael Yeoh, Faizul Ridzuan and Richard Oon.

Apart from the donation drive, customers who made purchases during the PH Expo were entitled to join the Buy and Win contest. Lucky homebuyer Brenda Esther Sator walked away with a 9D7N round trip for two to Shanghai sponsored by Airworld Travel and Tours. Visitors who registered at the Expo also had an opportunity to enter the Visit and Win contest. Liaw Jun Yung won himself a brand new iPad mini sponsored by Suria Sabah. The next SHAREDA PH Expo which will take place in Sandakan from 11 to 13 April at the Yu Yuan Secondary School Function Hall. This free to attend event will operate from 10:00am to 8:00pm daily. For more information visit www. propertyhunter.com.my.

Its President for Habitat for Humanity Kota Kinabalu mentioned in an interview that he encourages everyone to impact lives and give hope by being a volunteer to build decent homes for the needy. The NGO is in constant need of support from members of the public not just in funds, but also in manpower to build houses. HFH identifies families in need of financial support and assist them in building new homes or refurbish existing ones. According to its National President Mr Allen Tong, the average funds required for the construction of a house is RM30,000. Qualified beneficiaries will be granted the fund on a loan basis with no interest, and the NGO is also involved in the construction of house to ensure the fund is appropriated.

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Liaw Jun Yung, winner of the Visit and Win contest who received a brand new iPad Mini

9D7N trip for two to Shanghai Buy and Win contest winner Brenda Esther Sator

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/// Hot Topic

Property Hunter Adopts New Property Search Function on Facebook

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acebook has extended its expanded search function, and businesses related to the real estate industry have jumped on the band wagon with the launch of the new Property Page. Property Hunter (PH) has also followed suit and incorporated this function to their Facebook fanpage which has close to 10,000 likes. PH is the first organization in Sabah to incorporate this search function on their account which is directly linked to their website that has all the latest updates in the property sector in Sabah. Visitors to the PH Facebook fanpage will be able to use the app to search, like, and crucially, share all the listed properties. The app is expected to have a profound effect on the way people search for properties. According to Director Michael Hiew, PH expects to see more people interact with property on Facebook and see more properties shared across pages, groups and users. He hopes that this viral marketing will increase awareness of properties in Sabah.

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When looking for properties via Facebook Graphs, users can expect to see results based on relevance and weighting which will immediately favour agents with detailed property inventories and well-established business pages. This innovation echoes the changing preferences in property search. Hiew said, “With this new app, we aim to target the younger generation who are relying more and more on online platforms to get information instantly regardless of time or place. The public is becoming more demanding in this sense and they want to quickly find the best property for their very specific requirements. With all this information available with a click of a button we will definitely see the game changing in the near future.� Besides searching for property listings, users can also interact with the PH team through Facebook. For more information, visit www.facebook.com/ PropertyHunterMalaysia.

/// HOT TOPIC

Visitors to the PH Facebook fanpage will be able to use the app to search, like, and crucially, share all the listed properties. The app is expected to have a profound effect on the way people search for properties.


/// Hot Topic

Property Hunter E-Magazine

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ublishers across the global are creating digital magazines and apps to better engage directly with target audiences as part of their owned media demand generation programs. And readers of Property Hunter (PH) magazine can now a digital copy of the magazine on Google Play, iTunes, Joomag and Magzter.

The digital version of the magazine will enable PH to target a different section of audience, especially those within the age group of 29 to 40 years old who are becoming increasingly dependent on modern technology. One of the reasons why online

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magazines are becoming more popular is the launch of smart phones and tablets. Almost everyone has a smart phone or tablet nowadays, and research shows that sales of digital magazines have increased with prices of these devices getting cheaper. With these new functions, PH aims to diversify and expand its audience demographics. The magazine instead to create a different experience for the users who can now instantly get the latest updates on the property market in Sabah. According to Director Michael Hiew, hopes that this will help the magazine deliver a new kind of experience for their readers which is more interactive and based on twoway communication. He said, “The PH digital magazine will have a use of rich media which gives the user a superior experience over print. It’s the ‘showing’ versus

/// HOT TOPIC

the ‘telling’ that makes multimedia presentations such a powerful tool for engaging readers. It adds another dimension to the content on our website.” He adds: “We hope that we can better serve our readers and make it

easier for them to browse through our library of current issues and back editions. This will definitely benefit our readers overseas who don’t have to pay a hefty price for shipping cost. Plus, it is more ecofriendly as well.”


/// East Malaysia Property News

Property Deals Drop, Value of Transactions Rise, Prices May Rise

Bank of China Can Provide Loans to Developers in Sabah

Property Prices in KK Surged Up to 100 - 150% Says SHAREDA

real property gains tax (RPGT), however, will have little effect on curbing speculative activities in the market. He said the RPGT should have been introduced earlier when house prices were lowerand prices had appreciated faster, resulting in higher profit margins. Luxury property buyers at PH Expo Kota Kinabalu Property transactions dropped in the first nine months of last year, said the Valuation and Property Services Department, confirming observations by real estate professionals that the market is slowing down. Although the number of transactions was lower, there was an upward trajectory in value, an indication of rising prices. The department’s deputy director-general Faizan Abdul Rahman said the residential subsector, which accounted for about 64% of the total property transactions, saw a 14% drop from a year earlier, with average house prices exceeding RM300,000. Faizan was speaking at the 7th Malaysian Property Summit 2014 organised by the Association of Valuers, Property Managers, Estate Agents and Property Consultants yesterday. Faizan said the commercial sub-sector saw a drop of 22.3%, compared with the previous year. The industrial, agricultural and

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development subsectors saw reductions of about 20%, 13.6% and 8.3%, respectively. The total number of transactions for the first nine months fell to 280,820 valued at almost RM106bil, compared with 328,692 in 2012 worth RM107bil. Transactions in 2010 surpassed the RM100bil mark as a result of an extremely buoyant market, which started in 2009. It has been on an upward trajectory since then. On the effect of the various tightening measures, organising chairman Choy Yue Kwong said they would curb excessive speculation. Choy, who is Rahim and Co (Selangor) Sdn Bhd managing director, said the measures would discourage speculators from using bank loans to finance their purchases. “The curbs are slowly taking effect. The measures will have a significant impact on speculation, especially speculators who depend on bank loans,” he said. Choy added that the

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Prices had skyrocketed now, squeezing profit margins and rendering the RPGT less effective, he added. CH Williams Talhar & Wong Sdn Bhd managing director Foo Gee Jen, meanwhile, said there was a mismatch between the demand for real estate and supply. “There is an oversupply of high-end residential property in the market. Prices have gone up too much over the last few years. What people really need is affordably priced lower-to-midrange housing,” said Foo. “Developers will be pressured to cater to this market segment that is most in need. Having said that, the bright side is that the market is expected to stabilise with more realistic prices over the year.”

Sabah Housing and Real Estate Developers Association (SHAREDA) President, Francis Goh Sabah Housing and Real Estate Developers Association (SHAREDA) president Francis Goh has urged the Bank of China to set up a branch here in order to provide loans for developers to build better five-star hotels and high-end leisure properties. Goh said, “I hope that the Bank of China will set up a branch soon so that we can develop Sabah into a tourism haven,” adding that Bank Negara doesn’t encourage commercial banks to approve loans for developers or investors who want to build hotels, deeming the investments as high-risk ventures. Goh pointed out that the resorts in Sabah should be six to seven stars when compared to five-star resorts in Kuala Lumpur. He said resorts in Sabah are built on land no less than 300 to 700 acres. And more developers should venture into leisure property development in the future. “In line with the vision of Sabah government to turn stretches of long white sandy beaches along the west coast up to the Tip of Borneo under the Sabah Development Corridor for tourism development known as Kinabalu Gold Coast, Sabah shall excel and will soon take over Bali or Langkawi of the development trend for leisure properties can be propelled,” he said. Goh also suggested China entrepreneurs to acquire

high-end properties that are only available here if they wish to invest. For instance, Peak Condominium with sea view along Likas Bay which is priced at RM750 per sq ft. Goh said the land within three km radius from the city centre now cost between RM300 and RM400 per sq ft, meaning that an acre of land within that radius would be between RM12 million and RM16 million. He said buyers would find it hard to look for luxury condominiums close to the city in five years’ time as developers would not be able to find these type of land. Goh added that investing in commercial shoplots was also a viable option as the price had surged in recent years.

The City is ranked the third in Malaysia in terms of the rapid surge in property prices, after Penang and Kuala Lumpur with property prices surging between 100 and 150 per cent in the past five years in the State. The trend is expected to continue for the next five years, said Sabah Housing and Real Estate Developers Association (SHAREDA) President, Francis Goh. He said the price of a doublestorey terraced house with a built up area of 1,200 square foot has increased up to 114 per cent or RM600,000 between 2007 and 2011. Last year, he said a double-storey terraced house cost around RM850,000 while a double-storey semi-detached house is priced at more than RM1 million. Briefing Sabah’s property market overview to some 50 entrepreneurs and investors from China at Wisma Kinsabina, he said prices of walked up apartments, medium end condominium and high-end condominium have increased between 50 to 94 per cent in the same period of time too. Goh said as for the commercial sector, prices of two-storey and three-storey shop offices have surged 61 per cent and 111 per cent between 2007 and 2011, respectively. “A two-storey and three-storey shop offices now cost around RM880,000 and RM 1.6 million respectively,” he said. He said for retail malls, a ground

floor unit would be sold at around RM2,800 per sq ft, whereas a unit on the first and second floor at RM1,800 per sq ft and RM 1,500 per sq ft.

Actually, Goh said the existing resorts in Sabah should be rated six to seven stars when compared to the five-star rated resorts in Kuala Lumpur.

On another note, Goh said together with the oil palm followed by oil and gas as well as tourism, the property development sector had contributed greatly to the Sabah’s economy.

“Resorts here are built on land no less than 300 to 700 acres,” he said, adding that more developers would venture into leisure properties development in the future.

Goh said that despite building more than 10,000 properties of all types every year but it was still not sufficient to cope with the demand.

This included beach villas, lagoon villas, riverside villas, paddy villas, farm villas, hilltop villas, cliff villas, forest lodge, chalets, service suits, service apartment and hotel suites.

“Kota Kinabalu has a population of around 800,000, and growing at five per cent rate every year,” he said, adding that the 10,000 new properties annually, generally would not be sufficient to meet the population growth of 40,000 annually. Among those at the half-day briefing were Yihe Imperial International Education Research Institute president Professor Ai Xin Jue Luo Qi Yi, who led the China delegates, Bank of China (Malaysia) Berhad chief executive officer Wang Hongwei, Bank of China (Malaysia) Berhad East Malaysia regional general manager Zhang Hong Kun and liaison secretary to the Minister of Special Tasks Albert Kok. Meanwhile, Goh urged the Bank of China to set up a branch here in order to provide loans for developers to build better fivestar hotels and high end leisure properties. “As the president of SHAREDA, I hope that the Bank of China will set up a branch here as soon as possible and together with developers, we can develop Sabah into a tourism haven.” According to him, he had asked Ministry of Tourism, Culture and Environment Datuk Masidi Manjun for the reason Sabah only had five five-star resorts only and the answer was that Bank Negara Malaysia did not encourage commercial banks to approve loans for developers or investors wanting to build hotels as the investments as high-risk ventures.

In this respect, Goh said the delegates might consider purchasing or building leisure properties in Sabah. “In line with the vision of Sabah Government to turn stretches of long white sandy beaches along the west coast up to Tip of Borneo under Sabah Development Corridor for tourism development known as ‘Kinabalu Gold Coast’, Sabah shall excel and will soon take over Bali or Langkawi if the development trend for leisure properties can be propelled,” he said. Goh also suggested another investment option for the entrepreneurs from China was to acquire unique high-end properties such as the Peak Condominium with sea view along Likas Bay. “I think that high end properties are more worth it and yield a higher return on investment.” However, Goh said they should not be too surprised with the price of the properties because the land within three-kilometre radius from the city centre now cost between RM300 and RM400 per sq ft or between RM12 million and RM16 million per acre. “We cannot build more than 80 units on an acre of land,” he said, adding that these prime locations were now considered rare. In five years time, he said it would be difficult to look for luxury condominiums close to the city as they would no be able to find land anymore.

Palm Condo and Square to Transform Kinarut

Assistant Minister of Infrastructure Development Datuk Ghulam Haidar Khan Bahadar Assistant Minister of Infrastructure Development Datuk Ghulam Haidar Khan Bahadar assured that the Papar-Kota Kinabalu road upgrade is included into the state’s development agenda. However, the funds are needed to implement this project. He was responding to WSG Development managing director Datuk Susan Wong’s proposal to upgrade the road to cope with the increasing traffic congestion brought about by rapid developments in Kinarut. Gulam commended WSG Development for its property development projects in Kinarut, which transformed the town with more modern facilities. He opined that The Palm Condominium Kinarut and its surrounding commercial units were viable long-term investment options. Upon complement, The Palm Condominium Kinarut will provide five blocks of 16-storey premier condominiums, giving a total of 640 residential units, while the Palm Square will have 72 units of two and three-storey shop lots and a modern supermarket operated by G-Mart. WSG has also completed several projects in Kinarut, including 222 terraced houses at Taman Sungai Wang and 390 terraced and semidetached houses at Rose Garden. Wong said, “With the completed and upcoming developments, I believe that Kinarut will soon be a prosperous town and a viable investment location.”

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/// East Malaysia Property News

Jesselton Quay Project a Strong Catalyst for Suria Capital

SP Setia Group to Enhance KK’s Status

in passenger fees income resulting from higher number of tourist arrivals in Sabah. The research firm explained that among the three segments, it is optimistic on its logistics and bunkering division which is the second biggest revenue contributor to the group. Alliance Research added Suria Capital’s logistics and bunkering segment has been recording two consecutive quarters of breakeven results.

The roll out of Suria Capital Holdings Bhd (Suria Capital) Jesselton Quay property development in Kota Kinabalu, Sabah will provide a strong re-rating catalyst to the company’s earnings. Analysts believe the company’s new revenue stream could be derived from property development as most of the company’s line of businesses have been providing stable income to the company. RHB Research Institute Sdn Bhd (RHB Research) in a report said, “The Jesselton Quay project remains the key catalysts in the near future. “The ex-container port land is ripe for property development and Jesselton Quay will drive Kota Kinabalu and Suria Capital to new highs,” the research firm said. Additionally, Alliance Research Sdn Bhd (Alliance Research) in a report said “We expect the impending launch of its Jeseltion Quay project to be a strong catalyst,” the research firm noted. The research firm observed that the project is currently awaiting procurement of development order and is expected to be launched in the second quarter of 2014. To recap, Suria Capital had on October 2013 entered into a joint venture agreement with

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another listed company, SBC Corporation Bhd to develop the Jesselton Quay project. The project comprised of commercial suites, retail mall, retail units, office towers and a hotel will carry a net sale value of RM1.8 billion. The Jesseltion Quay project to be built on a 16.25 acre of prime port land is strategically located at the waterfront of Kota Kinabalu city centre. Meanwhile, the port operator’s net profit for the fourth quarter of 2013 (4Q13) rose 65 per cent year-on-year (y-o-y) to RM15.61 million. As for financial year 2013 (FY13), the company in a filing to Bursa Malaysia on February 28 said its earnings grew 22 per cent y-o-y to RM61.84 million. For 2013, the company’s turnover gained 0.3 per cent y-o-y to RM263 million while revenue for 4Q13 increased 16 per cent to RM73 million. Alliance Research noted the higher revenue received for 4Q13 was driven by port revenue growth of 25.2 per cent y-o-y, continuous turnaround of logistic and bunkering division which grew 178 per cent y-o-y and strong revenue growth of 66 per cent y-o-y from ferry terminal division due to increase

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The research firm believed that Suria Capital’s logistics and bunkering division will provide more contribution supported by the partnership that the company has formed with Singaporean Petro Summit Pte Ltd in November last year. Alliance Research observed that for Suria Capital’s port operations, there was a five per cent drop in revenue in total tonnage handled in 4Q13 mainly attributable to lower palm oil related exports while container throughput grew by five per cent y-o-y. The research firm also noted Suria Capital’s profit before tax expanded at a stronger rate of 18.7 per cent driven by improved efficiencies at port operations and turnaround of logistics and bunkering services. Hence, with the strong results, Alliance Research forecasted Suria Capital’s core earnings to grow by 5.5 per cent, 4.1 per cent and one per cent for FY14, FY15 and FY16 respectively. The research firm noted that the declining earnings growth for Suria Capital could be due to higher depreciation charge following heavy capital expenditure cycle in FY14 and FY15 as well as higher effective tax rate as the company special tax incentive is expected to end in 2016.

Kota Kinabalu is experiencing dynamic growth in its economy, tourism and real estate market. And SP Setia Bhd Group who recently held their Chinese New Year celebration at their sales gallery in KK Times Square is set for 2014. The Group will enhance its status with the 60-acre Aeropod, the city’s first integrated transport hub development. Strategically located directly opposite Terminal One of the Kota Kinabalu International Airport (KKIA), Aeropod will be the new home of the existing Tanjung Aru railway station, which is part of the 134km Tenom-Tanjung Aru line formerly known as the North Borneo Railway and is the only operational rail transport system in Sabah. SP Setia will modernize and redevelop the train station, which covers about 18 acres, and as he city’s new transport hub, Aeropod will be similar to KL Sentral is some ways. Business development senior manager Alex Loh said, “We hold a long-term goal everywhere we go and we will be cautiously looking at the opportunities open to us because the real estate sector will be challenging this year. But we are excited that the number of tourist arrivals is very significant,” he said adding that Sabah’s growth is coming from multiple dimensions, including the robust oil and gas sector. According to project planning and development senior manager Timothy Lim, “The first phase is to do the train station while the second phase is the commercial part of it. Very soon you will see the superstructure coming up and we hope to finish off within two years according to schedule. We will also be constructing a flyover at our own cost which starts from KKIA all the way to Kepayan.” Launched in February 2012, Aeropod will take10 years to construct and upon completion will include two hotels, 1,500 to 2,000 residential units and 140,00 sq ft of retail space. The urban pad will also include retail offices, corporate offices, a shopping mall with food and beverage, and entertainment outlets, plus SOVO units. Construction of boutique retail offices are currently in progress and due for completion in 2015.


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Development Milestones PacifiCity

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ales of residences at PacifiCity, Kota Kinabalu’s Premier Lifestyle Hub have been very good reports Jonathan Wheeler, the General Manager of the project. “We had a fantastic response over the last few months including during the Property Hunter expo in Kota Kinabalu”. Pacific Heights is the first residential tower for sale at the project, it offers 204 fully furnished units with panoramic sea or mountain views, priced from RM 740,000 including all furnishings and appliances it offers the best value in Likas Bay. “We expect to sell out of the first block very shortly” he added. Meanwhile construction of the project continues apace with the shopping mall set to open to the public next year and announcements on additional anchor tenants expected shortly.

Riverson

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ocated in the up and coming KK Southern City Hub, the construction of Riverson, a new mix integrated commercial development is currently underway. According to Head of Sales and Marketing, Pouline Wong, said that progress is going very smoothly. Block A which will be occupied by the Gleneagles Kota Kinabalu Medical Centre has a finished concrete roof top, 40% of the building architecture is completed and 20% of the mechanical and electrical works is done. And the building architecture of Block B, on the sixth floor of the commercial area is 30% ready and 20% of the mechanical and electrical works have been installed.

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/// Hot Topic

/// HOT TOPIC

Sabah a Top Travel Hotspot but Lacking Tourism Properties

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abah recorded an increase in tourist arrivals last year despite several security related incidents that happened, namely the Sulu intrusion and the Semporna episode. State Tourism, Culture and Environment Minister Datuk Seri Panglima Masidi Manjun said that 2.5 million tourists visited Sabah in the first 10 months of 2013, which represented an increase of 21% over the same period in 2012. Masidi added that the bulk of visitors were Malaysians from the peninsula and Sarawak totalling some 1.8 million, an increase of 17%. The largest increase in arrivals was foreign tourists, especially those from Hong Kong and China, with their numbers going up by nearly 85%. A total of 307,325 people from Hong and China visited Sabah via

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237 charter flights, the highest in the country to date. In 2013, arrivals from South Korea jumped 32.1%, visitors from Japan increased by 25% and tourists from Taiwan improved by 15.5%. According to Chief Minister Datuk Seri Musa Aman, the state garnered a revenue of RM6.35 million from tourist arrivals last year, and the figure is expected to increase this year with the Visit Malaysia Year 2014. In 2014 domestic and foreign arrivals are expected to hit 3.4 million. Increased Connectivity The increase was also supported by several new direct flights to Kota Kinabalu, including from Hangzhou, Shenzen and Shanghai in China, Kota Baharu in Kelantan, and Cebu in The Philippines.

