Malaysia - Housing

[winston]

Developers act to avoid property bubble this year by zunaira saieed AND isabelle lai

KUALA LUMPUR: There will be no property bubble this year, as developers will accommodate the market’s need by launching smaller units.

“This year property developers would opt for fewer launches with smaller units,’’ said IOI Corp Bhd founder and executive chairman Tan Sri Lee Shin Cheng on the sidelines of Invest Malaysia 2014 yesterday.

Lee added that the IOI group would opt for smaller units but with more varieties.

Affin Investment Research noted that developers in the first quarter of this year had held back their launches due to the new property-cooling measures.

The research house expects property sales to pick up marginally in the second half as developers adjust their pricing strategy for new property launches.

IOI Properties chief executive officer Lee Yeow Seng said this year would be a challenging year due to Government’s several cooling measures.

Earlier in the year, Penang Chief Minister Lim Guan Eng said that foreign property and industry specialists strongly believed that measures such as the state’s 2% levy on sellers disposing of their property within three years would help to ensure there would be no property bubble.

Afiin Investment Research had said the introduction of the cooling measures had affected the number of new property launches, market sentiment and availability of credit and that the first quarter of this year had seen the weakest sales since the second quarter of last year.

Meanwhile, the expected El Niño phenomenon would have a significant impact and was expected to push crude palm oil (CPO) prices up, said IOI Corp chief executive officer Datuk Lee Yeow Chor.

He said, however, that the impact of El Niño would be felt only about two months after the period of prolonged dry weather.

“How bad the impact will be depends on the severity of El Niño this time. But we’re talking about a prolonged dry period of at least five to six months, so it will certainly have a significant impact on production,” he told reporters at the same event.

Lee said he had expansion plans in existing plantations and was also constantly on the lookout for new land banks, especially brownfield plantations.

“We are looking in the South-East Asia region,” he said.

Source: The Star

[winston]

Home prices under pressure by angie ng

http://www.thestar.com.my/Business/Busi ... -pressure/

[winston]

Tengku Adnan: 10pc cap in assessment for residential property
June 24, 2014

KUALA LUMPUR: The increase in assessment for properties in Kuala Lumpur will be capped at 10% maximum for residential and 25% for commercial.

This was announced by Federal Territories Minister Datuk Seri Tengku Adnan Tengku Mansor at a town hall meeting with residents and businesses.

The decision to reduce the assessment rate for all types of properties by between one and three percent as per Tengku Adnan’s announcement at the end of last year, stands.

The new property valuation that led to protests by various parties also remains.

“If the funds are managed properly and taxes are paid on time, we may not need to introduce any other changes next year,” Tengku Adnan said.

Over 314,300 or 63% of properties will benefit from the cap.

A total of 16,461 or 3% of properties comprising low- and medium-cost homes will see an increase in their tax but an exemption has been made for them to pay the same tax as last year, making the amount unchanged for 2014.

Another 166,890 or 34% of properties, largely low- and medium-cost homes, will enjoy a lower assessment tax.

All properties will enjoy the same rates anywhere in the capital except for commercial, service apartments and vacant commercial lots.

Tengku Adnan said that the cap is effective for this year only.

“We may consider extending it for next year and even increasing or decreasing the percentage depending on the current situation and the ability of the people to pay,” he added.

The announcement last year to increase assessment on properties was met with protests from owners already feeling the sting from the removal of subsidies on essential items such as sugar and the petrol price increase.

KLites were shocked to receive notices on the increase in their property valuation and the corresponding hike that would raise their assessment charges from 100% to 250% and as high as 400%.

Source: The Star

[winston]

Auction property in Mt Kiara:-

1) B-23-05, Kiaramas Sutera. 1668sf. RM790K or RM473.62psf. Register b4 11/8. 10% deposit

2) A-11-3A, Ceriaan Kiara. 2196sf. 3+1r. RM900K or RM409.83psf. Register b4 9/7. 10% deposit

3) A-6-1, MK Meridin. 2513sf. 4+1r. RM1.3mil or RM517.31psf. Register b4 12/7. 10% deposit

4) C-13-6, Kiara 9 Residency. Duplex. 2694sf. 3r. RM1,570,995 or RM583.14psf

5) B1-1-2, 28 Mont Kiara. 2539sf. RM1,441,800 or RM567.86psf

6) B-7-6, Seni Mont Kiara. 3714sf. RM2,395,800 or RM645.07psf

[winston]

Property demand under pressure from rising prices, GST, cooling measures

KUALA LUMPUR: Question marks remain over the sustainability of property demand in Malaysia, with property prices outpacing income growth, interest rates inching up and the upcoming GST expected to affect prices, according to Maybank IB Research.