Flight frequency from Tokyo and Perth has also been increased to three and two times a week, bringing the total number of non-stop flights from international destinations to Kota Kinabalu to 18. Low-cost carrier Air Asia also recently launched direct flights from the state’s capital to Adelaide. Additionally, Kota Kinabalu is also now a homeport for Star Cruises Aquarius. Star Cruises’ choice in making KK a homeport for the winter season of its Superstar Aquarius fits well with the need for additional tourist arrivals through other means of transport. About 90% of tourist influx arrives in Sabah via plane. This illustrates that connectivity is important to keep a continuous flow of tourists coming into the state.

Global Recognition Sabah has also recorded several notable successes at international level for the private sector. The state capital Kota Kinabalu was also recently voted as the number one destination on Agoda.com’s fourth annual Asia’s Fresh Destinations list, which marks some of Asia’s hottest emerging travel stops. It is the second Malaysian city to make it to the list. Ipoh was listed last year. Masidi said, “For the first time in 2013, we received the TripAdvisor Certificate of Excellence and the Agoda Golden Circle Award through Bunga Raya Resort. Also, Mabul Water Bungalows won Dive Resort of the Year while other five-star resorts such as Shangri-La’s Tanjung Aru Resort and Shangri-La’s Rasa Ria Resort, Hibiscus Villa Kudat also won excellence awards, including Best of Malaysia Awards from Expatriate Lifestyle.”

About 90% of tourist influx arrives in Sabah via plane. This illustrates that connectivity is important to keep a continuous flow of tourists coming into the state.

He added Kota Kinabalu was listed as “Top 10 Rising Asian Destinations” by TripAdvisor, following consistent positive feedback from visitors every year. Lack of Tourism Properties However, lack of five-star hotels around Kota Kinabalu reduced tourist arrivals from Europe by 4.7 %. At least 2,000 more hotel rooms were needed in Kota Kinabalu to accommodate influx of tourists.

Sabah especially lacks in fourstar and five-star hotels to cater to tourists, especially those from China and Hong Kong who preferred to stay in these types of hotels. The state is constantly faced with shortages of rooms to accommodate such tourists. Masidi said, “During peak season of the tourism calendar, we always find ourselves lacking in this area. We have lots of three star hotels and they are doing well. We hope they would continue doing well, but we also need four and five star hotels.”

Currently, Sabah only has five fivestar resorts and developers wanting to venture into leisure properties are finding it difficult to finance such projects because Bank Negara Malaysia does not encourage commercial banks to approve loans for developers or investors wanting to build hotels as the investments as high-risk ventures.

Development Corridor for tourism development known as ‘Kinabalu Gold Coast.’ If we can continue developing leisure properties and make Sabah a tourism hub in South East Asia, we will excel and soon take over Bali or Langkawi,” Goh said.

According to SHAREDA President Francis Goh, “Resorts here are built on land no less than 300 to 700 acres and more developers should be encourage to venture into leisure properties development to cater to the growing number of tourists.”

However, with the tourism growth in Sabah, our local businesses also have to work harder and step up their game in terms of providing the highest quality service and living up to the name that the state carries.

Leisure properties included beach villas, lagoon villas, riverside villas, paddy villas, farm villas, hilltop villas, cliff villas, forest lodge, chalets, service suits, service apartment and hotel suites. “The Sabah government has a vision to turn stretches of long white sandy beaches along the west coast up to Tip of Borneo under the Sabah

Increase of Quality

“We can give tourists a good place to stay but without hospitality, it means nothing and they will leave with a bad taste in their mouth. In line with the theme of this event ‘People love to travel. People love food. People love quality service’, I hope we can provide good hospitality services to our guests because if they enjoyed their stay here, they could become our little ambassadors,” Masidi said.

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/// Feature Property Event

/// FEATURE PROPERTY EVENT

Beaufort Flood Relief Efforts by Kimis Development Sdn Bhd

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looding haunts Beaufort averagely 3 to 4 times annually. But on the 14th of February, Beaufort district suffered from what is said to be the worst flood in Beaufort history. The district braced the worst as the water level at Sungai Padas breached the danger level of 8.70 metres, reaching over the 10-metre mark and is expected to rise further. The water level increased further in the evening due to high tide. Relief centre was established by the Beaufort residents, holding more than 800 people affected from 64 villages. Some 18 road links have been cut off due to flooding and 18 schools shut down. At the height of the flood, almost 3,000 villagers were evacuated. There were also two deaths reported, an eight year old boy who drowned in the flood waters in Kampung Lubak and a two year old girl drowned in Kampung Mempikit in Keningau.

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Help poured in from various sources including Kimis Development and the members of SHAREDA Youth also did their part in helping out the victims of the flood. Efforts lead by Roy Chiew of Kimis Development Sdn Bhd the developer of Beaufort Square and SHAREDA members, organized an emergency relief effort which provided essential food and water supplies such as bags of rice, cartons of mineral water, and other food were bought and delivered to over 250 families in five villages. In the meantime, the Sabah government was also urged to set up a Cabinet Flood Mitigation committee to consider and come up with flood mitigation programs to solve the overflowing of the Pagalan and Padas Rivers. An immediate step could be to deepen the rivers and to build a diversion channel to divert excessive water to reduce the water levels and flooding.

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/// East Malaysia Property News

MoU Signed to Provide Internet Service to I-Office Tower

ID Tags for Registered Real Estate Agents From May 1

Sri Indah Condominium

Unlisted Real Estate Agents Tarnishing Industry

other sources, such as a property owner.

system introduced would negate and weed out these players.

“But what we want to do is to encourage people to seek the services of the registered ones because they are governed by the law on how they carry out their services in this industry. Perspective of ITCC Developer of the ITCCPenampang, Sabanilam Enterprise Sdn Bhd, sealed a Memorandum of Understanding (MoU) with SEDCO Communications (S. Comm), Monday, to develop an A Grade I-Office Tower making it among the first buildings in Sabah to meet the Malaysia Cybercentre standard. Through the MoU, SEDCO Communications would be one of the Internet service providers for the I-Office Tower. “We are excited with this connectivity as S. Comm will have dedicated and ondemand high capacity Internet bandwidth and high-speed international capacity access which fulfils one of the criteria for A Grade and Cybercentre facilities,” said Group General Manager of Sabanilam Enterprise Sdn Bhd, Caesar Mandela Malakun. S. Comm Chief Executive Officer, Jasmi Adnan Thien, said the MoU will be the catalyst for increasing competition and an alternative to existing service providers, hence bringing about better price-quality match and data speed transfer, taking into consideration the accessibility in related businesses. I-Office Tower is one of the components in the new mixed-development property hailed as “The New Landmark of Penampang” situated at the Penampang by-Pass listed under the Sabah Development Corridor. ITCC-Penampang has a built-

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up area of 1.68 million sq ft that consists of a four-storey shopping mall with 675 retail outlets, 295 condominium Hotel Suites, a 330-room business hotel, 170 table Banquet Hall, Exhibition Centres for MICE and a 16-storey I-Office Tower. The signature project of Malakun Holdings Sdn Bhd is being developed by its subsidiary Sabanilam Enterprise Sdn Bhd and is poised for completion at the end of 2015. S Comm is a subsidiary of SEDCO, which is licensed to provide fibre optic infrastructure and broadband bandwidth services throughout Sabah. S Comm, in 2012, signed a Memorandum of Understanding with Brunei International Gateway (BIG) Sdn Bhd to collaborate in implementing the Brunei, Indonesia, Malaysia and the Philippines Asean Growth Area (BIMP-EAGA Rink) under the BEST Cable Project, a project to link up the sub-region through fibre optic and satellite. Upon completion, the project is expected to propel the BIMPEAGA region into a central hub for investments, promote socioeconomic development and improve the people’s quality of life. S Comm would be able to improve the Internet bandwidth capacity in Sabah by tapping into BIG international capacities, namely the Asia America Gateway (AAG) and Southeast Asia Japan Cable systems (SJC).

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Chairman of Estate Agent Practice Committee Board member, Eric Lim showing the property agents authority tag during the press conference on tightening of real estate industry regulations in Putrajaya Real estate agents and their negotiators need to carry an official identification tag from May 1 to distinguish them from bogus agents. The tags, available only to registered agents and their negotiators, will contain a Quick Response (QR) code which can be verified on any QR code reader device or mobile ap­­ plication. The new identification system is aimed at weeding out illegal players in the real estate industry and to increase public confidence in the profession, said the Finance Mi­­nistry’s valuation and property services department director-general Datuk Abdul Hamid Abu Bakar. “This (registration and identification) exercise shall also minimise the number of illegal agents who may be involved in unhealthy practices which mars the credibility of the profession. This is not a licensing exercise but a form of registration by the board.

“Through this process, negotiators will be held accountable for their actions via their respective supervising registrants (real estate agents),” Abdul Hamid told a press conference here yesterday. A real estate agent is a qualified individual who has completed an examination set by the Board of Valuers, Appraisers and Estate Agents (Bovaea).

“The illegals are not registered so they are not subjected to the (Va­­luers, Appraiser and Estate Agents) Act, which means they may carry out irresponsible acts that could jeopardise the buyer’s interests,” Abdul Hamid said. Under Section 30 of the Act, real estate valuers, appraisers and agents who commit an offence are liable to a fine not exceeding RM300,000 or imprisonment not exceeding three years or both upon conviction.

Award-winning property developer, Wah Mie Group is one of the most well-known names in the industry in Sandakan. The Group’s latest high-rise project is Sri Indah Condominium located at KM 6, Jalan Utara. With its strategic location in the centre of a booming commercial area, the 480 condominium units is an ideal purchase for small families looking to settle down and property investors alike.

Abdul Hamid, who is the board’s president, said that it estimated that illegal agents or negotiators could make up more than half of those in the field. “There is no law to say that you can only buy from registered real estate agents and negotiators, as you can also buy directly from

For more information, visit www. wahmie.com.

Sultan of Brunei’s Sharia Law Plan Could Benefit Sabah and Sarawak Property Market

These agents are licensed to employ up to 20 real estate negotiators to assist them in carrying out their tasks. There are currently 1,779 real estate agents and 16,243 negotiators registered with the board.

To ensure the upmost comfort of residents, the condominium is surrounded by greenery which is enhanced by refreshing cool breeze. Residents can also enjoy facilities such as a club house equipped with basketball courts, a badminton court, a swimming pool, a gymnasium and a multipurpose room.

Criticizing the Sultan is forbidden, but the citizens of Brunei have still expressed their displeasure with Sharia law over social media, Agence France Presse reported.

Brunei’s all-powerful Sultan has ordered his citizens to stop criticizing his plan to institute a harsh version of Sharia law, telling them they’ll be sorry once the law is implemented. Sultan Hassanal Bolkiam, one of the world’s richest men, presides over the tranquil, oil-rich kingdom neighbouring Malaysia with a population of 400,000. He announced last October that Brunei would gradually institute Sharia law punishments such as flogging, severing limbs and death by stoning beginning April 1.

“They cannot be allowed to continue committing these insults, but if there are elements which allow them to be brought to court, then the first phase of implementing the Syariah Penal Code Order in April will be very relevant to them,” he said, according to a copy of his speech published by state media. Uncertainty and mixed sentiments from non-muslim citizens splurge sudden increase interest in neighbouring Sabah and Sarawak with reports from several property developers reporting unusual increase in property enquiry from Bruneians to invest abroad as a second option.

Elson Kho, director of Property Hunter teaches registered agents how to be more competitive in the market There are now 30,000 to 40,000 unregistered real estate agents and negotiators in the country, according to Malaysian Institute of Estate Agents (MIEA) president Siva Shanker. Shanker said these illegal and unregistered real estate agents and negotiators are profiteering through various misconduct practices which is jeopardising the professionalism and accountability of the real estate industry. Among the misconducts reported include the misinterpretation of the size of property, miscalculation of assets valuation, failure to return deposits and delay in providing services before signing the purchase agreement. “These real estate agents and negotiators are thriving because currently, there is no enforcement coupled with poor awareness of the public,” he told reporters after a media briefing in Putrajaya yesterday. Shanker said after the announcement of the introduction of a new

tag system which is going to be applied in May, real estate agents and negotiators have been on the move to get themselves registered. “We have conducted 41 classes in 10 locations across the country for some 11,000 participants in three and a half months,” he added. Meanwhile, the Board of Valuers, Appraisers and Estate Agents (BOVAEA) has announced that all real estate negotiators will be using an identification tag in its effort to curb the activities of illegal agents. Its president, Abdul Hamid Abu Bakar, said the introduction of the new identification system will not only raise the real estate industry standards but also to increase public confidence in the real estate players, specifically the real estate negotiators. He said over the years, the real estate industry has received a negative image due to these unregistered estate agents and negotiators. The new tag identification

“The tag identification system allows the public to spot an unregistered real estate negotiator from a registered negotiator. If a real estate negotiator does not wear his tag, we urge the public to report the negotiator to the BOVAEA for further assistance,” he told a media briefing in Putrajaya yesterday. Under Section 30 of Valuers, Appraisers and Estate Agents Act 1981, anyone who commits an offence is liable upon conviction to a fine not exceeding RM300,000 or imprisonment not exceeding three years or both. Abdul Hamid said the registration for real estate regulators under the new regulation started in October 2013 and ended on Feb 28, 2014. He said during the period, BOVAEA has registered over 1,779 real estate agents and 16,243 real estate negotiators. “The primary objective of the registration exercise is to improve the professionalism and accountability of all negotiators in this industry. The exercise shall also minimise the number of illegal agents who may be involved in unhealthy practices which mars the credibility of this profession,” he added.

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/// East Malaysia Property News

Billboard Properties with Great Returns

Naim Participated in the PH Expo

Conduct Research Before Buying Properties

12 Years Return at 7%, Lodge Residence Showcase in Tawau and Sandakan

Naim Land, a top developer in Borneo showcasing projects from Kuching, Bintulu and Miri at PH Expo 2014

Billboards or off-premise outdoor advertising signs, is available to advertisers for display to the public. But most of these signs do not advertise the business or other activity occurring at the site on which the billboard is located. The larger and most common types of billboards are usually located on leased property adjacent to freeways, highways and other major thoroughfares. The billboard site is generally limited to an area large enough to accommodate the billboard’s foundation. The billboard owner generally holds a leasehold interest in the billboard site; fee simple ownership in the billboard site is usually held by an unrelated party that owns the land contiguous to the billboard site. Landowners must consider a few things when they lease their property for use by a billboard company. The net revenue of the sign will be determined by the location. Billboards located in prime areas facing roads with hightraffic normally fetch a higher price due to larger exposure.

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We all regularly drive by billboards, but we seldom think about the economics of how they work and what they pay the landowner. So, it comes as no surprise that the average person has absolutely no clue as to how to handle the negotiation of a billboard lease on his property. Billboard income is great as long as it does not stop you from selling or developing your property down the road. This risk is largest potential downside from having a billboard on your property. Unless you are certain that there is a 0% chance of your property being used for different purposes at some point, every billboard lease should contain language allowing for removal in the event of future plans. However, billboard leases are, in general, fairly long-term instruments. Typically there are two interests in the billboard site which are the leased fee interest of the ground lessor (the interest held by the fee owner of the billboard site) and the leasehold interest of the ground lessee (the interest held by the

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billboard company’s interest). Lease lengths average around 10 years. Residential properties fronting main traffic routes generally are priced lower and creative investors, they have maximised their passive income by erecting a billboard and leveraging on the potentially revenue genetrating business. Some existing billboards built on residential property in Kota Kinabalu are reportedly fetching up to RM150,000 per annum which could easily pay of the value of the property in 8 years or less. This trend could be a whole new investment opportunity for many.

Naim Holdings Berhad, one of Malaysia’s leading developers participated in the Property Hunter Expo 2014, the largest property expo in East Malaysia held at the Sabah Trade Centre. A multi-award winning developer and contractor based in Kuching, Sarawak, Naim showcased a range of residential and commercial properties in Kuching, Miri and Bintulu. In addition to exciting lucky draws, Naim also offered attractive sales packagers to expo goers. Its senior manager for property development, Zamry Ibrahim said as all Naim’s developments are located in Sarawak’s key growth areas, they provide owners and investors with unique investment propositions. “Our developments are situated in Kuching, Miri and Bintulu, the key growth areas in Sarawak, where we still see good property demand. With aggressive developments taking place led by the Sarawak Corridor of Renewable Energy (SCORE) driving the state’s economic growth, towns such as Bintulu are experiencing an economic boom, Zamry said adding it’s time for owners and investors to ride the wave. Naim featured its iconic Bintulu Paragon and Kuching Paragon integrated developments, and Miri’s Bandar Baru Permyjaya development.

Zamry explained that Naim’s Bintulu Paragon Kuching Paragon integrated developments are noteworthy, not only because of their locations, but also their level of integration, making them one-stop hubs. “Firstly, these developments are located in prime locations - for Bintulu Paragon, the largest integrated development to impact Bintulu, it’s located within Bintulu’s CDB, while Kuching Paragon is situated about 15 minitues and 10 minutes away from Kuching ciy centre and the airport,” Zamry said. He added that Naim also featured newly launched condo development know as Sapphire on the Park, a component within Kuching Paragon and Street Mall and SOVO developments which are components within the Bintulu Paragon. “For our Miri developments, we will feature various development components within the Bandar Baru Permyjaya which is strategically located about 15 minutes from Miri city, such as our newly launched Bahagia Residences apartments, which are affordable and also Pusat Bandar Phase 5 shophouse,” Zamry said.

Property buyers and investors learning from top experts in property at PH Expo 2014; from left; Enoch Khoo, Michael Yeoh, Richard Oon, Ishamel Ho, Faizul Ridzuan and Chris Tan People can still get good buys in the property market today if they are choosy said the author of a bestseller book. Faizul Ridzuan, one of the speakers at the PH Property Expo talk told the audience about how an ordinary worker can invest in properties and make a fortune out of it. “There are a lot of property developments right now and if you are selective, you can find some very good buys,” said the writer of the book WTF (23 properties by 30). The active speaker in the property industry explained that there are very good buys and bad buys in the market, and one has to be careful and do research before purchasing any property. “The most common mistake that people

do when it comes to investing or buying property is that they do not do research. Research on location, who is renting the place, is it cheap, and is it within the affordable level, within the area are few factors that need to be looked into,” Faizul said. Some people are saying that it is a bad time to be investing in properties today because it is getting harder to apply for property financing, the number of supply would eventually exceed the number of demand and the prices of properties would drop. However, when asked on the matter, Faizul disagreed and said that the more stringent banks are in giving our property financing means that people should grab the opportunity to buy properties now before

it gets tougher to apply for property loans. “Five years back, it was very easy to apply for housing loans compared to today. As we cannot foresee what will happen in the future or what the country’s economic status is going to be, we should grab the opportunity that we are still able to apply for loans now and get a property,” he said.

The Lodge Residence in Putra Nilai, a soon to be upgraded to a City status is showcasing at Sabah Hotel in Sandakan (15 - 18 March) and Marco Polo Hotel in Tawau (20 - 23 March) The Lodge Residence is one of the latest property launch by BBN Development Sdn Bhd topped with 7% guaranteed rental return up to 12 years (terms and conditions apply). The project is conveniently located next to Nilai University and surrounded by INTI International University, Manipal International University and Universiti Sains Islam Malaysia (USIM) which is poised to be the star accomodations for student and staff alike in Nilai. Marked as the state’s residential, education and trading hub Putra Nilai is leading the boom in Negeri Sembilan.

The project which is expected to be complete in 2016. Within a prime 6,233 acres of freehold land, Putra Nilai is the forte of pioneering development of diverse property compositions developed by BBN Development Sdn Bhd. Putra Nilai is strategically located to world famed Putrajaya, Cyberjaya, KLIA, Sepang International Circuits and Sepang Gold Coast. For more infomation please contact BBN Development Sdn Bhd on +606 850 1888 or email to sales@bbndev.com.my

Those interested are invited to call Gerald Sim at 016 8866700 for more information about the Naim’s developments.

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/// Hot Topic

What is Your Definition of Affordability? People’s Perception of Affordable Housing Due to the exponential price expansion of the residential property market in Malaysia, the words “affordable housing” have taken on new meaning. There are also people who are stuck in the middle-income trap who do not qualify for low-cost housing and yet, can’t afford to purchase even “medium-cost” residential projects. In order to understand the sentiments of the market, an online survey has been conducted to gauge the public’s perception on this issue using both quantitative and qualitative methods. According to answers obtained from 104 respondents, 46% of them have defined affordable housing as being priced from RM200,000 to RM400,00 per unit. From this figure, 35% rated affordable housing as those priced below RM200,000 per unit while 13% thought that affordable housing are those priced below RM200,000 per unit. Only 6% of those who participated in the survey thought homes priced RM400,000 to RM600,000 per unit were within the affordable range. In terms of whether there is a shortage of affordable housing in Malaysia, a total of 89% respondents agreed that the problem exists while 11% thought otherwise. According to 82% of the respondents, the basic criterion which affordable housing must fulfill is being situated within close proximity to work and school. 61% are of the opinion that the availability of amenities is a must while 58% listed accessibility to public transportation as an important criterion.

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/// HOT TOPIC

One noteworthy comment came from a respondent who cited “comfort, design and a wellmaintained building” as among the other criteria he would like to see in an affordable housing project. In relation to the 1Malaysia People’s Housing Programme (PR1MA), 57% are aware of the affordable housing initiative, while 43% are not familiar with it. The most common challenges house hunters face are steep prices, inconvenient and unsafe locations, as well as difficulty in getting a loan. Affordable Homes It is likely that more Sabahans are not able to afford to buy houses with the 6% increase of the Government Services Tax (GST) this year. Despite about 50,000 units of affordable homes believed planned for Sabah in five years, more Sabahans may not be eligible for housing loans. Naturally, with the introduction of the GST, property prices will go up and are expected to slow down due to uncertainties in the bank borrowing policies. Demand for properties will continue to increase but loan approvals is expected to dampen. Income Growth Not InTandem with House Prices According to Urban Wellbeing and Local Government Minister Dato’ Abdul Rahman Dahlan, it will be hard for those earning a monthly salary of RM5,000 and below to obtain homes. Based on the current loan repayment requirement and the base lending rate (BLR) of 6.6% this group of households can only afford houses costing less than RM300,000. He said, “Using this yardstick for affordable houses price,

developers should focus their housing development to cater for the needs of this 80% of the households. However, the 2012 NAPIC (National Property Information Centre Report) states that only 31.7% of all new housing units launched were priced below RM250,000.” This creates an imbalance between the demand and supply of houses towards the right target group in Malaysia as there exists a serious gap of about 40% between the provision of affordable housing below RM300,000 compared with the demand. He also lamented about the rising prices of houses in Malaysia and especially in his home state Sabah. House prices in Malaysia and in Sabah too have been rising too rapidly. As a result of these rapid price increase, house prices in Sabah have now become the second most expensive in Malaysia. Abdul Rahman said, “Of greater concern is the fact that income growth has not been keeping in-tandem with the increase in house prices. The state

government must play their roles in provision of affordable housing by imposing a certain quota for the housing development.” He adds: “Currently, most of the state governments only impose a low-cost housing quota for housing projects and in many instances even these are not strictly enforced. This can done through systematic registration and having a specific database to conduct a thorough demand and supply analysis at the state level.” Abdul Rahman, who is also the MP for Kota Belud, also shared that the average house price increases in Malaysia have hovered between 9.96% and 12.3% annually, while in Sabah the price increases were 8.05% in 2011 and 13.11% in 2012. “In Sabah, where there is ample land, house prices should not be rising at such a rapid pace,” he said. Plans for More Affordable Homes In 2014, three new developments with a

gross development value of RM350 million are being planned by Syarikat Perumahan Nasional Berhad (SPNB) for Sabah. And all in all, SPNB plans to build 2,812 affordable homes from its land banks in the State. They are Apartment Tuaran Impian involving 832 units in Tuaran, Wirawan Kimanis (1,036 units) in Papar and Vista Leila Idaman involving 944 units in Sandakan. However, out of the three developments SPNB plans to expand its land bank in Kimanis to bank on the spillover from the Sabah Oil and Gas Terminal (SOGT). It also plans to build a mixed development in Kimanis, but the project wil only commence once local demand picks up, while the Vista Leila Idaman in Sandakan will be a State Government-SPNB venture. SPNB to date has undertaken seven out of eight affordable home projects in Sabah and now has two on-going projects in Tawau and Lahad Datu. For Tawau in Taman

Apas Permai, the second phase would be completed by the second quarter of 2014 and expects to hand over the house keys to buyers by mid-2014. State Local Government and Housing Assistant Minister Datuk Zakaria Idris complimented SPNB’s effort in providing affordable homes to the younger middle and low income generation who are faced with various challenges especially the rising costs of items. Low Cost Homes No Longer Being Built The government’s announcement of RM30,000 subsidy for low cost houses costing RM70,000 will not fully benefit Sabah where houses at such prices are no longer in existence. Sabah Housing and Real Estate Developers Association (SHAREDA) President Francis Goh said traditionally, low cost houses were built by the Sabah Housing

and Town Development Authority (SHTDA). However, low cost houses were no longer being built in Sabah since the construction cost had gone up higher than the selling price due to rising land and construction material price. “In view of the expensive land, material and labour which is about 30% higher than in Peninsula Malaysia, all members of SHAREDA and most government housing agencies are only able to supply affordable homes at the range of RM150,000 to RM250,000 in Sabah,” he said. “SHAREDA was of the opinion that even though the government has announced a high subsidy for people to purchase home but it will still not able to solve the root problem of owning affordable houses in the country,” he said. Goh said SHAREDA fully supports the National Housing Council’s (NHC) noble effort in trying to assist the lower income group to own

home under the MyHome scheme but it would be better if it was extended to those in the medium income bracket as well. Taking into consideration the obstacles including tight conditions set by commercial banks that often confronted home purchasers from the lower income group, he said SHAREDA proposed to the NHC to give the subsidy in the form of 10% deposit but only for first time house buyers. “Providing the subsidy in the form of the 10% deposit will solve the problem of many purchasers from the lower income group in sealing the sales and purchase agreement due to difficulty in securing the 10% deposit. The subsidy could be paid to the housing developers account once the buyers have secured bank loans for the 90% payment,” he said. Loans for First Time Buyers SHAREDA also proposed for a policy to make it mandatory for all

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/// Hot Topic

Developers in Sabah recognised for building affordable homes at SHAREDA Nite 2013, presented and witness by Minister of Local Government and Housing, Datuk Seri Hajiji Haji Noor accompanied by SHAREDA President, Mr Francis Goh and SHAREDA Vice President cum SHAREDA Nite Organising Chairperson, Dato’ John Chee commercial banks as well as Bank Islam in the country to provide loans to all first time house buyers. All this while, housing developers in Malaysia had been helping the government by complying with the quota of building low cost and medium cost houses.

Shareda believed that the government’s promise of building one million affordable homes would not be fulfilled if the developers and government agencies could not market their products because the buyers failed to secure loan from the banks.

At the same time, the commercial banks only collected profits from the housing developments without doing any corporate social responsibility and give incentive or facility to the needy to own homes, Goh said.

SHAREDA agrees with the National Chamber of Commerce and Industry Malaysia for the setting up of a housing bank in order to ease the burden of low-income earners. Out of 50,000 low-cost houses that had been completed only 7,000 were sold.

About 50% of the bank’s profits depended on housing transactions including bridging loan. With more than 3,000 branches of commercial banks in Malaysia, each bank should be given a quota of approving housing loans for 335 units each in order to achieve the government’s target of one million home purchasers.

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Meanwhile, Goh said SHAREDA also objected to the proposed Property Investor’s Club in Malaysia because it would hurt the market and prevent genuine property buyers from making a purchase. SHAREDAa felt that the Registrar of Societies (RoS) should not allow the club to conduct its activities of prospect buying which as a result might see

them gaining higher profit than the developers. SHAREDA to Continue Effort An umbrella company will also be set up by Sabah Housing and Real Estate Developers Association (SHAREDA) to group all its members in a coordinated and continuous effort to provide cheap, affordable houses to the poor in the state. The company, to be known as Shareda Bhd, will serve as a special purpose vehicle (SPV), whose primary objective is to facilitate members of the association to collectively construct affordable houses. The umbrella company will be funded by SHAREDA members either in cash or in land, and who would develop affordable housing projects by way of pooling resources. The SPV will help explore the opportunities for SHAREDA

members to carry out affordable housing projects with less monetary aims. SHAREDA aims to raise a start-up capital of between RM18 million to RM30 million for the company which would pay back to contributing members in the form of share dividends. More than 2,000 units of affordable homes were expected to be launched this year as part of SHAREDA’s commitment to build 10,000 units of affordable homes in the state.


/// East Malaysia Property News

Visitors Flocked to the 2014 Property Hunter Expo In Sabah, one of the highlighted developments is Taman Putra Pogun by DOCOMO Development. This RM45 million project is located on a 5.5 acres land in Penampang. The development consists of two storey semi-detached houses and two and three storey link or terrace houses.

The 2014 Property Hunter Expo (PH Expo) is a freeto-attend Expo held at the Sabah Trade Centre from 7th to 9th March 2014 (Friday to Sunday). The exhibition will also tour other towns in Sabah, Sandakan in April and Tawau in May. The exhibition featured over 50 developers and more than 70 properties from Australia, Singapore, West Malaysia, Sarawak and Sabah. Those looking to invest in Johor can visit the WCT Land booth to find out more about their project Medini Signature which is located in the heart of Medini Iskandar Malaysia. This luxury apartment consists of 456 units with stylish interior layouts. MAC Group will also be promoting V’Residence, a two-block 26-storey tower, condominium in Cyberjaya City, Selangor. V’Residence is has a total of 268 units sprawled across four acres of land. With only six units per floor in each tower, the condominium units come with the choices of balcony or lanai and consist of three to five bedroom designs ranging from 1,373 sq ft. Another featured project in Selangor is the highly anticipated is Dream City located on a 7.5 acre land in Seri Kembangan. Visitors wanting to find out about

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this unique development can stop over at the AYG Property Solutions booth. Dream City comprises of seven blocks, and a 90,000 sq ft skypark. It has six types of units ranging from 550 sq ft to 2,560 sq ft. It comes fitted with earthfriendly conveniences such as energy monitors, rainwater recycling and energy efficient windows. Exhibitor Hua Yang Berhad will be showcasing Sentrio Suites which is located in the bustling township of Desa Pandan in Kuala Lumpur. This servicedapartment development spread across 1.55 acres of leasehold land. There are 327 units available measuring from 570 sq ft to 1,230 sq ft. It offers a selection of six design options with two and three bedroom layouts, as well as studio type unit. Visitors looking to invest in neighbouring Sarawak can drop by The Wharf Unique Harvest booth. The developer will be exhibiting their project, The Wharf which is an integrated part of the Miri Waterfront Commercial Centre. The built up size of two + one bedroom units ranges between 143.3m2 to 163.5m2. Facilities include multiple pools, a gymnasium, a multipurpose hall and a children’s playground.

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IPMUDA Berhad will also be featuring one of their latest development Kondominium Kristal Heights which is located on Jalan Kepayan, next to the upcoming Aeropod. This very low density development consists of only 95 units (seven types of design) built across 3.6 acres of land. The units boast of breathtaking sea view and residents have access to facilities such as a clubhouse, gymnasium, pool and many more. Managing Director of Maxx Media Michael HiewAccording to organizer and director of Maxx Media (S) Sdn Bhd Michael Hiew, “Visitors will also receive a free copy of the latest Property Hunter magazine and they can stand a chance to win attractive prizes when they enter the Visit & Win and Buy & Win contests.

Home Prices Continue to Rise in Malaysia

Kota Kinabalu City Centre, Sabah Residential properties in Malaysia have become less affordable, but the price growth has been moderating particularly in the past two quarters, according to Dr Yeah Kim Leng, Chief Economist at RAM Holdings group. The housing market is also expected to have a “soft-landing” in 2014, which can shrink property bubbles in certain areas, he said during Malaysia Property Inc’s 2014 Corporate Outlook seminar yesterday. However, there exists a significant gap between supply and demand, especially in the low-cost segment. “Developers need to take note that 3.8 million people or 55 percent of the market have monthly household incomes of less than RM4,000 and can only afford properties priced RM360,000 and below,” Yeah noted. Speculative buying is also a threat to Malaysia’s financial system, but it’s hard to differentiate between investors and speculators.

“This is because property has become an investment asset in Malaysia due to the lack of alternative investments. The demand for properties for investment in Malaysia is high, especially if interest rates remain low.” Nevertheless, the country’s demographics are favourable to the housing market. For instance, the working population is growing steadily, while the unemployment rate remains low at 3.4 percent. “Despite cooling measures, the fundamental demand such as demand from first time home buyers should still continue and banks still have the liquidity to serve this demand,” he added.


/// Feature Property Event

Property Hunter Expo Kota Kinabalu Showcased Top-Notch Properties

/// FEATURE PROPERTY EVENT

58% of the visitors prefer to make investments between the price range of RM201,000 to RM500,000. These statistic shows that there is a high demand of affordable housing as (based on their income level) most of the visitors are not capable of servicing bank loans for properties above RM500,000. Hence, approximately 70% of the visitors think that both residential and commercial property prices in Malaysia are too expensive and beyond their means. 43% of visitors think that the real estate climate has become positive in the last six months and more than 60% of the visitors are worried that the prices of properties will increase across the board in the next six months. However, 33% of them believe that Sabah will be the next hotspot in the country. Currently 67% of the visitors live in landed properties and the remaining 33% live in high rise condominiums and apartments. When asked what they look for when wanting to invest in a new property, 21% said location, 15% said safety and security and 10% said good infrastructure and amenities.

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he 2014 Property Hunter Expo (PH Expo) took place last weekend at the Sabah Trade Centre in Kota Kinabalu. The freeto-attend exhibition featured over 50 developers and more than 70 properties from Australia, Singapore, West Malaysia, Sarawak and Sabah. During the three day period, the event managed to attract more than 15,000 visitors which garnered a record breaking sales of 200 units totalling up to RM150 million. According to organizer and director of Maxx Media (S) Sdn Bhd Michael Hiew, “We are very pleased with the encouraging public response. Despite the cooling measures by the government and the tightening of lending policies by Bank Negara, it is obvious that there is still strong interest in the property market in Sabah. � During the Expo, 49% of visitors were in the youth category ranging from 21 to 39 years old, 40% were between 40 to 59 years old and 11% were veterans aged 60 and above. 42% of the visitors earn a monthly income of RM3,000 and below, 38% earns between RM3,000 and RM6,000, and 20% earns RM6,000 and above. 28% of the visitors have their own company or are self employed, 28% are civil servants working for the government and 14% consist of businesspersons and professionals working in management and executive levels.

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/// Feature Property Event

Other exciting activities also took place such as the Property Talk Session, which saw over 200 participants; a free photography session by awardwinning photographer Louis Pang, who managed to shoot over 230 families during the weekend; and a drawing and colouring competition sponsored by ABX Express, which had over 120 participants. Visitors also receive a free copy of the latest Property Hunter magazine and they can stand a chance to win attractive prizes such as a trip to Shanghai and a iPad Mini when they enter the Visit & Win and Buy & Win contests. This year, PH Expo will also be supporting Habitat for Humanity, a non-governmental organization that helps eliminate poverty housing by building affordable houses for the less fortunate. For every purchase of property made, Maxx Media pledged to donate RM50 to the NGO and in total, the organizer managed to raise RM10,000 for the cause. Hiew said, “We are looking forward to the next Property Hunter Expo which will take place in Sandakan from 11 to 13 April and Tawau from 16 to 18 May. It will be a joint venture with the Sabah Housing and Real Estate Developers Association (SHAREDA). We will feature booths of different developers, property agents and banks.� PH Expo is an annual Business-toConsumer (B2C) event that aims to bring investors and home buyers to property developers with the ever growing demand in premium property. For more information, visit www. propertyhunter.com.my.

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/// Feature Property Launch

Sejati Walk Welcomed by Over 90% Take Up Short After Launching

/// FEATURE PROPERTY LAUNCH

Local housing developer Wah Mie Group has launched Sandakan’s first street life pedestrian mall named Sejati Walk, which is expected to be completed in 2017. The launching ceremony was officiated by managing director Quek Siew Hau and attended by more than 100 guests who were very keen to find out more about the project. According to Quek, this lifestyle pedestrian mall will be a double-storey open-air mall designed to connect the surrounding community together with its strategic and convenient location for the residents of Sandakan. It is an eco-friendly low density pedestrian mall well designed with natural ventilation and natural lighting, yet providing a high level of human comfort.

Taman Sejati Ujana Taman Sejati Ujana is located near all major highways in Sandakan and conveniently a stone’s throw away from the Sandakan Airport, Sandakan War Memorial and Crocodile Farm. This large scale residential and commercial development by the Wah Mie Group comprises of terrace and semidetached houses, plus four-storey apartments stretched across 63 acres of land next to a bustling commercial hub with a shopping mall, shop lots, hotel and corporate garden. This is one of the most anticipated new townships in Sandakan.

He said that with affordable 341 small-size store units in typical Sandakan street life concept, Sejati Walk is expected to be able to provide holistic hospitality for the community. The average size of a unit is between 300 to 500 square feet, with prices at RM700 per square foot. Each unit also has an alarm system. Since January this year, Wah Mie has already sold

all the units on the ground floor and 50% of the units upstairs. The mall also features a 54feet walkway in the centre which has vegetation, natural light and 24 feet fans that will provide ventilation. It will also have ample parking and CCTV surveillance around the vicinity. A special highlight in the mall that will please Malaysians and foreign alike is the Food Street which will be the first of its kind in Sandakan. It will introduce visitors to all the famous food in the city operated by local restaurants and coffee shops. With its strategic location in Mile 7, which is about three minutes away by car from the Sandakan Airport, Sejati Walk will become an ideal location for tourists as well as local residents to relax, recharge and shop. Sejati Walk aims to be the next iconic development in Sandakan which will also be the cornerstone of the city’s shopping destination. It will propel the future growth of the Sandakan economy. The construction of the mall has commenced in February this year. Those who are interested to know more are encouraged to visit Wisma Wah Mie Mile 4 here, or visit their website at www.wahmie.com.

The up and coming Sejati Walk will be the next iconic openair shopping mall in Sandakan. With over 341 small-size store units, residents of Taman Sejati Ujana won’t have to go far to enjoy a great shopping experience with a familyfriendly environment. A gated residential development, Taman Sejati Ujana has round the clock security to ensure the safety of residents. Each unit has a chic modern design and consists of three rooms, two bathrooms and a covered carpark. High quality construction materials are used to ensure maintenance longevity and value for money for buyers. Basic fittings such as wall finishes, ceramic tiles on the floor and the installation of sanitary facilities will also be included. For more information, kindly visit the official Wah Mei Group website, www.wahmie.com. Sejati Walk set in the centre of Taman Sejati Ujana, Sandakan

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/// East Malaysia Property News

Second-Hand Properties to See Higher Demand: MIEA

Property Agents See Housing Market Picking Up Later This Year

Luyang, Kota Kinabalu, Sabah

Malaysian Institute of Estate Agents (MIEA) president Siva Shanker (pic) says that once people get used to the negative publicity, the market will find its level in the second quarter

Due to the abolition of the Developers Interest Bearing Scheme (DIBS), the secondary residential property market will shine brighter than the primary market segment in 2014, according to the Malaysian Institute of Estate Agents (MIEA).

Moving forward, Malaysia’s residential market in 1H 2014 is expected to be sluggish due to government’s latest property cooling measures. However, it is expected to pick up steam in the second half, particularly for the secondary market.

Without DIBS, in which the developer pays the interest of a buyer’s loan during the construction period, the appeal of newly launched projects has lessened. Notably, the scheme was disallowed by the government in Budget 2014 as it promotes speculation.

But the most pressing issue for the property sector next year would be the introduction of the goods and services tax (GST) in April 2015, which could create another round of price hikes.

On the other hand, second-hand properties could see better demand this year thanks to their cheaper prices. “More people are expected to snap up secondary properties as they are generally 30 to 40 percent cheaper than newly launched projects,” said MIEA President Siva Shanker. In 2012, newly launched projects only accounted for 20 percent of all the residential property transactions, while the rest were second-hand homes. And this year, that proportion is expected to dip to 15 percent.

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“If the government starts educating the public on GST now, the market should react favourably to the new tax system,” he added.

Malaysia’s property market is expected to grow at a slower pace in the first half of the year before picking up again, the Malaysian Institute of Estate Agents (MIEA) predicted. The government introduced measures including a hike in property gains tax and caps on the length of mortgages in order to curb speculation in the property market. “I think the second two quarters will see the market finding its level, people getting used to the negative publicity. The kneejerk reaction will be over,” MIEA president Siva Shanker told reporters as MIEA released its outlook on the property market. By 2015, prices could even rise by 10 to 15 per cent, he said but added that the number of property transactions may be dented when the new Goods and Services Tax (GST) starts in April.

“The only problem there being the hiccup which may be caused by the imposition of GST on April 1 (2015),” he said, saying that it was hard to say if the public would react badly to it. Alex Ting, a committee member of Sarawak MIEA who was also present at the news conference, believes property prices will rise when the GST rolls out in April next year. Despite residential properties being exempt from the new consumption tax, Ting said the prices of building materials would rise and force developers to pass on the cost to buyers, noting that cement and bricks’ prices had recently gone up in Sarawak.


/// Feature Property Launch

70% Sold on Ashton Tower Launching Day

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he property market ushered into the year 2014 with great cautious. In the midst of conservative market sentiments, tightening of bank lending policy and curbs from the government, SCP Group has certainly broke through the cloud of uncertainty and proven the market wrong with the right product to meet the market wants and expectations. The recent launch of Ashton Tower in Kolombong by SCP Group attracted over 500 enthusiastic visitors and investors to its newly built show gallery on its project site. The development boast 390 units of “semi-D designed” condo with an early bird price tag starting from RM361,800 per 870sqft unit. Close to 70% have been booked as of the day of official launching. Speaking to SCP Group’s Executive Director Mr Calvin Low, his company is very confident of the project due its indisputable strategic location, which is situated amidst the matured neighborhood of Kolombong & Inanam. The property is also within easy reach to an array of industrial and commercial facilities such as supermarkets, shopping malls, commercial shop lots and also schools.