“Already, the affordability index has been trending down since 2009 after the hikes in the BLR (to 6.6%, from 5.6% over 2009-2011) and higher property prices (+12.5% CAGR vs income growth of +6% between 2010-2013). This would impact investment decisions for new purchases and could eventually lead to a decline in property sales.

“Also, higher interest rates – we expect a 25-50bp rise in the benchmark OPR in the second half of 2014 – and the GST implementation in April 2015 will hit on affordability.

“We remain cautious on the sustainability of property demand,” the research house stressed.

“Our discussions with the bankers also revealed that the loan rejection rate has been as high as 40-50% nowadays (depending on product types; affordable housing dominated by first-time buyers has lower loan rejection rate) compared to 10-20% a year ago,” it noted.

Maybank IB Research also pointed out that household debt had reached a high of 86.8% of nominal GDP at the end of 2013, and could possibly climb to 88% by the end of this year.

It said a survey it carried out a recent property fair showed 64% of respondents already had at least one property in hand and were looking to buy new properties for investment. And this was despite the cooling measures introduced during Budget 2014 in October last year.

“As such, there is a risk that Bank Negara may further rein in household debt expansion and curb speculative demand. With many potential buyers still looking to buy properties for investment purposes, further tightening measures could negatively hit demand, and in greater force," it warned.

According to the research house, demands for landed property under RM1mil remained firm but pointed out that discussions with property agents revealed a significant slowdown in demand for high-rise luxury properties.

It cited as example WCT’s Skyz Jelutong in Shah Alam (RM650 psf) which has only sold 40% since its preview in Nov 2013, as well as Guocoland’s DC Residency in Damansara Heights RM1,600-1,700psf), which has only been 30-40% booked since its private preview in mid-2013.

Maybank IB Research said it remained Neutral on the property sector, saying key risks included further tightening measures, interest rate hikes.

“We are more upbeat on developers who are offering well-priced products in well connected locations that would continue to sell well. Our top pick is Eco World. Another Buy is Glomac," it said.

Source: The Star

[winston]

Neutral' outlook on Malaysian property sector

Kenanga Research property analysts Sarah Lim and Adrian Ng are downgrading the sector to “neutral”, as they believe the risk-reward ratio is leaning towards “risk” due to expected minimal catalysts in the third quarter of 2014 and possible negative headwinds during the quarter.

PETALING JAYA: Kenanga Research has downgraded the property sector to “neutral” from “overweight”, while Maybank Investment Bank Research (Maybank IB) remains “neutral” on the back of a lack of new catalysts, increasing tightening measures and household debt, which is at an all-time high.

Kenanga Research property analysts Sarah Lim and Adrian Ng are downgrading the sector to “neutral”, as they believe the risk-reward ratio is leaning towards “risk” due to expected minimal catalysts in the third quarter of 2014 and possible negative headwinds during the quarter.

This includes potential interest rate hikes and further cooling measures in Budget 2015.

Meanwhile, Maybank IB Research analyst Wong Wei Sum highlighted that household debt had reached a high of 86.8% of nominal gross domestic product at end-2013, and could climb to 88% by end-December.

“There is a risk that Bank Negara may further rein in household debt expansion and curb speculative demand. With many potential buyers still looking to buy property for investment purposes, further tightening measures could negatively hit demand, and in greater force,” she said.

Lim and Ng opined that Johor’s Iskandar Malaysia story had lost steam, given the influx of China-based developers that have the capability to flood the market with high-rise residentials.

This was seen in the volume of units launched by Guangzhou-based Country Garden Holdings Co Ltd’s Danga Bay project, where it launched most of the 10,000 units of condominiums at one go.

“There are threats of more property and land supply due to Country Garden and Kumpulan Prasarana Rakyat Johor’s plans to reclaim about 5,000 acres along the Straits of Johor near the Second Link, even though Johor has ample landbank for development,” said Lim and Ng.