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/// FEATURE PROPERTY LAUNCH

Secondly Low said that the price of the project is right for its target market. With all of its units priced within the range of RM361,800 to RM420,000 (early bird), chances of the buyers securing a bank loan is much higher. Above all, Low commented on the group’s confidence towards the strong population growth that Sabah is enjoying now. It is for this very reason that this KL based developer has ventured into 2 property development projects here in KK, with the third one already in the pipeline - Damaisari (linked house development). No strangers to the people of Kota Kinabalu, the group also has business interest in carpark management, such as the ones in KK Times Square and Karamunsing Capital.

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/// West Malaysia Property News

Why Malacca Could Be the Next Big Thing After Iskandar Malaysia

WEST MALAYSIA PROPERTY NEWS

Malacca

Sharing news and information about various issues related to the property industry from Peninsular Malaysia.

Properties in KL Penang, Iskandar Continues to Attract Foreign Interest

Netizens Share Their Views on Property Prices an outright ban on any individual owning more than one property),” said Michael. However, many are not convinced that RM14,580 a month is needed to afford a home in the Klang Valley.

Property investment consultant Datuk Seri Gavin Tee expects to see more interest from foreigners in Malaysia’s property sector despite the Budget 2014 cooling measures. In spite of the hike in Real Property Gain Tax (RPGT) and he higher minimum purchase piece for foreigners, more foreign interest is expected, especially in the Greater Kuala Lumpur, Penang and Iskandar regions. “China, Macau, Hong Kong and Taiwan have even tougher tightening measures compared to Malaysia;s cooling measures which are relatively mild,” Tee said adding that property prices in some growth areas have the

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potential to hit record highs. He also said there will be more choices fr those purchasing properties for their own use, as prices are expected to correct slightly in residential and commercial areas. Besides that, he expects the property market to be lifted up towards the end of March, driven by investors and developers reentering the market. He said that large-scale projects by the government will be driving Malaysia’s growth in the next couple of years, adding that he is the most optimistic of developments in Greater KL and Melaka.

Several Netizens have shared possible solutions to the high property prices on several social media platforms. Ungku Abdul Hafiz advised people not to be fooled by developers who say that house prices are going up. “The developers like to create hype and urgency so that people will continue to buy houses even though they can’t afford it,” she said. Michael G believes that decentralisation is the short-term answer to solving the high housing prices. “But before that, I would suggest both government housing (i.e. no private property, with statecontrolled rent) and a much heavier property gains tax (if not

Facebook user Wai Keat agrees that the study does not reflect the actual situation in Klang Valley because the study only covered a small group of 1,529 respondents. Mohd Luqman Abdullah also points out that the figures may vary based on location, type of housing and the size of the home. Another user, Grace Chong, comments that the sample doesn’t represent the average homeowner’s salary: “Most people I know earn between RM3,000 and RM5,000 a month. They are not rich nor poor and they survived.” While @farahaziz tweets: “I own a house in the Klang Valley and I definitely have a much lower monthly household income.”

Pete Wong is the founder of Awarna Media with offices in Kuala Lumpur, Singapore and around the region. He made his foray into property on both sides of the Causeway since the early days - when Orchard Road was still known as District 9 and Mont’ Kiara was mostly inhabited by monkeys. Besides travelling around Asia on business, he finds time to write about the property scene, often advising investors with local insights. Pete is also the editorial consultant for Building & Investment magazine and one of the judges for the SEA Property Awards. Pete commented, If you find investing in local properties too daunting and Iskandar Malaysia overhyped, you may want to check out Malacca. During a recent visit to the historic city, I was surprised by its transformation. A few years ago, there weren’t many tall buildings and one could basically drive through town and see all there is to see in less than 15 minutes. Now, not only are there more buildings, well-known retailers are moving in and the number of tourists has shot up significantly. New hotels like Hatten are running at close to full occupancy despite it being just over a year old. Familiar shops like Esprit, MNG and Charles & Keith are nearby and you might get the feeling like you are in suburban Toa Payoh or Tampines. However, the difference here in Malacca is that your hotel rates and food prices are easily less than half of what you have to pay in Singapore, thanks to the strength of the dollar. One developer credited with transforming downtown Malacca from

a sleepy town into a respectable retail hub is Hatten Group. The developer first came into prominence when it took over an abandoned project and re-launched it as Dataran Pahlawan Melaka Megamall in 2006. Since then, they have added a string of other projects including retail malls, hotels and condominiums, mostly around Malacca.

Iskandar to Benefit From FilmMaking Industry

nformation, Communiction and Culture minister Datuk Seri Dr Rais Yatim (third from left) looking at a model of Pinewood Iskandar Malaysia Studios Iskandar Malaysia Studios Sdn Bhd (IMS) is positioning Pinewood Iskandar Malaysia Studios as the preferred location for filming and television-related activities in the region.

year experience and global reach to attract clients from around the world.

While Johor is one big state and getting from one location to another is a long drive, most of Malacca’s attractions are within easy reach. Driving from the city centre to the ancient ruins of A’Famosa, for example, is only 15 minutes.

Chief executive officer Michael Peter Lake said growth prospects in the film-making industry would be good in years to come and would create economic opportunities for Iskandar Malaysia.

Malacca also has a killer advantage -a UNESCO World Heritage Site status. The only other place in Malaysia with a similar status is Penang’s Georgetown.

“Prospects in the film-making industry will not only come from the region but also from the United States as well as Europe,’’ he told reporters following the signing of a joint venture agreement between Imagica Corp, a unit of Imagica Robot Holdings Inc, and Candelon Ventures Sdn Bhd, a special purpose vehicle of Khazanah Nasional Bhd, for the setting-up of a post-production facility, Imagica South East Asia Sdn Bhd at Pinewood Iskandar.

Combine the city’s historical significance with its compact size, throw in famous food and restaurants at bargain prices and a growing retail scene – and what you get is a winning formula. In fact, hotels are not building fast enough to accommodate the exponential growth in tourist arrivals, especially during peak season. Located almost midway between Singapore and Kuala Lumpur, the city attracts holidaymakers and foreign tourists from both cities. If you were to invest in Malacca with a view to tap on the increasing number of tourists, you may be getting better returns than anywhere else in Malaysia.

Signing on behalf of Imagica were president Yukihiro Fujikawa and strategic business development head Shinichi Noguchi while Candelon director May Quah Bee Fong represented the company. Lake said Candelon and Imagica would jointly market the post-production facility at the studios and the latter would be banking on its 78-

“It is a win-win situation for both parties with us having world-class facilities at our studios here and our Japanese partner’s expertise as a strong selling point,’’ he said. Lake said Johor Baru could be the next Bangkok in the postproduction-related services as Malaysia was now ready to go all out in the filming and television industry. He added that apart from offering services in film making, Pinewood Iskandar had a wide range of facilities, a tank that could store 10,000 litres of water as well as facilities to produce TV series and postproduction work. Meanwhile, Noguchi said it would be 30% cheaper by having a post-production facility in Iskandar Malaysia, compared with Japan and competitive costing would be the main criteria to attract clients here. “Our decision to invest RM9mil overseas, the first for us in 78 years is largely due to the high operating cost in Japan and Iskandar’s strategic location at the crossroad between East and West,’’ he said.

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/// West Malaysia Property News

No RM1 Million Price Floor for Foreign Buyers in Iskandar, Says Report

Penang Developer Gets Show-Cause Letter for Jacking Up House Price

KL Office and Condo Market to Remain Challenging on property transactions across all property sectors in Johor is being discussed,” he said.

Menara Keck Seng, Jalan Bukit Bintang

Foreigners planning to purchase property in Johor’s Iskandar region will soon be exempted from the minimum purchase rule of RM1 million, Singapore’s Straits Times reported. Quoting an industry source, the daily said that projects approved by Johor authorities before May 1 this year would be exempted from the ruling, first announced by Prime Minister Datuk Seri Najib Razak when tabling the Budget 2014 last October. Under the new rule, the minimum value of properties that foreigners could buy is doubled to RM1 million, from RM500,000, as a measure to address rising property prices. Najib had also announced that Real Property Gain Tax, or RPGT for non-Malaysians, is imposed at 30% on the gains from properties disposed within 5 years, while for disposals in the sixth and subsequent years, RPGT is imposed at 5%. The deferment of the ruling will come as a relief to property developers in Malaysia who have already started on their projects, reported The Straits Times. “They (Johor’s state authorities) understand that the market is a bit shaken by these measures, particularly the projects that have gone quite far ahead,” the paper quoted a source as saying. “There’s a tendency now to let them go through and extend the cut-off point to May 1. So developers that have submitted and received approval before that should be safe.”

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The exemption is expected to be announced in a few weeks. According to The Straits Times, the minimum price announcement had “sparked frustration” among developers, upset that they would be forced to amend their projects, and leaving them no choice but to build bigger units to price the property at RM1 million. Smaller property developers could be the hardest hit as they have limited land space. “(These developers) have smaller parcels of land with limited capital. Although their traditional market is local buyers, foreigners could still be potential buyers,” the daily quoted an executive from a property firm in Malaysia. “But now they have to make the hard choice between making bigger units which could erode margins to woo foreigners or completely lose out on the foreign buyer segment. They are in a dilemma.

A developer in Penang has been slapped with a show-cause letter from the state government for charging low-medium cost house buyers more than double the price of the units. Jagdeep Singh Deo, who is state housing exco, said the Penang government will not tolerate developers not following the requirements for low-medium cost housing. “We want to hear what the developer has to say to explain this issue,” he said. “We have asked the buyers who face this problem to meet with state housing committee representatives to resolve their problems,” said the Datuk Keramat assemblyman. Yesterday, a group of house buyers protested outside the state administration offices in Komtar with one man getting down on his knees to beg the Pakatan Rakyat government for help.

The paper also reported of speculations that RPGT could also be adjusted as developers worry about property market affected by the new measures announced by Putrajaya.

The buyers were angry with the developer of Centrio Avenue for increasing the prices of the lowmedium cost houses they had signed to buy from RM72,500 to RM168,000 last November.

“The main thing here is that the policy makers need to make sure they don’t kill the market by making potential investors nervous about Iskandar,” a senior executive from an Iskandar told The Straits Times.

The extra charges were for parking lots at RM28,500 each and RM60,000 for a renovation package.

“We are comforted that, to some extent, they are being considerate to the businesses by making these adjustments.”

Jagdeep said the developer could not force the buyers to pay extra for renovations they did not ask for.

He said the state government had met with the developer, who has agreed to resolve the matter. “I am not satisfied that after two months of meetings, many of the cases are still unresolved. “We know that the group of buyers had meetings with the developer. We are aware of what transpired during the sessions held in December and two meetings on January 13 and 24. “I have been calling the developer for updates,” he said. The Centrio Avenue project was launched in 2008. The low-medium cost units with a built-up space of 650 square feet each are expected to be ready for occupation in March 2014.

The Kuala Lumpur office and condominium markets are expected to remain challenging in 2014 due to slow rentals amid new supply and various cooling measures, according to Rahim and Co Chartered Surveyors Sdn Bhd. Sulaiman Saheh, its director of research and strategy, said compressed and tighter yields are expected from downward pressure on rentals with looming new supply. A report released in the second half of 2013 by Knight Frank titled “Real Estate Highlights: Kuala Lumpur, Penang and Johor Baru” concurred with Sulaiman and adds that the various cooling measures laid out in Budget 2014 will soften demand in the condo market, with the expected interest rate hike further dampening sentiments. Sulaiman added that while the cooling measures are meant to create a more sustainable property price growth, they would impact the market by slowing down sales frequency and create a more gradual price appreciation in the property market. “Among the measures are a hike in the Real Property Gains Tax (RPGT), abolishment of the Developer Interest Bearing Scheme, and the increase in minimum price for foreign buyers to RM1 million. Also, a 2% levy

Knight Frank expects the Kuala Lumpur hospitality sector to remain resilient. The sector is backed by strong demand for hotels which is expected to remain the forerunner of the country’s economic development backed by concerted efforts from the government. It said it is cautiously optimistic for the Klang Valley retail market as consumers are expected to tighten spending ahead of further government subsidy rationalisation measures, a hike in electricity tariffs and toll rates. According to Sulaiman, landed properties are still preferred, especially freehold properties, as he expects the emergence of niche submarkets within the secondary market. “New property launches face more challenges but developers will be more creative with their products and marketing strategies,” he said. Meanwhile, Penang’s highend residential sector is expected to be affected to a higher degree by the measures introduced in Budget 2014, while the commercial sector should remain relatively stable stated the report. However, Sulaiman added that the eventual opening of the second Penang Bridge and the state government’s efforts to spur developments in the southern part of the island and the mainland will most likely lead to brighter prospects in these locations. In Johor, the report

stated that development will continue to be concentrated within the city centre, Danga Bay and the Nusajaya and Medini locality within zone A and B of Iskandar. Apart from the high-end condominiums and apartments, prime office and retail space, the region is expected to see more retail malls and purpose-built offices in Iskandar. While Sulaiman added that the increase in minimum price for foreign buyers would impact Iskandar the most. “Medini, which is in Iskandar, has been granted exemption from the RPGT hike and minimum purchase price requirement,” he said. “Iskandar has seen ... [an increase in the number] of foreign buyers in many of the new residential products in the past year. [This is also the result of] the new processing fee on foreigners buying houses in Johor [being] based on property values instead of [an outright] RM10,000 fee,” he said. — by Haziq Hamid

Four-Unit Limit for Bulk Sales by Developers

Minister of Urban Wellbeing, Housing and Local Government Datuk Abdul Rahman Dahlan Launch the Housing-Income Index by Sime Darby property The Government has implemented a measure to control bulk sales of property to try and curb the proliferation of “property clubs” that have been walking away with handsome profits, especially in the Klang Valley. Minister of Urban Wellbeing, Hou­sing and Local Government Datuk Abdul Rahman Dahlan said developers selling more than four units of their properties to a single buyer or group must now obtain prior approval from the Controller of Housing. The move is likely to affect the activities of these property clubs which normally enter into a tacit agreement with the developers to take up a large portion of their units before the launch of a project. Because the property club buys in bulk, it gets a steep discount and pays a smaller down-payment compared to an individual house buyer. The benefits accrued are then passed on to its members. When the project nears completion members divest their property at a much higher price. Speaking after launching Sime Darby Prop­erty’s housing income index,

Rahman said bulk buying was not against the law but it created a false demand causing unnatural price spikes. “The new condition would palliate those effects. I will call for a meeting with the Real Estate and Housing Developers’ Association of Malaysia (REHDA) stakeholders in a month’s time,” he said. Abdul Rahman also said the new enforcement would be made compulsory in all realestate advertising and sale permit materials. The existence of property curbs came to light last year when developers announced huge take-ups in the first days of a project launch, causing an artificial demand. This resulted in unsuspecting house buyers rushing to take up the remaining units, also causing a spike in property prices. In a related development, Abdul Rahman said the Government may increase its RM300mil allocation for the MyHome scheme which will be launched on April 1. The scheme will subsidise the purchase of lowcost houses by first-time buyers who earn less than RM3,000 a month.

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/// Contributor

Affordable Housing and the Malaysian Middle-Class: The Unmatched Demand Dr. Daniele Gambero

CEO and co-founder of REI Group of Companies Dr. Daniele Gambero is the CEO of strategic marketing consultancy firm REI Group of Companies. He holds an MBA from L. Bocconi University in Milan-Italy, Master in Communication from the University of Michigan Ann Arbour MI – USA, Ph.D in Marketing Strategies and Communication from L. Bocconi University and University of Michigan. With his vast experience in strategic marketing consultancies, investment studies, researches, property market reports and business valuation globally, the REI Group of Companies helps Malaysian developers with business solutions relating to design, concept, strategic marketing and pricing, advertising and marketing and sale procedures for their residential, commercial and industrial projects since 2007. Dr. Gambero’s lectures attract large crowds due to his lively presentation of serious topics with deep insight into the Malaysian Property market since 2011.

Where Is The World Heading To The demand for adequate and affordable housing has been dramatically growing worldwide during the last 20 years. The World Bank and UN are estimating a growth of more than 40% in population by 2050 totaling a whopping 10 billion people. The global labor force will grow even faster by a good 60% increasing from 2.4 billion today to more than 4.2 billion workers within the same time frame. Affordable housing demand will raise everywhere becoming the big “social issue” worldwide and strategies and ways forward have to be discussed and starting being implemented as soon as possible. Malaysia will contribute to this global growth with a good 12 million higher population compared to the current 30 million. In other words by 2050 there will be more than 42 million Malaysians.

Kuala Lumpur

While the author makes reasonable efforts to present information which he believes to be reliable, the author makes no representation that the information or opinions contained in this article is accurate and complete. Readers are advised to seek specific professional advice before acting on the views.

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113,005

Supply of Low Cost till 2020

Supply of High Rise till 2020

156,915

251,854

Total Houses Supply by 2020

521,774

Population by 2020

1,870,000

Estimate Under Supply of Houses by 2020 101,559

Selangor

833,155

491,584

342,154

1666893

6,279,686

426,336

652,827

260,616

87,968

1001411

4,499,432

498,400

Penang

204,903

214,780

63,728

483,411

1,633, 703

61,157

Malacca

138,607

50,244

18,979

207,830

914,506

97,005

Negeri Sembilan

265,638

90,725

47,461

403,824

1,276,244

21,591

Pahang

230,251

69,856

17,862

317,969

1,674,660

240,251

Perak

383,460

95,873

12,909

492,242

2,494,237

339,170

Perlis

19,804

9,294

1,602

30,700

243,400

30,150

Kelantan

67,511

12,722

4,189

84,422

1,533,613

Terengganu

91,254

43,173

1,026

135,453

1,045,864

Kedah

247,710

115,217

3,173

366,100

Sabah

98,335

62,930

41,618

189,640

51,915

14,893

Grand Total for Malaysia

3,536,100

1,725,844

909,416

GDP per Capita at current prices 2009

2010

2011

2012

RM

RM

RM

RM

57,040

62,075

Sarawak

31,286

Pulau Pinang

30,098

Average growth (%)

State by state Population in 2012

68,072

73,931

8.28

1,768,680

33,136

39,324

40,414

8.08

2,601,000

33,601

35,188

37,006

6.62

1,664,640 5,826,240

Selangor

28,468

31,457

33,727

36,135

7.63

Malacca

25,397

28,328

31,093

33,550

8.85

832,320

Negeri Sembilan

25,595

28,586

31,295

32,511

7.62

1,040,400

Pahang

20,548

23,008

26,066

26,197

7.64

1,560,600

Johor

18,878

21,329

23,593

24,574

8.36

3,537,360

Terengganu

19,102

20,581

22,220

22,733

5.61

1,144,440

Perak

15,809

17,341

19,362

20,569

8.38

2,496,960

Sabah

15,515

17,118

19,038

19,010

6.43

3,537,360

Perlis

15,186

16,175

16,992

18,119

5.71

208,080

Kedah

12,481

13,744

15,388

15,814

7.52

2,080,800

8,421

9,322

10,366

10,617

7.37

1,664,640

Kelantan

Johor

Sarawak

Per Capita Income Statistics

Kuala Lumpur

Existing Stock and Estimate House Supply and Demand by 2020 Supply of Landed till 2020

When I give presentations on the Malaysian Property Market I always talk first about the main driver that justifies the balancing between offer and demand, the economic growth of the Country. Malaysia has been kept on performing pretty well in the past decade and the outlook for the next several years remains positive. By looking at a steady growth of the economy and analyzing the individual States’ economic drivers we can foresee a quite differentiated population movement and income trend. The table illustrates very clearly where we are today and how the values will possibly change in the next few years (see the column with the increase rate). This table shows how impossible is to have a nationwide parameter of affordability for home as what is within the affordability for the middle class of Selangor is totally out of reach for a Pahang citizen. The next step is then to calculate on a state by state basis the average affordability of homes and define a proper “making sense” value.

State

If we look at the current housing situation and estimate the housing demand only for the next 6 years, till 2020, based on existing stock and current incoming supply of houses (all delivered before 2020) there will be a lack of almost 3.5 million dwellings by 2020. Besides making the happiness of current and future investors, the table below is showing how un-resolved is the issue of affordable housing as almost 60% of the 3.4 million lack of houses will be generated by the Malaysian middleclass. These numbers are underlining the urgency in finding a solution but, before talking about possible ways of replying to the big demand that will be generated the stakeholders should look into a clear definition of what affordable house means and all the players in the Malaysian Property Market arena should take their own responsibilities in terms of future (immediate) actions.

State

What does affordable means? There can be a nationwide realistic parameter for affordability?

The Real Affordability The next table shows how different at the end must be the perspective and mind set of lawmakers, buyers and developers when addressing the affordability issue and the results are opening the door to a new and interesting scenario for state rulers, developers and eventually investors.

GDP 2012 per Capita at current prices State by state (est) Population in 2012

Yearly

Monthly

35% of monthly income = Loan repayment

RM

RM

RM

Affordable House value (30yrs loan @ BLR-2.3 4.4%) PerCapita

Per Household

RM

RM

426,782

Kuala Lumpur

1,718,680

73,931

6,161

2,156.23

480,000

720,000

213,168

Sarawak

2,501,000

40,414

3,368

1,178.74

260,000

390,000

1,947,472

283,057

1,654,640

37,006

3,084

1,079.34

240,000

360,000

202,883

3,443,107

485,738

Pulau Pinang

256,448

2,543,759

252,304

Selangor

5,626,240

36,135

3,011

1,053.94

240,000

360,000

832,320

33,550

2,796

978.54

220,000

330,000

1,040,400

32,511

2,709

948.24

220,000

330,000

6,171,360

31,399,685

3,476,669

Malacca Negeri Sembilan

1,560,000

26,197

2,183

764.08

165,000

247,500

Johor

3,337,360

24,574

2,048

716.74

160,000

240,000

Terengganu

1,144,440

22,733

1,894

663.05

145,000

217,500

Perak

2,396,960

20,569

1,714

599.93

135,000

202,500

Sabah

3,437,360

19,010

1,584

554.46

125,000

187,500

208,080

18,119

1,510

528.47

120,000

180,000

Kedah

2,080,800

15,814

1,318

461.24

105,000

157,500

Kelantan

1,654,640

10,617

885

309.66

70,000

105,000

Perlis

Two explanations on how these values have been calculated: the monthly loan repayment takes into consideration the newly revised, by Bank Negara, rules on DSR (Debt Servicing Ratio) and some average commitment that every household normally has while the step from “per capita” to “per household” uses a 1.5 ratio only considering both couple’s commitments and normal differences in payout between husband and wife. I hope these numbers will help all readers to better understand the meaning of affordability and how it differs on a National basis. By looking at these numbers it appears quite clear that every state should carefully look into a number of different parameters if they will decide to defining a “State Affordable Table”, population estimate growth and migration flows, State economic development planning (jobs and wealth creation), per-capita income estimate growth and last but not least financing facilities available. Building cities is part of the normal economic growth of a Country but ensuring that those cities can be purchased through an accessible and fair financing is becoming crucial in Malaysia. Federal and State Governments during the last few years have been introducing a wide range of measures to curb un-healthy speculation in the property market and while at one end we should welcome these as cure for a long term stability of the industry at the opposite one, above all when looking into the additional lending rules massively introduced by Bank Negara in the last few months, we should be concerned as soon we will not talk anymore about affordability but only about “Financeable affordability”. Home buyers in Malaysia will soon have to learn how to prepare themselves, or better their financial side, before going into the market to purchase a home. The last few years of “Cash-light offers” by developers have been addicting the market to an unreal situation where one could purchase properties with an actual 100% financing….. Budget 2014 and Bank Negara have been halting this without, however, explaining how to proceed from here onward. What I mean is that there should have been an “Educational or Informative” round before stepping into such a financing-tight new set of rules. The result, within the next few months we will have the confirmation of this, might be that developers will actually supply more affordable homes but with a 70 or 80% margin of financing very few purchasers will be able to buy them.

Opportunity in The Making

2012 Per Capita Income Statistics

State

Pahang

And here we come with a different way to look into property investment for the one that can afford to buy not one but many houses. Most of the middle class earner group members are actually having financial capabilities that might allow them to buy but banks will not finance them. Renting will then become a viable alternative to purchasing providing the offer will be there for livable homes. Some developers have been actually looking into this future panorama and have been launching a number of projects where two to three bedroom houses, either landed or high-raise, will become available in the near future. Rental, because of land cost and location will be within very affordable values and if you ask me I will surely like to have one of these properties to be rented to an established family, parents age 35 to 45 years, with stable income instead of looking at temporary short-medium term high rental properties to be leased to expats or young trendy singles who today are in and possibly tomorrow will move to a different location. ROI wise the possibilities of fetching a higher yield are more towards the first option compared to second one.

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/// West Malaysia Property News

Mixed-Use Developments Continue to Be Popular existing buildings and soon-to-becompleted projects. With the office sector being a tenant’s market, landlords continue to offer attractive incentives to retain existing tenants and attract new ones. There were noticeably more announcements from building owners expressing their interest to dispose of their buildings. Developers are also seeking to secure anchor tenants or purchasers for their office components before starting construction in an increasingly challenging office environment. “Meanwhile, the investment market is expected to be less active in the next six months compared with 1H2013 as yield compression is expected to continue due to the lagging rental market,” says Sarkunan. During the period under review, there was no completion in the city centre and the city fringe. The cumulative supply remained unchanged at 48.3 million sq ft in the city centre and 19.7 sq ft in the city fringe. The expected completions, such as Menara 1 Sentrum and Menara Kembar Bank Rakyat, for 3Q2013 were rescheduled to a later date. STABLE PERFORMANCE The overall occupancy in the city centre was stable in 3Q2013. The overall occupancy in the city rose 1.7% quarter on quarter to 83%, while the overall occupancy in the city fringe rose 2.9% to 83.5%.

The trend of integrated developments with mixed components that typically comprise retail, serviced apartments, small offices/home offices (SoHos), small offices/versatile offices (SoVos) and/or commercial office space is expected to continue in the coming months. “Well-located, good-grade, dualcompliant green and Multimedia Super Corridor (MSC) status office space with good accessibility and connectivity to public transport

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are also expected to continue to be well received. Furthermore, there is strong demand for space in decentralised locations with good infrastructure and enhanced accessibility,” says Sarkunan Subramaniam, managing director of Knight Frank Malaysia, when presenting The Edge/Knight Frank Klang Valley Office Monitor for 3Q2013. Sarkunan notes that tenants are spoilt for choice as competition has heightened between landlords of

There were tenant movements in Integra Tower, Menara Binjai and Menara Weld in the Golden Triangle, which saw an increase of 1.4% q-o-q in average occupancy to 80.9%. Tenant movements were also noted in Wisma Dang Wangi, and to a lesser extent in the central business district (CBD). CBD average occupancy rate increased 2.5% q-o-q to 84.7%. In the city fringe, the overall average occupancy rate increased by 2.9% from last quarter to 83.5%. Mid Valley City (MVC)/Bangsar/Pantai saw a 4.1% increase in occupancy to 92.8%, while Damansara Heights (DH) and KL Sentral (KLS) registered increases of 1.3% (79.1%) and 2.1%

(67.5%) respectively. Major tenant movements were noted in Menara I & P 2 in DH, Menara Shell in KLS and in a few buildings in MVC/Bangsar/Pantai, especially in Bangsar South. The overall rental rate was flattish. The city centre saw a marginal decline of 0.1% q-o-q in average rental rate, which stood at RM5.96 psf. The average rental rate in the city fringe remained unchanged at RM5.52 psf, which Sarkunan says is reflective of growing pressure on rents due to the high impending supply. The Golden Triangle registered a 0.2% decline from last quarter to RM6.26 psf, and the CBD was unchanged at RM4.76 psf. In the city fringe, average rental rate dipped 0.5% q-o-q in DH to RM4.42 psf and remained unchanged in KLS and MVC/Bangsar/Pantai at RM7.03 psf and RM5.54 psf respectively. There was an overall net absorption of over 510,000 sq ft compared with 398,000 sq ft a year ago. According to Sarkunan, there were two notable transactions in the period under review. Maju Holdings Sdn Bhd sold 24 office lots of its under-construction Tower 3 of Maju Linq in Bandar Tasik Selatan for about RM600 psf to Ipmuda Bhd. The office lots amounted to about 42,792 sq ft of lettable area. Jaya33 Sdn Bhd disposed of its Jaya 33 in Section 13, Petaling Jaya, at RM725 psf to Pelaburan Hartanah Bhd. Jaya33 has a lettable area of 450,000 sq ft. NOTABLE ANNOUNCEMENTS IN 3Q2013 KLCC Property Holdings Bhd (KLCCP) has dislodged its intention to buy the remaining 40% in Suria KLCC held by CBRE Global Investors, opting instead to focus on the redevelopment of Lot D1 and Menara Dayabumi in Kuala Lumpur. KLCCP is in the midst of securing an anchor tenant for the 1.4 million sq ft (gross floor area) Lot D1. Should investment decisions be finalised by end-2013, the development will be completed within three to five years.

YNH Property Bhd is considering turning the proposed Menara YNH in Jalan Sultan Ismail into a mixed-use development comprising a hotel, offices and retail outlets. The Ipoh-based company is currently working on securing anchor tenants. Construction will start upon confirmation of anchor tenants. Its gross development value (GDV) is estimated at over RM3 billion. Ivory Properties Group Bhd’s subsidiary Ivory Place Sdn Bhd has entered into a conditional agreement with Plaza Rakyat Sdn Bhd (PRSB) for the proposed acquisition and rehabilitation of the abandoned Plaza Rakyat project. The leasehold project originally comprised a 79-storey office tower, a 21-storey hotel, a 45-storey serviced apartment and a 7-storey shopping mall. Ivory Properties plans to revive and develop an integrated commercial, residential and transport hub. The construction of Menara Warisan Merdeka in the city centre is expected to kick off by end-2013. Owner and developer Permodalan Nasional Bhd expects to meet the criteria set by DBKL in its development order for the project to receive the green light. Issues such as access roads and routes within the development area are being ironed out. UDA Holdings Bhd has called for fresh bids from local and foreign companies for the redevelopment of the 7.85ha Bukit Bintang City Centre, which sits on the site of the former Pudu Jail. The redevelopment project is part of the Economic Transformation Programme under the New Economic Model. UDA Holdings initially planned a mixed-use development comprising seven blocks of commercial and residential buildings, a hotel, office towers and a shopping complex. Malaysian Resources Corp Bhd intends to dispose of its Platinum Sentral in KLS. The five low-rise blocks of office and retail space are certified with the Green Mark platinum award (provisional) from Singapore’s Building and Construction Authority and have a gross floor area of 980,000 sq ft and a net lettable office space of 445,000 sq ft. Felcra Bhd will launch a premium 1.8ha mixed-use development in Jalan Semarak in early 2014. The development has an initial GDV of up to RM900 million and will comprise a condominium, an office tower and a business centre. It will be developed in two phases. The master developer of Putrajaya, Putrajaya Holdings Sdn Bhd, has planned more commercial developments to

revitalise the township. Its plans include two million sq ft of office space — excluding government office space — and a total of 650,000 sq ft of shops and office suites. The shops and office suites were expected to be launched by end-2013. HCK Capital Sdn Bhd is planning to sell 30 storeys of its 42-storey HCK Tower in Empire City, which was purchased en bloc in December 2012. HCK Tower is part of an integrated development comprising two hotels, a shopping mall, residential and office units, and leisure and entertainment amenities. The office space, which has floor plates of 10,500 sq ft, is being sold at an average price of RM760 psf or about RM8 million per floor. HCK group plans to occupy the top six floors. Emkay Group is looking at setting up a real estate investment trust in the near future. To date, the group owns two Grade A office towers — Wisma Mustapha Kamal in Cyberjaya and Menara Mustapha Kamal in Damansara Perdana. Construction has started in Emkay’s latest addition — Mercu Mustapha Kamal in Neo Damansara, Damansara Perdana — and it is expected to be completed by November 2016. Mercu Mustapha Kamal features two Grade A office towers with a total net floor area of 468,267 sq ft, as well as a banquet hall and retail units. The building is Green Building Index Gold pre-certified. The development will also be MSC Malaysia Cybercentre-compliant upon completion. OPENING AND EXPANSION Starting from Oct 1, 2013, the British High Commission in Kuala Lumpur has been operating from its premises on the 27th floor of Menara Binjai a Leadership in Energy and Environmental Designcertified building in Jalan Binjai. The move is part of a global strategy to modernise and dispose of embassy and high commission sites. Pulsate, a member of Asia’s digital research agency Pulse Group, is setting up a state-of-the-art data solutions centre in Cyberjaya by end-2013. The venture is a collaboration with the industry’s major players, such as Dell, Intel and Revolution Analytics. It is the country’s first such initiative in the big data analytics sector. Pulsate will also be setting up a big data academy in Kuala Lumpur. It will be the first such academy in Asia-Pacific. The entire project, including the academy, will reportedly require investments of between RM20 million and RM60 million over three years.

Prices May Hit Record-High Despite Gloomy Outlook projects with high import content and low multiplier impact may also be delayed (but MRT lines 2 & 3 should proceed as planned).

Dato’ Sri Gavin Tee We expect property sales this year to decline by 5% to 10%, dragged down by slower volume, although prices will likely hold up due to cost push (as seen in the past during periods of sharp spikes in inflation). House price growth may moderate to 3% per year (first nine months of 2013: +12.5%) as rising new supply meets weaker demand. Sentiments should remain subdued (at least in the first half of 2014) given recent tightening measures and inflationary pressures. A potential interest rate hike could dampen disposable income further (every 50 basis point rise pushes affordability down by 1.6 percentage points). While developers may hold back launches and offer more incentives, which will eat into margins, earnings visibility should be intact given current large unbilled sales. Watch out for pressure points as rising building material costs and tight foreign labour supply could heighten execution risk and dampen developers’ margins (challenging to pass on to buyers amid softer demand). There is no property bubble for now, but we fear an oversupply of Kuala Lumpur office space, hybrid high-rise units and Iskandar Malaysia highend condos. Government

We prefer township developers, which should benefit from resilient demand for landed and affordable housing. Conglomerates and investment asset owners should also see earnings holding up. We view IOI Properties Group Bhd as the new sector bellwether given the dearth of large cap entrepreneurial-driven developers. Sector priceto-revised net asset value (RNAV) is trading below the historical mean, which may have partly priced in potential headwinds, but it still lacks re-rating catalysts in the short term. We cut target prices across the board (based on 40% to 55% discount to RNAV) to factor in weaker sector outlook. MKH Bhd is one of our top picks given its large exposure to affordable housing and landed residential property in the Kajang-Semenyih growth corridor in Selangor (beneficiary of the upcoming MRT) along with strong earnings growth potential from rising plantation contribution. Our other top picks are Eastern & Oriental Bhd (potential strong re-rating from STP2 approval and Medini launch) and Wing Tai (M) Bhd on resilient earnings from retail and Penang mass residential. We’ve downgraded S P Setia to “fully valued” (from “hold” due to heightened execution risk) and YTL Land & Development Bhd to “hold” (from “buy”) due to high exposure to highend condos around KLCC.

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Average Household Income of RM14,580 a Month to Afford a Home in the Klang Valley

Rocky Road Ahead for Property Sector

developers work handin-hand to build more houses that are not only accessible. but which can appreciate in value,” he said. Abdul Rahman hoped that other property developers and the academia can carry out similar surveys in the country. Based on the findings, Sime Darby said that 68% ofplanned housing schemes in the Klang Valley were in the accessible range.

You must have an average household income of RM14,580 a month to afford a home in the Klang Valley, according to a recent study.

that are considered not only accessible but have the potential to appreciate in value. They include Nilai, Denai Alam, Bukit Jelutong and Bukit Subang.

The study spearheaded by Sime Darby Property Bhd in collaboration with the Faculty of Built Environment of Universiti Malaya – takes into account the current household spending trend, price of homes and mortgage rates.

A report of the study said that houses in selected areas in the Klang Valley remain accessible to homeowners who may be looking to invest in a second home.

It found that certain groups of buyers interested in strategic areas can have access to houses that are priced at 56 times their household income. The study also found that this same group can afford to spend up to 26% of their monthly household income to service a mortgage. It identified strategic areas in the Klang Valley

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The Housing-Income Index which was launched here yesterday by Urban Wellbeing, Housing and Local Government Minister Datuk Abdul Rahman Dahlan, who said the survey results would be useful for potential house buyers. “The Index and its key findings had been reviewed by the ministry, and we find that the information is valuable as it can help policy makers and

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“We intend to utilise the results to develop innovative, high quality products that are accessible and meet market needs,” said Sime darby Property managing director Datuk Seri Abd Wahab Maskan. The Housing-Income Index was developed to gain a better understanding of home-owner profiles, specifically household incomes and spending patterns in relation to owning a home. The study covered 1,529 respondents, of whom 1,183 were home owners at 12 locations: Bukit Jelutong, Denai Alam, Bukit Subang, Bandar Bukit Raja, Subang Jaya, USJ, Putra Heights, Ara Damansara, Mont Kiara, Melawati, Kajang and Nilai.

Latest Government Cooling Measures Can Help Stabilise Property Market of their children when there are favourable interest rates.

We prefer township developers, which should benefit from resilient demand for landed and affordable housing. Conglomerates and investment asset owners should also see earnings holding up. MRT line is still tunneling despite rocky path We expect property sales this year to decline by 5% to 10%, dragged down by slower volume, although prices will likely hold up due to cost push (as seen in the past during periods of sharp spikes in inflation). House price growth may moderate to 3% per year (first nine months of 2013: +12.5%) as rising new supply meets weaker demand. Sentiments should remain subdued (at least in the first half of 2014) given recent tightening measures and inflationary pressures. A potential interest rate hike could dampen disposable income further (every 50 basis point rise pushes affordability down by 1.6 percentage points). While developers may hold back launches and offer more incentives, which will eat into margins, earnings visibility should be intact given current large unbilled sales. Watch out for pressure points as rising building material costs and tight foreign labour supply could heighten execution risk and dampen developers’ margins (challenging to pass on to buyers amid softer demand). There is no property bubble for now, but we fear an oversupply of Kuala Lumpur office space, hybrid high-rise units and Iskandar Malaysia high-end condos. Government projects with high import content and low multiplier impact may also be delayed (but MRT lines 2 & 3 should proceed as planned).

We view IOI Properties Group Bhd as the new sector bellwether given the dearth of large cap entrepreneurialdriven developers. Sector price-to-revised net asset value (RNAV) is trading below the historical mean, which may have partly priced in potential headwinds, but it still lacks re-rating catalysts in the short term.

PROPERTY CLUBS “Bulk buying by a group of property buyers under property clubs can be disruptive only when they feed on rising prices. If such clubs are more investment orientated and are highly transparent about their operations, I see no harm in them,” Fernandez observes.

Bulk buying creates artificial demand in the early stages of a project’s launch and usually involves high- rise residential strata properties where supply is high

We cut target prices across the board (based on 40% to 55% discount to RNAV) to factor in weaker sector outlook.

There are many ways to stabilise the residential property market and the latest measure by the Government to curb bulk buying is a step in the right direction to ensure a more equitable market that is led by real demand.

MKH Bhd is one of our top picks given its large exposure to affordable housing and landed residential property in the Kajang-Semenyih growth corridor in Selangor (beneficiary of the upcoming MRT) along with strong earnings growth potential from rising plantation contribution.

Urban Wellbeing, Hou­sing and Local Government Minister Datuk Abdul Rahman Dahlan said developers selling more than four residential units to a single buyer or group must now obtain prior approval from the Controller of Housing. The new enforcement would be made compulsory in all real-estate advertising and sale permit materials.

Our other top picks are Eastern & Oriental Bhd (potential strong re-rating from STP2 approval and Medini launch) and Wing Tai (M) Bhd on resilient earnings from retail and Penang mass residential.

Property consultants gave their thumbs up to the move aimed at reigning in property speculation and flipping activities for fast gains.

We’ve downgraded S P Setia to “fully valued” (from “hold” due to heightened execution risk) and YTL Land & Development Bhd to “hold” (from “buy”) due to high exposure to high-end condos around KLCC.

Property consultancy Khong & Jaafar managing director Elvin Fernandez says the curb will in the medium to long term help to stabilise the housing market. “It is very good that these measures have come out. Bulk buying has been misused and the current intended curtailment to limit such buying to four units is good. Bulk buying by speculators with the intent of flipping and crowding out genuine buyers is not healthy,” Fernandez says. He says bulk buying can distort the market when speculative groups of buyers signal to developers demand which in fact is not real demand in the market. However, Fernandez believes bulk buying is a good thing if it is done for genuine reasons such as parents buying houses for each

VPC Alliance Malaysia Sdn Bhd managing director James Wong discloses that bulk buying are mostly done via property investors club and by foreign buyers from China, Singapore, Japan and South Korea. “They are mostly financially strong and are interested to buy in strategic locations with public amenities such as projects nearby to MRT stations and LRT extension lines, which usually have higher opportunities for capital appreciation. Bulk property buyers normally have the financial muscle to buy in bulk to get good pricing and discounts, and they usually go for properties of RM500,000 or more.” Wong contends that bulk buyers of properties are indirectly providing shadow banking financing for projects and assisting developers to fast-track the required sales target for bridging loan drawdown.

the early stages, the stock available to the market quickly dries up and it creates a rush and a buzz for the balance units which sends the unit prices rocketing further. This also sets the tone for prices in the next launch,” Khong explains. COOLING THE MARKET Due to the high number of units booked, developers would be willing to offer more discounts to push sales and pare down their risks. The property clubs are used to bring in quick sales by offering good discounts prior to the actual launch. Developers can get their sales numbers high from the start and prices will rise even higher. Khong says the curb on property bulk buying to reduce unhealthy and excessive speculation in the market needs to be closely monitored and has to be enforced effectively to ensure a fine balance prevails in the market. While excessive speculation and false demand will create problems affecting the capital values of properties, he says too much legislative intervention in the property market will affect its “free market” status.