They added that unfavourable state policies, including changes in working days and weekends and recent amendments to the Johor Housing and Real Property Board Enactment Bill 2014, had caused more confusion among investors.

“We are glad that Singapore has expressed concerns about the land reclamation, and that Malaysia has agreed to provide Singapore with the relevant information for further studies,” said Lim and Ng.

They believe the reclamation would be devastating for Johor, especially for UEM Sunrise Bhd’s Nusajaya and Khazanah Nasional Bhd’s Medini area. “We really see no need for additional land, as Johor still has ample amount of landbank and capable local developers,” they said.

Meanwhile, in a survey conducted on 30 randomly selected visitors during a property fair, Maybank’s Wong said that 80% of the respondents intended to buy at least one property over the next 12 months.

“Most already have at least one property in hand and are looking for new properties for investment purposes. Many also admitted that rising living costs, with the goods and services tax implementation and interest rate hikes, would very likely affect their purchase decision,” she said.

She added that the top concerns continue to be pricing and financing.

Source: The Star

[winston]

Closing the housing affordability gap by angie ng

HBA is of the opinion that the Government should implement a holistic housing programme to build more affordable homes.

THE sharp jump in the prices of houses in the last two years has created a generation of Malaysians who cannot afford to buy their own property and the situation can potentially worsen if nothing is being done to close the housing affordability gap.

http://www.thestar.com.my/Business/Busi ... ility-gap/

[winston]

Worries over luxury condos, number of upcoming units 'frightening' by eugene mahalingam

CH Williams Talhar & Wong expects some 5,000 to 6,000 luxury condo units to enter the market in the next six to nine months in the Klang Valley.

PETALING JAYA: An oversupply of new luxury condominiums in the Klang Valley this year is expected to create pressure on rentals and even result in a “price war” on new and existing units.

Property consultant CH Williams Talhar & Wong Sdn Bhd (WTW) managing director Foo Gee Jen said the number of new units expected to come in over the next few months was “frightening.”

“We expect some 5,000 to 6,000 units coming in within the next six to nine months in the Klang Valley,” he said, adding that he was “mixed” on the outlook for high end condominiums ranging between RM1,000 per sq ft and RM1,500 per sq ft.

Malaysia Institute of Estate Agents (MIEA) president Siva Shanker said he expected a “price war” to erupt amongst owners looking to find the best rental rates for their condominiums.

“A lot of people would have bought these upcoming properties to flip (sell at a higher price). But at such prices, they may have problems finding a buyer. So the next thing they will do is try to rent out the unit.

“Again, to try and get the most out of the situation, they will want to rent out the property at the highest possible price. But because there’s an oversupply situation, there will be competition from other owners.

“So a price war will begin as they start lowering prices (to be able to secure a tenant).”

Siva said he expects units ranging between RM600,000 and RM1.5mil to face this problem.

“However, units that I call super luxury units, ranging over RM3,000 per sq ft, are unlikely to face this problem as they are quite niche and are unlikely to face much competition,” he said.

According to WTW in its report on the luxury condominium sector for the third quarter of 2013, the cumulative supply of luxury condominium in Kuala Lumpur increased from 25,796 units in the second quarter of 2013 to a total of 26,163 units in the third quarter of 2013, contributed by 147 projects.

The bulk of supply was concentrated in KLCC area with a total of 11,181 units or 43% of total cumulative supply in Kuala Lumpur.

“Prices were generally stable in all areas where in KLCC and Mont’ Kiara/Sri hartamas area, prices ranged between RM850 and RM1,400 per sq ft while for the remaining areas, prices were between RM700 to RM1,200 per sq ft.

“In terms of gross asking rentals, rentals in KLCC area indicated stable rates at a range of RM4.50 to RM6.50 per sq ft while the remaining areas ranged from RM3.50 to RM5.50 per sq ft,” said WTW.

Source: The Star

[winston]

Cooling measures reduces property transactions but prices keep uptrend by thean lee cheng

PETALING JAYA: The measures to cool the property market may have weeded out a large part of speculative activities but they have not succeeded in curbing rising prices, says Malaysian Institute of Estate Agents (MIEA) president Siva Shanker.