As such, bulk purchase of properties tend to distort the market as they are sometimes “intermediary” buyers and after buying, wait for opportunity to flip and dispose the properties.

Besides bulk buying, there are other contributory causes for the spike in property prices: developer interest bearing schemes; attractive funding/ financing rates; low fixed-deposit rates and the weak foreign exchange that attracted more foreign buyers to the local market in recent years.

Concurring, CB Richard Ellis Malaysia executive director Paul Khong says bulk buying creates artificial demand in the early stages of a project’s launch.

“On the whole, the curb gives a fairer chance to more genuine Malaysians to own properties at reasonable prices or even at the developer’s original list prices.

It usually involves high-rise residential strata properties where supply is high, but rarely for properties with genuinely strong demand especially landed segment in prime locations.

“The public will continue to invest and make profits from property purchases. With inflation all around, property investments will do well as it is a hedge against inflation and will always be a favourite investment choice for all,” Khong concludes.

According to Khong, bulk buying has been successful in hot areas and allow developers to report 100% sales on the first day of a project’s launch. “Due to the artificial demand of a big take up at attractive prices in

Fernandez foresees more measures and tweaking of the measures to be introduced moving forward. He singled out the DIBS and not property bulk buying as one of the

main factors that has caused the sharp price hikes in the local housing market in the last few years. “The sharp price hike in selected areas of Kuala Lumpur, Penang, Johor Baru and Kota Kinabalu has more to do with the DIBS. Largely, as a result of the DIBS in 2009, transactions in the primary market climbed from about 25,000 housing units a year or about 12% of the residential market in 2009, to about 60,000 units in 2012, or 22% of the residential market nationwide last year,” he says. He says after the DIBS was banned under the Budget 2014 announcement, short-term property investors or “flippers” are finding it hard to operate in the current market, which is an objective of the Government’s cooling measures. When the flippers have been subdued, it will give more room to first-time house buyers, upgraders and investors to participate in the market; the phenomena has been observed in other markets including Hong Kong. “Bulk buying came on more recently in the last year or so when buyers with purely speculative intent came forward to take advantage of the rising market. Until the end of 2012, house prices have been rising in line with household income, increasing at 5% per annum. It is only selected hotspots that prices have spiked to more than 10 times the annual average household income,” he says. As to the practice of pre-launch sales and its impact on other genuine buyers, Fernandez observes: “Prelaunch sales are acceptable market practices for developers because it enables them to gauge demand and is, in fact, a risk mitigation measure. It is only when it is used incorrectly that it becomes questionable such as when genuine first-time buyers, upgraders and investors are excluded. Many pre-launch sales have, for example, been open to only the developers staff, or friends.” He says pre-launch sales should be allowed but some controls must be put in place to ensure all Malaysians who want to buy on the first day are given a chance.

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/// Contributor

Michael Yeoh The Mortgage Expert

With over 15 years of experience in the mortgage and investment industry and working with prominent companies such as Standard Chartered Bank, Hong Leong Bank, HSBC and Hwang DBS Unit Trust, Michael has helped thousands of loan borrowers by providing comprehensive mortgage advisory and solutions. Michael regularly conducts mortgage courses and has produced many graduates. He is also a regular columnist and also has being featured in New Straits Times Press, The Star, Property Guru and also Property Hunter magazine. He speaks regularly in Property Exhibitions, Seminars and also for developers. You can get in touch with him at Website: www.michaelyeoh.com.my

Knowledge is power. With proper knowledge how banks determine credit approval, your chances in getting loan approval will definitely increase.

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Sure Ways to Get Your Loan REJECTED

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ne day after giving a talk for a property developer project launch, one gentlemen approach me and asked me this “Michael, how do I get my loan rejected from the Banks?” I have all kinds of mortgage questions being asked during or after my seminar but this top the list. Interesting, that is why I am dedicating this article to the gentlemen. Well, let’s look at 4 sure ways that can cost you your loan approval.

Overconfidence I was once approached by a couple after my seminar. They look very worried and pull me to one side for a private discussion. Guess what happen. They bought a RM3.5 million commercial property paid 10% and immediately sign Sales Purchase Agreement(SPA). Their biggest mistake is not securing the loan from the bank before paying RM350,000 down payment. After that, their nightmare started. They approached 5 banks 3 rejected 1 approved at 50% another at 60%. They need a margin of 85%. Lesson to be learned: No matter how confidence you are, sometimes that are a lot of unforeseen circumstances that can affect your loan approval. Better make sure your loan is approved and you have sighted the Banks Letter of Offer before proceeding to sign SPA.

Giving Fake Documents While the author makes reasonable efforts to present information which he believes to be reliable, the author makes no representation that the information or opinions contained in this article is accurate and complete. Readers are advised to seek specific professional advice before acting on the views.

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Even the loan is approved but when it reaches the disbursement stage if the banks finds out they have all the right to cancel the facility and report to the police. I have seen such cases happen before.

reason loans gets rejected. Well, if you look at the past few years Bank Negara have introduce many measures to curb lending. It will not be easy anymore and it is not going to be easy in the future.

My 2 cents advised to all loan borrowers. Do not resorts to such way in order to get your loan approve.

You need to be a savvy loan borrower. Knowledge is power. With proper knowledge how banks determine credit approval, your chances in getting loan approval will definitely increase. You don’t even have to trouble yourself and send your documents to many banks. Choose the banks which you have the most likelihood to get approval. Some banks approval are more relax than others.

Panic Imagine yourself as a loan borrower. The bank rejects your loan. What will be your reaction? Most borrowers will PANIC. You will start to get worried especially time is not on your side. The next thing you will do is photocopy 10 sets of your financial documents, then submit to every bank you can find. RED ALERT. This might make your chances in loan approval lesser. Banks can tract your loan submission and rejection to any other banks via Central Credit Reference Information System. In short we call it CCRIS. You go to Bank A and Bank A rejects, Bank B also rejects, Bank C rejects and Bank D actually you have a slim chance to get approval but the problem is they saw 3 previous banks reject your loan. Your guess is correct, they will also reject this loan.

My personal advised to every loan borrower out there. 1. 2. 3.

Do your Research Plan your Mortgage Submission Know your Bankers

And lastly attend my talks where you will receive the latest updated information on the mortgage industry. For information on my latest seminars log on to www.michaelyeoh.com or add me on facebook www.facebook.com/miichaelyeoh.my.

From my experience, different banks have different approval criteria. One bank rejection does not mean you are in trouble. Maybe you do not fit into what the bank is looking for as a borrower. This brings us into the next discussion topic, No Knowledge on How the Banks Approves a loan.

As the name suggest, this should NOT have been done in the first place. I have seen borrowers who are worried cannot get their loan approves by the banks have resorted doing such thing. I also had seen syndicates who are expert in this field. They can even make the EPF statement looks so real. I am not suggesting you do this to get your loan approval. Banks have ways to verify your documents. Like for EPF contributions by a loan borrower the banks will be able to do a cross check with EPF department.

No Knowledge on How the Banks Approves a loan

During my time working in the bank, I have seen many altered financial documents submitted by loan borrowers to me. Sometimes, it is not difficult to spot these.

Many borrowers are complacent when it comes to loan application. They taught loan approval could not be that difficult. This is one of the main

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/// West Malaysia Property News

Affordable Housing: The Buzzword The term “affordable housing” means different things to different people. To policy makers and financial institutions alike, “affordable housing” means that you can “afford” to buy a property and qualify for the mortgage loan based on your income level. However, for house buyers, “affordable housing” not only means being able to “afford” to buy a property and qualify f or the mortgage loan based on the income level but also, it indicates being able to maintain a minimum standard of living. An objective benchmark to measure the affordability of property prices is to compare it against the annual household income. This method is widely used as a benchmark to evaluate the affordability of property prices, especially in urban markets – as it is also endorsed by the World Bank and Harvard University. The optimal target is to purchase a property priced at a multiple of three times your annual household income or less. Realising that this may be difficult to achieve, house buyers should try to achieve a multiple of the property price as a multiple of annual household income of not more than four times. But, what is the reality on the ground? We compared the above “affordability index” to prices of intermediate double-storey link houses at selected locations to find out. Based on international standards, all the above property prices can be classified as “seriously unaffordable” to “severely unaffordable”. The situation is equally bleak even for condominiums. The above “affordability index” has also been compared to prices of condominiums (excluding penthouses) at selected locations. We should also point out that the annual household income assumes that it is the combined income of both working spouses. For single individuals and single parents, the situation is even worse and it is almost impossible for these groups of people to own their own houses. As mentioned, “affordable housing” means being able to buy a house and sustain a minimum standard of living. Using the Annual Household Income statistics of Kuala Lumpur benchmark citing RM103,032 or RM8,586 a month for instance, we can assume the following scenarios:-

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• • • •

House buyer maximises loan repayment which is said to be one-third of the gross income House buyer takes 90% margin of financing after making a 10% down payment The house buyer takes a 30year housing loan Interest rate at (BLR) Base Lending Rate (currently at 6.60%) less 2.50%

The house buyer will be eligible to take a mortgage loan amounting to RM592,303 with a monthly loan repayment of RM 2,862. The property value in total would be RM658,114 (loan of RM592,303 plus 10% downpayment of RM65,811). On its own, such a property may still seem affordable to the house buyer. However, after factoring in the basic household expenses of the current sandwich generation (couples with young children and aging parents), the financial situation of the house buyer could reach distressing levels. The above expenses are actually really basic without much leisure pursuits being factored in. Still, the family is left with only RM506 per month or 5.9% of gross income in savings and they will not have enough cash reserves to cater for any unexpected emergencies. The true “affordable housing” benchmark for a household income earning RM8,586 per month lies within the range of RM300,000 to RM400,000. In this scenario, the house buyer is left with more cash reserves or savings every month. As for single house buyers, their affordability is only half of this amount, ranging anywhere between RM150,000 to RM200,000. However, just ask ourselves, when was the last time we saw a property launch at this price which had a Kuala Lumpur or Selangor address? There is no denying that the prices of suitable houses or “affordable homes” have now reached critical levels – beyond the grasp of average wage earners. This is a highly undesirable situation and if left unchecked, can lead to adverse and far-reaching problems. Eventually, we will end up with a whole generation of people without their own houses. Therefore, they will continue to rent houses, thereby subjecting themselves to the whims and fancies of their landlords.

There will also be those who will commit an excessive proportion of their household incomes towards servicing the house mortgages. CONCLUSION:The average household is finding it ever more difficult to buy their own property with the ever-rising property prices coupled with the rising cost of living. Indeed. The prospect of buying a suitable house is looking bleak. The average rakyat is struggling to purchase his dream house amidst the ever-rising prices of properties which have far outpaced the increase in salaries. Young adults are unable to afford a reasonable, suitable and liveable house that doesn’t require either taking out a back-breaking bank loan or moving out to a distant and bland housing estate that involves mind-numbing daily commutes. Young adults are slowly becoming a homeless generation. Mind you, they are the future economic drivers of the city. Hence, the Government must take concrete and proactive measures to curb the unbridled escalation of house prices. HERE ARE SOME SUGGESTIONS:• •

Stem the rapid rise of property prices due to false demand and excessive speculation Ensure a steady supply of affordable properties to cater to the demands of the lower-and middle- income class Prevent a “homeless generation”

• •

from emerging that will result in many social problems Prevent our young from drowning in debt. Seriously consider the above proposals amongst others to find solutions that can bring down/regulate/curb the spiralling effect of rising house prices.

Chang Kim Loong is the honorary secretary-general of the National House Buyers Association (HBA).

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/// Contributor

I like this simple explanation; assets puts money in your pockets and liability takes money out!

Ahyat Ishak Investment Expert

Ahyat Ishak is the author of the bestseller “The Strategic Property Investor” book and the founder of “The Strategic Property Investment Model & Program”, which has helped many Malaysians create immense and sustainable wealth through property investment. He first began property investing for more than a decade ago and became a property millionaire before the age of 30, having started from humble beginnings. Through his experience and learning from many successful property millionaires, he has discovered the REAL Wealth Formula™ and has also trademarked his Strategic Property Investor Model™, which is the framework for his highly acclaimed workshops, seminars and talks. Academically, Ahyat Ishak has an IT Degree and MBA with the University of Southern Queensland (USQ), Australia, specializing in Strategic Marketing. He also holds the CPT or Certified Professional Trainers with IPMA, UK. Professionally, he is an entrepreneur and is the executive director of his family’s group of companies, which he 1st joined in the 90’s. This group has businesses ranging from services, technology, trading, food, agriculture and property investment. Website: www.ahyat.com YouTube channel: AhyatPropertyTV

While the author makes reasonable efforts to present information which he believes to be reliable, the author makes no representation that the information or opinions contained in this article is accurate and complete. Readers are advised to seek specific professional advice before acting on the views.

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Property Bubbles (Part 2) Lessons from my Property Exploration in Spain & Portugal

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Many newbie and young investor ask me what skills do they need to first learn in order to be a great investor. I’ve identified 8 critical success factors or what I call competencies which I had explained in greater detail in my book, “The Strategic Property Investor”. These 8 competencies shaped the 8 chapters of my book, which I give you permission to buy, if you see them in bookstores (hehe, this is what I call soft-selling!). The point that I want to make is that asset selection, is what I call the ‘critical’ of the 8 critical success factors of a truly strategic property investor. So what kinds of asset do I want to find? This brings me to the next lesson

Property is not an asset! Now I don’t want to shatter your hopes and dreams and all that you were told about property investment. But one of the biggest lessons that I had learned from this life-changing trip was that property is not ‘always’ an asset! In fact, in Spain and Portugal, properties are considered toxic! Most of us grew up with people telling us that property is an asset. While this may be true half of the time, it may be an absolutely horrible myth the other half! Not until we are able to accept this fact, can we start to progress and transform ourselves into the strategic investor that I’ve always talked about; great investors who are able to invest in good times and bad times! So what’s the problem with this age-oldmyth? The problem is simple, if your property is not bringing you income, than it cannot be seen as an asset, it is more like a liability! So what is an asset and what is a liability? I like this simple explanation; assets puts money in your pockets and liability takes money out! Lets use this simple concept which a kindergarten student can understand and apply it to property investment. So if I am living in a RM2million bungalow which burns more than RM10,000 just to pay the loans, it is now a liability. Yes it is a property but no, it is not an asset. Many will argue that I own an asset that appreciates in value, but no, it does not put money in my pockets, so I don’t call it an asset. Second instance, I own a RM2million shoplot but unfortunately bought at a wrong location, facing the wrong side of town, and cant rent out. Yes, it is a property but no, it is not an asset. This property doesn’t put money into my pockets, but instead takes money out, a whole load of it! I am burning Rm10,000 per month and that can never be good, no matter how deep my or anyone’s pockets are, for that matter! Lets start collecting properties, which are real assets. Until and unless we start accepting the fact that property is not always an asset, that is when we will force yourself to be more discerning in asset selection. And that brings me to my next lesson.

Try walking on the streets of the 3 ghost towns that I managed to set my foot on in Spain and I promise you that you come back a changed man. I still cant seem to wipe it out of my mind. I can still so vividly see it every time I close my eyes, in fact, I am still getting nightmares from it. I dream of zombies chasing me down on the streets of those ghost towns! The hair on the back of my neck still stands up every time I think of it. You get my point; it is scary! It is any investor’s worse nightmare to have bought property that end up being ghost towns, or buy into assets that people don’t want to get near of! One powerful lesson that I bring back home is how critical the skill of asset selection is to the investors. The great investors that are still standing today in markets that have crashed are those who are holding great assets. With simple asset selection tools and techniques, any rational and sane-minded person may have seen how ridiculous some of these properties were. But then again, not every investor thinks logically during times of irrational exuberance. The interrelation is quite simple actually, “Great investors find great assets!” This is something that I will dedicate my entire life learning.

his is part 2 of the lessons I am bringing back from my property exploration in Spain and Portugal, which had brought me to 2 nations, traversing 3,500km through 7 major cities, 3 ghost towns, meeting 10 property investors and 35 hours of flight that brought me across more than 20,000km from KL to Barcelona and back. Here are another 3 lessons I bring back from my property exploration in Spain – Portugal:

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The most critical skill: Asset Selection

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IGA: The only 3 letters you need to know in Property Investment So I get it! Find properties that are assets and that asset selection is critical. But what kinds of asset should I look out for? What makes these assets or properties that these brave investors still hold on to today so great? You know what, today must be your lucky day! You are reading the right article in the right magazine, because I’m going to reveal the secret, and it lies in these three very innocent letters; IGA. What does it stand for? It brings 2 very powerful concepts which I promise, if you can apply to your asset selection process, you will be able to find that great asset we all are looking for. The first powerful concept is“Investment Grade Assets”. I don’t want to just find any kind of asset, I want to find Investment Grade Assets! Now this applies to both anyone buying property, regardless if you are buying for own stay or investment. Either way, you must buy Investment grade assets. An investor told me once that it doesn’t have to be investment grade if he is buying for own stay. So it is ok if it is located inconveniently away from town, facing a water treatment plant or not facing the view that he wanted if he is buying for own stay. This is wrong! The second powerful concept is “Income Generating Assets”. I don’t want to just find any kind of asset, I want to find Income Generating Assets! If you can nail this down in your asset selection process, I can almost guarantee that the property that you can invest in good or bad times, and that you will end up buying an asset, not a liability. An Income Generating Asset is a property that will end up putting money in your pocket and not take money out. But what makes an asset Investment Grade Asset and an Income Generating Asset. That I will save for next month’s edition for part 3 of the lessons I bring back from my property exploration in Spain and Portugal. Until then, happy investing!

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/// West Malaysia Property News

Agent: Purchasers Want Affordable Homes but in Safe Neighbourhoods “This is probably to purchase a double-storey house in areas such as Ara Damansara, USJ Heights and Glenmarie, Shah Alam where Sime Darby has developed its housing projects,” said Jones, who is attached to Ramdar Properties. On whether selected areas in the Klang Valley remain accessible to potential house buyers, Jones said although there was affordable housing in various pockets within the Klang Valley, new buyers tended to look for a new environment and preferred to have their home within a gated-community.

Minister of Urban Wellbeing, Housing and Local Government Datuk Abdul Rahman Dahlan (centre), Sime Darby Property Berhad managing director Datuk Seri Abd Wahab Maskan (right) and prof Dr. Sr Noor Rosly Hanif (left), former dean of Faculty of Built Environment of University Malaysia launch the HousingIncome Index by Sime Darby Property The Government must take more action to tackle property price hikes and make homes accessible across the country for the people, especially the middle income group, said MCA vice-president Datuk Chua Tee Yong. He said the commitment by the Government to make homes accessible was commendable. “Further, the Government must take it as its responsibility to provide solutions for affordable housing, which young Malaysians who want to establish a family of their own are finding increasingly difficult to get,” he said in a statement. Chua said this in response to the recently-released Sime Darby Housing-Income Index, which said that house buyers must have an average household income of RM14,580 a month to afford a home in the Klang Valley. Affordable homes are still available in the Klang Valley but many areas with houses priced around RM400,000 and below are not preferable to buyers. Real-estate agent Michael Edward said areas such as Taman Sentosa and Taman Seri Andalas in Klang are examples where the houses are

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affordable but there are few pickers because it lacked security facilities and gated community features. “Buyers want affordable pricing, safety and location when they buy a house. But most affordable houses that are available are usually under the older projects and may have a high crime rate. This puts off potential buyers,” said the Klangbased agent with Rina Properties. Responding to recently-released Sime Darby Housing-Income Index, which said that one must have an average income of RM14,580 a month to afford a home in the Klang Valley, Edward said the survey probably interviewed respondents who owned properties in Sime Darby’s housing projects where prices were much higher compared to other areas. “If other housing projects besides Sime Darby’s are taken under the survey, the average household income should be lower,” he added. Describing the survey as “putting the bar too high”, real estate agent Jeremy Jones said the average household income of RM14,580 per month in the Klang Valley could be applicable to properties valued at RM950,000 to RM1.3mil in strategic locations.

“Therefore, choices for such housing become available to affluent buyers only,” he said. On Monday, Sime Darby Property Bhd in collaboration with the Faculty of Built Environment of Universiti Malaya released the finding of a study that indicated that house buyers must have an average household income of RM14,580 a month to afford a home in the Klang Valley. The study was conducted on 1,529 respondents aged between 21 and 60. Ninety-four per cent of them were married and 59% of them worked in the private sector.

Good Response to MIEA Registration of Negotiators trained since October 2013,” said Siva Shanker, the president of the Malaysian Institute of Estate Agents (MIEA).

Siva Shanker, the president of the Malaysian Institute of Estate Agents (MIEA)

He was speaking to the 28th Malaysian Annual Real Estate Convention (Marec) 2014. Held over the weekend, the convention was titled “Innovative Solutions in a Challenging Market — Ideas That Work”.

The recent registration of real estate negotiators, which has been under way since October last year, has yielded 11,000 registrants.