“The number of transactions has come down but prices continue to rise steadily,” he said at the Property Investment Convention 2014.

Siva said the number of transactions between 2011 and 2012 dropped by 0.67% but their value increased by 3.61% while between 2012 and 2013, the volume dropped 10.85% while the value rose by 6.7%.

“A drop of 10.85% is substantial but you have the value of transactions moving up 6.7%. That means prices of properties are continuing to rise,” he said.

The measures included the removal of developers’ interest scheme (DIBS), hike in real property gains tax (RPGT) rates and for mortgage loans to be based on the net price of the property.

Siva said that rebates offered by developers such as “free” legal fees and stamp duty contributed to the rise in property prices. During the same event held last weekend, a property developer openly offered an 18% discount. The gross selling price of the unit was reduced from RM900,000 to RM711,000 as a result of freebies.

“When a property price is artificially inflated this way, the gross price is stated in the sales and purchase agreement. This gives the developer the opportunity to price his next launch at a higher price, which explains why prices are going up indiscriminately.

“The developer gets a great take-up rate during his launches and the first batch of buyers are happy but the overall market suffers in the longer term,” he said, adding that the secondary market was obviously gaining interest.

Siva said another issue he was concerned about was the the existence of investor clubs.

“Although these clubs are less active today, they are still there. The minute the market turns, they will come back. The authorities should outlaw these clubs today or regulate them. The market cannot afford to wait two to three more years before doing something about these clubs,” said Siva.

Raine & Horne Malaysia (Penang) senior partner Michael Geh said during a panel discussion that the Government should say that over a 20-year cycle, property prices have moved up by as much as 45% on a national basis after an economic crisis but dropped by a fifth in each recession.

“In the 1986 recession, prices dropped 20% over a two-year period but during a seven-year upturn, prices went up 45%. During the 1997/98 Asian financial crisis, prices went down 20% but rose by much as 45% after that for another seven years or so.

“Between 2008 and 2010, the market was down by another 20% but from 2009/2010 onwards, it has been rising. It is still rising today. But salaries have not risen in tandem,” said Geh.

Geh added Malaysian car prices were among the top three highest in the world and there was no light rail transit in Penang, Sabah and Sarawak while Johor was promising.

“We need to pr**k a little hole and release a bit of pressure in terms of affordability, transportation and jobs. We are in a pressure cooker,” said Geh.

Source: The Star

[winston]

Malaysia's residential property sector enters cooling phase

“The macro-prudential measures implemented by Bank Negara to cool down the property market since 2010 look likely to have played a role here,” Mier said.

PETALING JAYA: The residential property segment, a sub-sector of the overall property market, appears to have entered “a cooling phase” in the first two quarters with sales expected to stay “moderate” for the coming third quarter, according to the Malaysian Institute of Economic Research (Mier).

“The macro-prudential measures implemented by Bank Negara to cool down the property market since 2010 look likely to have played a role here,” Mier said.

Mier based its conclusion after doing a residential property survey designed to be an indicator of economic activity in the property sector.

Its Residential Property Index fell for the second quarter to 109.9 points, slipping 1.3 points from the first quarter, and 28.3 points from a year ago.

The survey also showed that total unsold new residential properties have accumulated faster than sales in recent months.

More than a quarter of house builders reported bigger stocks in hand, which is at a three-year high.

The Mier report said that given the built-up in total unsold new units, those surveyed have decided to keep creeping prices at bay by maintaining them at current levels.

But in the months ahead, prices “are likely to escalate again” more than half of those surveyed said while the remainder said they will “neither raise nor slash theirs (their prices) for now.”

Fewer of them increased prices in the second quarter compared with the first and some even offered price cuts, the survey found.

Moving forward, about half of those surveyed expect sales for the current third quarter to remain the same while more than a third of those surveyed foresee higher sales as “home buyers bought ahead of the Goods and Services Tax” which will come into effect next April.

Property prices are envisaged to rise due to higher input costs after that.

Double-storey houses continued to be the most popular while none of those surveyed seem to have sold any bungalows during this same period.

The survey concluded that affordability issues may continue to haunt the market if property prices outpaced income growth and interest rates edged up.

“Housing demand may eventually lose ground,” Mier said.

Source: The Star