“In the past couple of months, there have been many changes in the real estate landscape,” said Lim Boon Ping, the convention chairman, in his opening speech.

“To date, we have conducted over 40 classes held across 10 locations nationwide ... Nearly 11,000 negotiatiors have been

Based on research by PPC International Sdn Bhd, a total of RM142.84 billion was transacted in the real estate industry in 2012. Approximately 60%

Hence, MIEA hopes the organisation will be able to play a more active role in the future. “We hope ministers and policymakers will consider engaging us prior to any major policy changes which may affect us,” said Soma Sundram, past president of MIEA. MIEA will spend RM1 million this year to create more public awareness about the importance of dealing with registered estate agents. Later this year, MIEA will issue tags with QR codes to all its members. Customers will be able to scan the QR codes with their smartphones and access the agent’s professional information.

RM1 Million Per Unit Minimum Threshold for Property Acquisition by Foreign Interests Kicks in 1st of March 2014

A foreign interest in Malaysian properties at PH Expo The minimum threshold for acquisition of property by foreign interests has been raised to RM1 million per unit from RM500,000 previously, effective 1st of March 2014, the Economic Planning Unit (EPU) in the Prime Minister’s Department on 28 March 2014. In states other than the Federal Territory of

Kuala Lumpur, Putrajaya and Labuan, the actual enforcement date is subject to the respective state authority, the EPU said in a statement. The unit said this measure was undertaken by the government to stabilise domestic property prices from excessive speculation and to enable local interests to acquire quality

appeal to do so at the State Appeals Housing Committee. Jagdeep Singh also said that the Land Office would use a comprehensive list of all lowcost and low medium-cost projects prepared by the local authorities to check on the background of the house owners who plan to sell their property.

of the transactions (RM85 billion) were made in the secondary market.

properties valued at less than RM1 million per unit, especially residential units.

Further, the Government must take it as its responsibility to provide solutions for affordable housing, which young Malaysians who want to establish a family of their own are finding increasingly difficult to get.

Penang Property to Remain Attractive Despite Controls

The Guideline on the Acquisition of Properties issued by the EPU was first enforced on June 30, 2009 to replace the Foreign Investment Committee Guidelines which have been abolished.

Celebration on Penang’s second bridge The Penang property market will remain as an attraction for both local and foreign investment despite the recent introduction of measures, controls and regulations by the state to curb property speculators. State Housing, Town and Country Planning Committee chairman Jagdeep Singh Deo said the state had received this assurance from the Malaysian Institute of Estate Agents (MIEA) Penang branch with regard to the state’s new housing policy. He said the aim of the policy was to ensure that only those eligible for low-cost and medium- cost housing continue to benefit from it. Jagdeep Singh also said that among the features in the new policy was the extension of the moratorium in relation to the subsequent or secondary sale of private low-cost and low mediumcost housing units to 10 years, from the previous five years.

The guidelines are to control property ownership by foreign interests in Malaysia.

The new policy will also see a moratorium of five years in relation to the subsequent or secondary sale of government and private affordable housing units.

One of the conditions under the guideline is the minimum threshold for acquisition of residential and commercial units, industrial land and agricultural land by foreigners.

However, Jagdeep Singh added that home owners who have reasonable grounds (financial constraints or health reasons) to sell their property before the end of the moratorium period, may

“For example, if somebody wants to sell project A, then the Land Office will refer to project A and see if the requirements have been met,” he added. Jagdeep Singh also said the state government would continue to give priority to providing affordable housing for Penangites. The state will also go all out to ensure prices of property in the state were controlled and not manipulated by speculators. There are a total of 1,182 stratified projects on the island itself (for all strata projects), with a total of 174,564 units as of Dec 31 last year. The implementation of the new housing policy will take effect on March 1. Other measures introduced in the new policy were the introduction of a 3% approval fee in relation to the purchase of property by foreigners and a 2% approval fee imposed on the sellers of property in relation to transactions conducted within three years of the date of purchase. A hire purchase scheme will be re-introduced and a shared ownership scheme is included in the new policy. MIEA caters to 70% of property transactions which constitutes the secondary property market.

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/// West Malaysia Property News

Majority of REHDA Members Pessimistic or Neutral on Real Estate

Neutral and Pessimistic About the Property Industry

REHDA Wants GST Be Implemented Gradually any method (segregation between residential and commercial property development) -- in claiming residual input tax credits as this would help ease the administrative burden when claiming residual input tax.

“It’s not as though the bumiputera units will remain empty. “Eventually they do get sold. “But because there is no official regulation, developers are fearful and hold back these units,” he said, adding that bumiputera units did not appreciate as much as the non-bumiputera ones. REHDA Headquarters Developers are generally expecting a challenging market for 2014 as a result of the cooling measures introduced by the Government in Budget 2014, a survey conducted by the Real Estate and Housing Developers’ Association (REHDA) revealed. The survey, which polled 150 REHDA members from 12 states across peninsular Malaysia, revealed that 87% of the respondents were “pessimistic or neutral” on the outlook for the real estate industry for the first half of 2014. As for the outlook in the second half of 2014, a total of 75% of the respondents were “either neutral or pessimistic” . REHDA president Datuk Seri Michael Yam said the various cooling measures were “gaining traction” and would have an impact on the local property market. “Due to the cooling measures, developers will scale back on their launches. Supply is being held back but the demand is there,” he said at a media briefing yesterday on REHDA’s property industry survey for the second half of 2013.

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According to REHDA chairman of communications, public relations and publication committee cum national treasurer, Datuk NK Tong, the number of project launches also dropped in the second half of 2013 compared with the previous corresponding period. “Overall cost of doing business had also increased in the second half of last year,” he said, adding that unreleased bumiputera lots remained the number one reason for unsold units during the period. “We’re hoping that during these trying times, the Government will look at the bumiputera quota issue, especially in Malacca, where there were 852 units completed with CFO (certificate of fitness for occupancy) as at Dec 31,” he said. Yam said the quota allocation for bumiputera units in Malacca was at 60%. “If you use an average price of RM250,000 per unit, at 850 units, that’s over RM200 million trapped in the system, which the developers have to bear.

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The survey also revealed that 74% of the respondents believed that the implementation of the Goods and Services Tax (GST) would have an adverse impact on the property industry once it is implemented in April 2015. According to REHDA’s immediate past president and finance and investment committee chairman Datuk Ng Seing Liong, the association had submitted various proposals to the Government concerning the GST. Among the proposals is for the Government to have the stamp duty on transfer of real property to be maintained at the current maximum 3% instead of the proposed 4%.

REHDA president Datuk Seri Michael Yam The Association of Real Estate and Housing Developers (REHDA) has reported that most respondents from its property industry survey 2H 2013 were neutral and pessimistic about the industry in 2014. REHDA president Datuk Seri Michael Yam pointed out that most respondents viewed that various cooling measures announced in Budget 2014 would have negative impact in the industry. On 2H 2013, he said, “The number of respondents with launches and total units launched have gone down compared to the previous corresponding quarter.” “Sales performance has also gone down, recording a 20%

reduction in the number of units sold to 1H 2013,” Yam added. Unreleased Bumiputera lots remained the major problem for unsold units while buyers difficultly to obtain endfinancing was mainly the result of financial institutions’ stricter requirements arising from BNM’s introduction of responsible lending guidelines directive to banks in late 2012, Yam said.

Changes at the Top in Tropicana

The Real Estate and Housing Developers’ Association Malaysia (REHDA) has proposed that the goods and services tax (GST) be implemented gradually as it will have an adverse impact on the affordability of housing to the people. Its Finance and Investment Committee Chairman, Datuk Ng Seing Liong, said the 6% GST, which would be implemented from April 1, 2015, was quite high and the consumers would be burderned by it. “The developers’ margins will also be lower with the GST,” he said at a media briefing on ‘GST -- Impact on the Housing Industry’. Ng said REHDA has submitted its proposals on the GST to the government and was awaiting the response. “REHDA has requested the Finance Ministry give serious consideration to the proposals as the implementation of GST in its current form will cause financial hardship, adding to the costs of development resulting in overall increase in house prices and will be eventually passed on to

the buyers,” Ng said. He said one of them was that REHDA wanted the government to extend the zero-rated goods and services to major cost components of property development projects like steel bars, iron, cement, concrete and aggregate sand or consider provisions for some relief to the suppliers to help them deal with cash flow issue. “The suppliers may end up passing the costs in the form of higher prices,” he said. The industry also wanted the stamp duty on transfers of real property be maintained at the current maximum 3% instead of the proposed four, he said. Ng said the imposition of GST would add another layer of cost as there were already multiple ‘taxes’ imposed such as real property gains tax, Construction Industry Development Board levy and service tax. Another proposal, he said, was to allow developers adopt a fixed allocation -- either builtup, land area (acreage) or

For sale purchase agreements of land entered prior to appointed date of April 2015, payments received of invoices issue prior to the appointed date where the supply of land is made available after appointed date will not attract GST, he said.

Tropicana’s first project in Kota Kinabalu, Tropicana Landmark Tropicana Corporation Bhd has promoted two key members of its senior management team and appointed a second group managing director, as the company seek to boost its transformation into becoming one of the top developer in the country. Former group managing director Datuk Dickson Tan was promoted to deputy group chief executive officer. His deputy, Edmund Kong Woon Jun, has been appointed group managing director. The group has also appointed Kok Kong Chin, who was previously a banker at CIMB Group, the other group managing director effective March 14. Better known as KC Kok in investment banking circles, Kok was responsible for bringing the private equity

firm, CVC Capital Partners, to Malaysia during the privatisation if Magnum Corp Bhd in 2007. Then Kok was a senior member of CIMB Investment Bank. “The promotion of Dickson Tan and Edmund Kong to positions of greater responsibility is timely as it coincides with our strategic transformation plan for accelerated growth and unlocking of value of the Group’s substantial asset base and landbank,’’ Tan Sri Danny Tan Chee Sing, founder and group executive vice chairman said in a statement. “I trust that with the capabilities of both Dickson Tan and Edmund Kong, together with Datuk Yau Kok Seng who joined us in January last year as group CEO.

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/// International Property News

Can Singapore Safely Deflate Its Property Market?

$350 Million Mega-Tower Planned in Melbourne

of borrowers if mortgage rates rise by 300 bps. Keeping those households from dumping their properties into an already slowing property market is likely key to keeping an even economic keel in the city-state.

INTERNATIONAL

Bugis Village, Singapore

PROPERTY NEWS

Singapore’s famously efficient government faces a challenge that has stymied many a country before: safely guiding its toppish property market to a soft landing as interest rates rise.

Catch up on the latest property and real estate news, views and analysis from across the globe featured

130sqft Hong Kong Store Sells at Record Price of $23million

A tiny Hong Kong store measuring just 130 square feet (12 square metres) has sold for more than $23 million, as prices reach astronomical levels in a city ranked the most expensive for retailers in the world. The southern Chinese territory was accorded the title by commercial real estate giant CBRE in February, as prime rents surpassed those of the most exclusive addresses in New York, London and Paris. The shop, located in Hong Kong’s retail heart of Causeway Bay, sold at a rate of HK$1.38 million ($177,726) per square foot, breaking a previous Hong Kong

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record of HK$932,000 per square foot, the South China Morning Post reported. “Buyers probably think that Hong Kong retail prices are still on the rise,” CBRE Executive Director for Retail Services Joe Lin told AFP, saying the buyer may have thought the store was a good investment. Mainland Chinese tourists will continue to visit the city in large numbers and will “keep the rent at a very high level”, Lin explained. He also said the ground-level shop, whose current tenant sells electronic appliances, was bought at such a high price because of

the shop’s prime location in the district. Lined with luxury stores, the area is near major shopping malls and attracts a large number of locals and mainland Chinese tourists. Government figures show that visitors from mainland China accounted for 75 percent of the city’s tourist arrivals in 2013. Retail rents in Hong Kong’s prime locations stood at $4,334 per square foot last year, beating runner up New York at $3,300 per square foot by a large margin, CBRE said.

Property prices in the city-state have surged over 60 percent since 2009, propelled by rockbottom global interest rates and quantitative easing in developed economies, even as Singapore’s government has enacted a series of cooling measures to prevent a bubble from forming. But the prospect of rising interest rates as the U.S. Federal Reserve begins tapering its asset purchases has spurred fears that Singapore’s property market could be headed for a crash as higher mortgage payments could spur forced selling and defaults. This week, Singapore indicated the specter of forced selling remains a serious concern, with the central bank, the Monetary Authority of Singapore (MAS), relaxing one of its cooling measures, the Total Debt Servicing Ratio, or TDSR. The measure aimed to ensure that buyers’ monthly payments do not exceed 60 percent of

their income, so they wouldn’t be caught out by a spike in interest rates. Most mortgages in Singapore have adjustable, rather than fixed, rates. The government now allows an exception for borrowers who took out their loan on their home before the TDSR was introduced last year and who need to refinance as their payments rise. “These exemptions will reduce the incidence of TDSR-imposed fire sales and lower the risk of a property market collapse,” David Lum, a property analyst at Daiwa, said in a note, adding the exemption could prove crucial as it will insulate owner-occupied homes from the pressure. “This should help to reduce possible systemic risk from the TDSR, or any blind application of policy thresholds,” he said, adding that the latest steps likely indicate the TDSR has been the most-effective cooling measure. The MAS estimates around 5-10 percent of Singapore’s borrowers have a monthly debtservicing burden that exceeds 60 percent of their income, with that percentage potentially rising to 10-15 percent

The consequences of getting it wrong on efforts to guide the property market to a soft-landing can be both long-lasting and high. While much of the U.S. housing market has shown significant recovery only five years after the Global Financial Crisis, Singapore’s property market didn’t fare as well in the wake of the crash during the Asian Financial Crisis in the late 1990s. It wasn’t until 2009 that the city-state’s private residential property prices returned to their 1996 peak level, according to the government’s property price index data. Others also believe the latest steps, which aren’t likely to affect new sales, will help prevent a meltdown. Without the changes, “stressed” households with TDSR ratios above 60 percent would be “held to ransom” by lenders as payments rose without the option to refinance, Citigroup noted. “This ensures a softer landing for such ‘stressed households’ as well as ‘fringe households’ (40-60 percent TDSR, which form one in five borrowers), whose debt servicing burden could deteriorate upon any adverse changes in their household cashflows,” Citigroup said in a note.

La Trobe Street, Melbourne A $350 million mega-tower proposed for La Trobe Street will be double the size of any other Melbourne apartment building and the third largest in the world by floor area, if approved. The massive residential skyscraper, the city’s largest to date, will house a population equivalent to the small Gippsland town of Foster in its 1343 apartments which are set behind a soaring, fluted, glass exterior. A listed Malaysian development company UEM Sunrise is behind the project, on a La Trobe Street site opposite Melbourne Central shopping centre. The huge structure will rise 285.5 metres or 82 storeys into the air and dominate the city’s skyline. It will dwarf the city’s next biggest residential building, which has 701 units and was constructed last year by another offshore developer, Far East Consortium, on Spencer Street’s old power station site. Melbourne’s tallest building, Eureka Tower, has only 556 apartments in its 297 metres. The new proposal is likely to further inflame debate about over-development in the city. ‘’I’m surprised about the scope and size of the building. Someone’s trying really hard to break a record somewhere,’’ Melbourne City councillor Ken Ong said. ‘’It’s very tall and in a high part of the city,’’ Cr Ong said. The

tower just scrapes under the city’s maximum height limits - by one metre - set by Essendon Airport’s PANS-OPS flight path restrictions. The ‘’massive explosion of big buildings’’ was proving a challenge, architect Rob McGauran said. Large towers should include social and community spaces, he said. ‘’Effectively we’re putting one town in a building … what sort of things would we have in a town of that size and are they available in the building?’’ he said. Foster has schools, childcare centres, a hospital and multiple shops. Planning Minister Matthew Guy has shown uninhibited support for tall buildings, recently fast-tracking approval for five large towers with more than 2000 apartments. ‘’We are aggressively promoting central city growth,’’ Mr Guy said at the time. Melbourne is an epicentre for offshore developers ploughing money into apartments. Another Asian developer, Chip Eng Seng, wants to build 1041 units in a $250 million 77-storey tower on the former Carlton & United Breweries site at the city’s northern fringe. Neither UEM or its architects Elenberg Fraser would comment.

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/// International Property News

Perth Is Australia’s Most Expensive City Perth costs could include isolation, the cost of transport and unnecessary regulations.

Daredevils Scale 128-Floor Shanghai Tower Without Ropes

Jakarta Is World’s Hottest Luxury Property Market

Singaporeans Take Wait-and-See Approach to Johor Property

He said surveys in the food and beverage industry revealed WA profits were no higher than in the east, suggesting genuine reasons for higher prices in WA. View of Northbridge in Perth from BHP Tower Perth is Australia’s most expensive city and one of the priciest in the world as the cost of living spirals higher. An international breakdown of prices from bread to coffee to imported beer shows Perth is the dearest Australian capital. And the city is more expensive than global centres such as New York and Tokyo. The figures are based on data from the Numbeo website that collates real-time prices around the world and has the biggest collection of data of its type. Numbeo’s price index puts Perth about 7 per cent dearer than Sydney, the nation’s second most expensive major capital. Some higher costs are dayto-day purchases. Perth’s average milk price at $1.63 a litre is well above the $1.47 in Sydney and $1.48 in Melbourne. Chicken breasts, apples, local beer and oranges are all more expensive in Perth than elsewhere. And once out of the kitchen, Perth prices really take off. Our dearest coffee is notorious at an average $4.43 for a cappuccino in the city - the most expensive in the country and up with London ($4.40) and Tokyo ($4.13). The situation is the same with restaurant meals. Numbeo’s analysis puts the cost of three courses for a

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couple in a mid-range restaurant in Perth at $100. In Sydney, Melbourne, Brisbane and Canberra the same night out is closer to $80. Beer can be $3 more in Perth restaurants and bottled water will cost on average about 7 per cent more than in Sydney. A pair of jeans is $20 dearer in Perth than Hobart and about $5 more than in Melbourne.

Mr Woods said the mining boom resulted in higher wages. “We’ve got to be very mindful that we don’t outprice ourselves and still offer value for money,” he said. “Higher prices are a careful balancing act between viability for business operators and service providers and ensuring it’s not a disincentive for people to live and visit.”

The average price for Nike shoes is more than $160 in Perth but $9 cheaper in Sydney.

Australian Retailers Association executive director Russell Zimmerman was surprised at the findings because Sydney retailers had the highest tenancy costs.

Perth’s only saving grace is property with rents and buying prices still lower than Sydney.

He suspected transport costs, mining boom flow-on effects and higher labour costs were behind Perth’s higher prices.

Chamber of Commerce and Industry WA chief economist John Nicolaou said Numbeo’s findings confirmed Perth was a high-cost place to live and do business.

Tourism Council WA chief executive Evan Hall said Consumer Price Index statistics consistently showed Perth was not the most expensive Australian city.

Labour was “without doubt” the main contributor but Perth’s isolation meant costs such as freight and logistics were often dearer.

Curtin University cultural studies professor Jon Stratton said the perception that Perth people earned lots of money could contribute to higher prices.

“WA’s rapid development has put further pressure on ageing infrastructure and driven up labour costs,” Mr Nicolaou said. He suggested the Federal and State governments could ease some costs through labour reforms, less red tape and addressing infrastructure shortfalls. Australian Hotels Association WA chief executive Bradley Woods said factors behind

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The figures come as ABS data released yesterday showed Perth house prices rose another 3.5 per cent in the December quarter. Community Housing Coalition WA chief executive Barry Doyle said this reflected an “alarming level” of inflation in the cost of WA home ownership.

Insane daredevils above the clouds on Shanghai Tower A pair of masked Russian thrill-seekers climbed the secondtallest building in the world without safety equipment to film above the clouds. Adrenalin junkies Vitaliy Raskalov, 20, and Vadim Makhorov, 24, captured the dizzying bird’s eye view from the top of the Shanghai Tower after a two-hour ascent. The pair, from Novosibirsk and Moscow filmed themselves breaking into and climbing the 2,130ft (650 metres) tower - twice the height of London’s Shard building. Apparently unsatisfied with the view, they then climbed the crane on top of the partiallyconstructed building in Shanghai’s Luijiazui district. Unbelievably, the selfstyled “sky walkers” used no safety equipment on their ascent and had to wait for the cover of darkness to avoid the Chinese authorities. Mr Makhorov said, “there are a lot of guards and cameras around in the day time, so we started climbing during the night, it was easier to stay unnoticed that way. “It took about two hours to get to the top, but

when we got there we could only see clouds.

Jakarta posted the largest price gains in the world, with the price of a luxury home increasing

“We had to wait for hours for the clouds to part, but it was well worth the wait, the view was like something from an aircraft window.

Where’s the hottest luxury real estate market in the world? Try Jakarta for the second year in a row.

“As soon as we saw a gap in the clouds were climbed right to the top of the crane and were able to get some great shots of the city below. “We were not afraid at all and we have never had any injuries as a result of our sky walking. “As a result of our ‘mission’, we didn’t get any sleep for over 24 hours, it was physically and mentally challenging for the both of us. “Our target was to climb the highest tower in China and the seconds highest in the world, it felt amazing to accomplish it, the sky is the limit!” In just one month in 2013, the duo conquered 12 cities in seven countries, scaling famous landmarks including the Eiffel Tower, and Barcelona’s Sagrada Familia cathedral. To watch it all: http://www.youtube. com/watch? v=gLDYtH1RH-U

According to Knight Frank’s Prime Global Cities Index, which tracks luxury real estate markets in 30 cities around the world, prices for top homes in the Indonesian capital rose more than in any other city, up 37.7% at the end of 2013 from the year before. Liam Bailey, Knight Frank’s global head of residential research, cited “very limited supply” and “very strong” demand as factors driving Jakarta’s high luxury property prices, “even if the Indonesian economy isn’t as strong as it was maybe two years ago.” It’s the second year in a row Jakarta has topped the list. In 2012, the city saw its upper echelon of homes jump 38% in price from 2011. The increase in Jakarta was more than double the price rise in secondranked Dublin (17.5%) and Beijing (17.1%). Ranking No. 4 and 5, respectively, were Dubai (17%) and Los Angeles (14%). The brokerage firm, which released its quarterly update on Tuesday, defines “prime real estate” as homes

that were sold in the top five percentile in terms of value. Meanwhile, Singapore and Hong Kong, which were once hot real estate markets in Asia just three years ago, have cooled thanks to government measures, such as higher stamp duties, intended to restrict speculation and foreign buying. Specifically, these measures have “impacted the flow of Chinese money coming into those markets,” Mr. Bailey said. Those two markets saw slight decreases in 2013 – Singapore was down 0.8% and Hong Kong declined 2.2%. Among the global financial centers, New York ranked No. 9 (10.4%) and London ranked No. 12 (7.5%) Which way is the global real estate market heading in 2014? Look to London, Mr. Bailey said. “It’s the bellwether. Price growth is strong but it’s going down. We’re seeing the effect of the fear of rising interest rates,” he said. See the full list of the 30 cities in the Knight Frank Prime Global Cities Index, ranked by price increases in last quarter of 2013 compared to the same year-earlier period,

Knight Frank Prime Global Cities Index 1.Jakarta 37.7% 2.Dublin 17.5% 3.Beijing 17.1% 4.Dubai 17.0% 5.Los Angeles 14.0% 6.Tel Aviv 12.7% 7.Bangkok 12.3% 8.San Francisco 10.4% 9.New York 10.4% 10.Sydney 9.3% 11.Tokyo 7.9% 12.London 7.5% 13.Shanghai 7.3% 14.Monaco 6.0% 15.Vienna 5.5% 16.Kuala Lumpur 5.5% 17.Vancouver 5.3% 18.Madrid 5.0% 19.Nairobi 4.9% 20.Miami 4.3% 21.Mumbai 3.0% 22.Moscow 2.1% 23.St Petersburg 0.6% 24.Cape Town 0.2% 25.Rome 0.0% 26.Singapore -0.8% 27.Zurich -2.0% 28.Hong Kong -2.2% 29.Paris -4.0% 30.Geneva -8.0%

A Johor project featured in a property show in Singapore Despite the delayed implementation of the RM1 million (S$387,000) minimum property price threshold for foreigners in Johor, Singaporean buyers are unlikely to rush in, according to Khalil Adis, Founder of Khalil Adis Consultancy. He noted that Singaporeans are used to the orderly and uniform implementation of policies in their home country. “Without a similar framework in Malaysia and (given) the sudden implementation in federal controlled territories, I suspect they would rather wait out until the policy has been cast in stone. “Singaporeans do not want to be caught in between where they suddenly find themselves unable to secure loans should they purchase properties below RM1 million. In Iskandar, for instance, only OCBC is willing to finance loans for properties less than RM1 million,” said Adis. Moreover, buying interest in Iskandar among Singaporeans has cooled in recent months, despite the Singapore dollar racing to a 16-year high against the ringgit last month and the existence of special economic zones such as Medini, where foreigners can purchase properties below RM1 million with no real property gains

tax (RPGT) up to 2020. “I think this is due to the lack of clarity that arose from Malaysia’s Budget 2014. As far as we understand, the federal government decides what the measures will be (i.e. raising minimum purchase price) but the state has the prerogative to decide when to implement. This is what is causing the wait-andsee situation. “Singaporeans now mainly want to understand the market, wait for the policies to be implemented and do lots of research until they are ready to go back to the market,” Adis added. Last Saturday, the RM1 million minimum threshold for foreigners took effect in all federal administered territories – Kuala Lumpur, Putrajaya and Labuan. But for Johor, the policy takes effect in May. Previously, Penang was the only Malaysian state whereby foreigners were subject to the RM1 million price threshold for condominiums.

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Contributor

/// Banking and Investment News

$₤ ¥ € BANKING & INVESTMENT

7 Home-Buying Mistakes Almost Everybody Makes gifting money for a down payment, their input may be necessary.

For most people, a home is the largest purchase they’ll ever make, so choosing the wrong property can have disastrous implications for their wallets and well-being. Still, many homeowners feel a strong sense of pride in putting their mark on the property, building equity and having a place to truly call their own.

NEWS

The banking and investment industry has a crucial role to play when it comes to property. Read about the most recent news and trends in this trade

Whether you’re a seasoned or first-time buyer, here’s a look at seven home-buying mistakes to avoid.

Bank Proposes Banks to Introduce Prime Financing Rate rate framework for the industry to price retail loans. The briefing was chaired by governor Zeti Akhtar Aziz.

Bank Negara Malaysia (BNM) has proposed that banks introduce a prime financing rate (PFR) to replace the base lending rate (BLR) as the reference for pricing retail loans, bankers said. BNM briefed senior bankers on its proposal for a new reference

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“It was proposed that a PFR - set by the respective banks replace the BLR for the pricing of all retail loans,” said a retail banker who spoke to The Edge Financial Daily on condition of anonymity. This suggest that banks will quote their lending rates as “PFR plus (a spread)”, rather than the current practice of

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Will 2014 Be Kind to Investors in Industrial Real Estate?

“BLR minus (a spread)”, he said. The PFR of each bank would be calculated based on the benchmark cost of funds plus the statutory reserve requirement (SRR), he said. The spread will reflect the bank’s profit margin, operating costs and credit risk, among other things.

A report by Business Monitor International on real estate in Malaysia for the first quarter of 2014 says that slowly but surely, industrial real estate is growing in its portfolio of investments. It is the way to go, in terms of property investment in Malaysia. The recent announcement on the National Automotive

Policy (NAP) 2014 promoting Malaysia as a single production base and marketing hub for energy efficient vehicles (EEV) is also likely to see industrial production expand and improve. This will obviously have a positive impact on the industrial property sector.

1. Using the wrong real estate agent. Just because your sister’s college roommate’s friend just got a real estate license doesn’t mean she’s the right agent for you. Real estate agent Herman Chan suggests vetting agents and looking for someone who does real estate full time and knows the local inventory. “You can lose an offer if you’re not responsive in a couple of hours,” he says. Request the agent’s sales data, and find out how he or she communicates. Chan recommends asking questions like these to gauge the agent’s techsavviness: “Is it OK if I text you? If I can’t make an open house on Sunday, can you shoot me a video?” If you prefer to check texts and emails on your phone, you may not want an agent who insists on faxing documents. 2. Shopping before you get preapproved. Before you get serious about buying real estate, find out how

much mortgage you qualify for and get a preapproval letter from your lender. “If you fall in love [with a property], write that offer and then find out you can’t afford it, it’s an emotional roller coaster you can’t afford,” Chan says. Many agents won’t even take buyers to showings until they have a preapproval letter for that very reason. 3. Maxing out your spending power. Qualifying for a-million ringgit mortgage does not mean you should buy a Mansion. Jon, regional sales manager for a real estate agency, says he’s seen people, especially first-time buyers, make this mistake. “It’s wiser to be a little more conservative,” he adds. Homeowners have additional expenses such as property taxes, condo fees and maintenance that renters do not, so some first-time buyers fail to budget for these extra costs and assume they can afford a monthly mortgage equivalent to the rent they paid. 4. Taking advice from outsiders. Parents, relatives or friends who haven’t bought property in the local market may not understand local pricing and market conditions. Parents or in-laws who own houses in the suburbs may also have unrealistic expectations about what the equivalent amount of money buys in the city. “Be careful about people that are giving you advice from across the country,”. When parents are

5. Skipping the inspection. Home inspections can help alert potential buyers to problems such as structural issues, faulty wiring and other problems a layperson probably wouldn’t spot. But if you’re in a market that moves quickly, you might be tempted to skip an inspection to make the offer more appealing. Insisting on an inspection might slow the process, but any seller that is going to knock you out because of that is probably hiding something anyway. You’re spending hundreds of thousands of ringgit, [so you want] to make sure you’re getting what you think you’re getting. 6. Overdoing contingencies. While home inspections are recommended, some homebuyers include so many inspection-related contingencies that it can scare off the seller and his or her agent. Some buyers are nervous, so they’re looking for extra ways to change their mind and walk away. You can write a competitive offer without all these extra things and leave yourself a couple of ways to get out. Talk to your agent before submitting the offer, so you’ll feel confident your interests are protected. 7. Getting too attached to one property. In competitive markets, you may have to put in offers on several properties before one is accepted. Some buyers get so infatuated with one property that a rejected offer hits them hard. It’s OK to feel anxious, but you need to be able to fall in and out of love during a home search. If you find a home that you think is perfect for you and you don’t get it, you can’t stay down too long. You have to recognise that wasn’t the house for you.”

Residential Property Prices Head North

Residential property price comparison chart The presence of Chinabased developers in Iskandar Malaysia could be a bitter-sweet experience for the property market in the state. On one hand, their presence in Johor would lead to the “internationalisation” of the property sector in the state but others are worried about the overhang that awaits the secondary market when buyers decide to sell. Malaysia Institute of Estate Agents (MIEA) president Siva Shanker praised Country Garden Holdings Co Ltd for having the confidence to offer about 9,000 units for sale at one go but he worries of the impact on the market in Johor. Says Siva: “The whole of Mont’ Kiara comprises between 18,000 and 20,000 units of apartments and that took some 20 years to build. But 9,000 units coming in over a period of two to three years will seriously throw the market off balance!” “Country Garden has done well with their shock and awe system of launching so many units. They held a clever marketing campaign with a fun fair-filled

atmosphere to lure people. They priced their units slightly lower than their competitors. “They also had a big show in China to sell their properties there.” It is speculated that Country Garden may have priced their units at RM200 per sq ft. According to CB Richard Ellis (Johor) Sdn Bhd director Wee Soon Chit, Country Garden reportedly acquired about 57 acres freehold waterfront land at about 380 per sq ft. “They started taking booking fees for about 9,475 high rise residential units in mid2013. They reportedly spent about RM150mil for their sale carnival from Aug 11 till Sept 10. The response was good with more than 50% of the units reportedly booked.” Wee says aggressive promotions were done to attract both local and foreign buyers, especially from Singapore and mainland China. “The number of units launched was big. Certainly it has never happened in Johor Baru or maybe even in Malaysia.”

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/// Banking and Investment News

Possible Regulatory Ruling Detrimental for Malaysian Banks “Those which do not meet the requirements would have to increase their CA (and ultimately credit cost) in CY14-15 even if their asset quality is improving.”

New Conditions to Curb Property Speculation Soon to Be Imposed

For banks with CA ratio of above 1.2%, the new ruling would limit the room for them to further reduce their CA ratios, it highlighted.

A possible regulatory ruling requiring banks to maintain a minimum collective assessment (CA) ratio of 1.2% over total loans will have a negative impact for banks here. Industry sources have indicated that there could soon be a new regulatory ruling which requires banks to maintain a minimum collective assessment (CA) inclusive of regulatory reserve ratio of 1.2% over total loans (excluding government loans and net of individual assessment provisions) from December 15 onwards. Analysts at CIMB Investment Bank Bhd (CIMB Research) registered surprise should this be implemented as domestic banks’ asset quality have been improving over the past few years. “We see this as a potential prudential measure for banks to build up their reserves against any rise in impaired loans in the future,” it highlighted in a research report. According to CIMB Research’s calculations, four banks namely Maybank, Public Bank, Affin and Alliance had CA ratios of below 1.2% at end-of September 2013.

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“We do not view this as alarming as most of them, especially Public Bank, have strong asset quality. “Public Bank has a shortfall because it took the opportunity to reduce its CA ratio from 1.5% to 0.7% upon the full adoption of FRS139 between 2010 to 2012, supported by its strongest asset quality. “Its gross impaired loan ratio of 0.6% at the end of September 2013 was less than half of the industry’s 1.4% and unrivaled by other local banks. “Its loan loss coverage stood at a comfortable level of 117.3% at the end of September 2013 versus 97.9% for the industry.” For Affin and Alliance, CIMB Research said their CA ratios were lowered by several rounds of write-backs in the past few years. Nevertheless, itnoted that they would have to top up their CA in CY14-15, potentially leading to a rise in credit costs even though the impaired loan ratio is expected to be stable. “Based on our estimates, this could lower banks’ net profits by between 0.5% (for Hong Leong Bank) and 11% (Public Bank) in CY14 to CY15.

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“Though margin contraction could be less severe in 2014, we do not advise investors to raise their holdings in banks due to the potential slowdown in loan growth. “We expect banks’ asset quality to be stable but the potential higher requirement for CA ratio could lead to a rise in banks’ credit costs.”

No Horsing Around With Your Investment This Year the “men”, and not the “boys”, among the players are best positioned to withstand the test. Buyers must watch out for offers that are not realistic — you would not want to be saddled with an inferior product. Your best bet would be to buy from established developers that have a good track record. S P Setia’s innovative 5:95 scheme for its Setia Alam township was wellreceived

Minister of Urban Wellbeing, Housing and Local Government, Datuk Abdul Rahman Dahlan The Ministry of Urban Wellbeing, Housing and Local Government plans to enforce a new condition to curb property speculation, said its Minister Datuk Abdul Rahman Dahlan. He said property developers who intended to make bulk sales of more than four units must obtain prior approval from the Controller of Housing. The ministry is talking to Real Estate and Housing Developers’ Association of Malaysia (REHDA) and expected to announce the measure in a month’s time, Abdul Rahman said. The new enforcement would be prescribed as a mandatory requirement in every advertisement and sale permit for housing development, he told reporters today. “The government will continue its various measures to help the people own houses, and weed out unhealthy speculative activities in the housing sector,” he said. The ministry, however, didn’t plan to undertake extreme measures to curb property speculation because the market

had to work on its own mechanism, he said. “It’s a free market. Prices should be determined by supply and demand,” he said. The minister also said the government might raise the budget for MyHome scheme this year. “If the project is well received, we could pump in more money,” Abdul Rahman said. The government recently announced an allocation of RM300 million for the private affordable ownership housing programme, to be launched on April 1. Under the scheme, the government will subsidise first-time buyers, who earn less than RM3,000 a month, up to RM30,000 to purchase low-cost houses. Qualified applicants can apply online when more details are announced closer to the launch date, the minister said.

Brace yourself for a rough ride in the Year of the Wood Horse. Caution is thick in the air and sentiments have largely been reversed compared with a year ago. A wait-and-see mood is now the order of the day. Interestingly, even feng shui experts are giving conflicting predictions on the real estate and construction sectors in Malaysia. A sign of uncertainty, don’t you think? Whatever the case may be, the reality remains if developers have been working hard to woo buyers previously, they should expect more trying times ahead. The market-cooling measures unveiled in Budget 2014 have already kicked in, no doubt. Though not unexpected what with the escalating property prices and household debts even genuine buyers are not spared the tighter lending regulations.

solely on the attractive Developer Interest Bearing Scheme (DIBS) and easy mortgage regime start servicing their loans in a quiet or downturn market. In such a scenario, speculators will have no choice but to become longer-term investors or exit at a loss. For those who can recall, there was a mixed reaction when S P Setia introduced the innovative 5:95 scheme for its Setia Alam township project in 2009. Because the easy financing scheme only required purchasers to put a 5% downpayment, the project was a big hit with buyers. However, sceptics were worried about the impact on the market when these houses were ready two years later. But as it panned out, the units were completed during an uptrend in the market, so the buyers found themselves in the money.

Besides the supply and demand factor, the market is also grappling with growing concerns about inflation.

Speculation is not apparent on the secondary market where the subject properties are already built and thus offer no immediate “window” for price appreciation.

Consequently, the volume of real estate transactions is getting thin. Still, it is not all doom and gloom. The good news is interest in real estate has not faded altogether. This is particularly so for select property types, including landed homes in preferred addresses with good accessibility. Gated developments remain attractive because of security issues. Affordable homes with immediate or promised accessibility are also much sought after.

Developers know that it is an uphill task trying to win over the shrinking pool of buyers in the coming days. The cost of doing business, land and building materials is rising yet demand for homes is subdued. With creative pricing schemes such as DIBS no longer allowed and financial institutions more stringent on financing, developers will have to compete through cost efficiency, product and design creativity, branding and marketing.

Contrary to widespread speculation, price dips have not been noticeable. The real test, however, will come when speculators who invested based

Then there is the Goods and Services Tax (GST) to contend with from April 2015.

Banks Urged to Subsidise Rates for Low-Income Earners

Meanwhile, it’s no party for contractors either. While construction material prices have not yet increased in tandem with higher fuel and electricity costs, a hike is imminent, like it or not. Some may argue that a lower demand for buildings will bring down the cost of building materials, but this is not necessarily so because the construction of the MRT and LRT lines are in full swing. Adding to that is the construction of a large number of residential and commercial buildings launched last year and the year before. Contractors who have won jobs will have to bite the bullet to complete them based on the tendered rates. Those planning to tender for new jobs will surely raise the numbers in anticipation of higher material and labour costs. On a different note, more Malaysian developers are building their portfolios outside the country, particularly in London and Melbourne. Meanwhile, developers from these markets are eyeing Malaysian buyers, hence the high frequency of exhibitions and sales of overseas properties in Kuala Lumpur. In the meantime, developers in China are beginning to show interest in Malaysia while major developers in Hong Kong, hit by cooling measures at home, are reportedly working hard to woo buyers in mainland China. According to a Reuters report, even Cheung Kong Holdings Ltd, controlled by Asia’s richest man Li Ka-shing, was said to be offering expensive car parking bays for free in densely populated Hong Kong to attract buyers.

Real Estate and Housing Developers Association (REHDA) is urging financial institutions to subsidise the property loan interest rates to help low-income earners own their first house. Its Penang chairman, Datuk Jerry Chan, said the current rates do not benefit the low-income earners as they are high. He said the poor are currently paying the highest interest rates as the banks fear they may not be able to pay the monthly instalments on time. “The federal government and Bank Negara Malaysia should look into this as most of the poor buyers fail to get their loans approved,” Chan told reporters after the Chinese New Year gathering. He said the government should help first-time buyers as the Perumahan Rakyat 1Malaysia (PR1MA) housing scheme alone will not be sufficient to cope with demand. “The property prices will continue to rise due to inflation and with the current loan rates, the poor will not be able to own their first house,” Chan said. The previous budget did not address the needs of first-time buyers, he added.

Indeed, this is not a year to horse around with your investments.

In an environment of uncertainty,

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*Listing are accurate at the time of print. Kindly contact the respective agents for updates. For more real estate listings, please visit www.propertyhunter.com.my

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List your property here today! 1. Log on to www.propertyhunter.com.my 2. Register an account for FREE 3. Post your property FOR SALE or RENT

List your property with us and you get it on: 1. www.propertyhunter.com.my 2. Property Hunter Magazine 3. Property Hunter Expo/Roadshows

*Listing are accurate at the time of print. Kindly contact the respective agents for updates. For more real estate listings, please visit www.propertyhunter.com.my

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*Listing are accurate at the time of print. Kindly contact the respective agents for updates. For more real estate listings, please visit www.propertyhunter.com.my www.PropertyHunter.com.my

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/// Property Listing

List your property with us and you get it on: 1. www.propertyhunter.com.my 2. Property Hunter Magazine 3. Property Hunter Expo/Roadshows

*Listing are accurate at the time of print. Kindly contact the respective agents for updates. For more real estate listings, please visit www.propertyhunter.com.my

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/// Property Listing

List your property here today! 1. Log on to www.propertyhunter.com.my 2. Register an account for FREE 3. Post your property FOR SALE or RENT

*Listing are accurate at the time of print. Kindly contact the respective agents for updates. For more real estate listings, please visit www.propertyhunter.com.my

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/// Property Listing

List your property with us and you get it on: 1. www.propertyhunter.com.my 2. Property Hunter Magazine 3. Property Hunter Expo/Roadshows

*Listing are accurate at the time of print. Kindly contact the respective agents for updates. For more real estate listings, please visit www.propertyhunter.com.my

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Property Hunter Magazine Issue 53 - April 2014  

Cover Story: Riverson Walk Be Inspired. Be Different. The only Themed Boutique Retail Shops in East Malaysia Hot Topic: Sandakan a Town Fue...

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