Malaysia - Housing

[winston]

Moody's: Malaysia housing market may be peaking

KUALA LUMPUR: Moody's Investors Service expects an uptick in non-performing loans (NPLs), particularly in the household segment, in the South-East Asian banking system.

Moody's assistant vice president and analyst Simon Chen said on Thursday that in Asean, the Malaysian and Thai banking systems were the most exposed to increased asset-quality pressure in the household segment when rates rise.

"This is primarily because the ability of households in these countries to service their debt in a rising interest-rate environment will be negatively affected by consumers' high leverage at a time when the housing market in Malaysia may be peaking and Thailand faces elevated political risk," he said in reference to Moody's just-released report "Rising household leverage poses risks to Asean banks as the economic cycle shifts".

Moody's said the long positive credit cycle that has benefited banks in Asean might be on the verge of peaking. These would pose challenges for the lenders as pockets of asset-quality risk emerge due to tighter global monetary conditions.

"Our central scenario is that banking systems in Asean will be broadly resilient to the financial impact of a shift in interest rates, but we expect an uptick in NPLs, particularly in the household segment," said Chen.

Moody's report showed household debt has risen significantly in Asean in the past several years, with growth in bank loans to households outpacing loan growth to other borrowers.

Household leverage as a percentage of GDP was at historically high levels in Malaysia (A3 positive) (87% at end-2013) and Thailand (Baa1 stable) (82% at end-2013), and close to its five-year high in Singapore (Aaa stable) (75% at end-2013).

Although household debt has also risen significantly in Indonesia (Baa3 stable) and the Philippines (Baa3 positive), the growth in these countries was from a low base.

However, the report pointed out Asean bank asset-quality risk from residential property price corrections was mitigated by legal frameworks that support bank creditors.

Unlike in the US, banks in Asean have legal recourse to the borrowers on their debt obligations, beyond the underlying property assets mortgaged to the banks.

This feature provides greater creditor protection to banks, removes the incentive for borrowers to default on their mortgage obligations, and alleviates risks that housing NPLs will spike when property prices fall significantly.

Additionally, Moody's report notes that Asean banks have responded to regulatory measures aimed at curbing further increases in excessive household leverage.

Banks in Thailand, Malaysia, and Singapore had tightened their underwriting standards on household loans, which was positive for banks' asset quality over the longer term.

The banks also have strong buffers to withstand asset-quality shocks in the household segment, Moody’s said.

Source: The Star

[winston]

Homebuyer due diligence by chris tan

A COMMERCIAL transaction normally commences with due diligence being conducted prior to much consideration being put into the written agreement. This measure has two effects – it prevents the parties from sealing a detrimental deal and also time wastage over unfruitful discussions.

Essentially, this is an important process to ensure the parties get what they exactly bargained for. The same is applicable in the purchase of new residential properties from developers.

While there have been incidents of abandoned housing projects all over Malaysia that impacted the homebuyers who spent their hard-earned money but did not get their dream home in return, generally the housing authorities had been successful in protecting the interest of house buyers.

Many of these projects were abandoned by illegal developers who did not possess any valid licences to commence the development in the first place.

The Urban Wellbeing, Housing and Local Government Ministry’s website showed there were 82 developers without licence and 116 developers who have abandoned their projects as of June 30, 2014.

The question that remains is how could the homebuying public be so ignorant that they are incapable of doing the basic due diligence when making the biggest life-long investment of buying a dream home.

Under the Housing Development (Control and Licensing) Act 1966 (HDA), any developer who constructs and sells more than four units of housing accommodation comes under the purview of the HDA.

Section 18 of the HDA states that any housing developer who carries out housing development without having been duly licensed shall be guilty of an offence and shall, on conviction, be liable to a fine which shall not be less than RM250,000 but not exceeding RM500,000 or jailed not more than five years or both.

Thus, it is compulsory for a developer, prior to developing a housing project, to fulfill the following:

·Obtain the necessary approvals from the relevant authorities such as development order and building plan;

·Apply a developer licence from the Controller of Housing whereby the Controller has the discretion to grant with or without further conditions or to refuse granting the licence;

·Deposit a sum of not less than RM200,000 with the Controller for the grant of the licence which is refundable upon the completion and expiry of the defect liability period of the project (there is an amendment to adjust the deposit sum in line with the gross development cost in 2013 but it has yet to come into force); and

·Apply for a sales and advertisement permit to start selling the units of the development.

Thus, a licensed developer would pass the first stage, with checks by the relevant authorities. A unlicensed development would mean these authorities are out of the picture and that development had not been discovered for breach yet.

As such, the next level of due diligence will be significant: the homebuyer himself.

With the advancement in wireless technology today, we “google” for everything for which we need clarification and information. The same applies for home purchasing. You will be amazed over the amount of information available online: ranging from the developer’s own website, property reviews to forums started by other homebuyers on the same development.

While it is not advisable to believe everything from the world wide web, it serves as a good starting point to know better the product you are buying before signing the sales and purchase agreement.

A minor website checklist is as follow:

·Google

·Developer’s website

·News websites

·Ministry of Urban Wellbeing, Housing and Local Government

·Real Estate and Housing Developers’ Association (Rehda) and

·National House Buyers Association.

In addition to that, you may personally pay a visit to the development itself and make your own observation. If possible, asking around for details would also build up the confidence in buying the right home.

Normally, at the entrance, there will be a white signboard feeding you details of the construction such as the details of the development, landowner, developer, contractor and completion date.

Your lawyer or banker also serve as another filter of due diligence. Before you sign any agreement, it is advisable to ask them on any doubt that you are suspicious about and to be comfortable with what you sign.

Even if you have questions on the credibility of the lawyers, the Bar Council has a website for you to do the checks or even its friendly help desk in its office.

The above due diligence process does not guarantee a 100% smooth property transaction but it minimises the risk of buying a project which could be abandoned. Besides conducting a detailed research, the purchase of a house from reputable developers may diminish your homebuying risk further.

And for any of you who think you might be a victim of unlicensed developer, it is time to call your lawyer and banker for clarification. Owning a house is a lifetime commitment; its protection starts with you.

Source: The Star

[winston]

‘Property prices to keep rising’ By SHAREN

REAL Estate and Housing Developers Association (Rehda) president Datuk Seri FD Iskandar Mansor, says property prices will continue to rise because of the supply and demand factor and high land cost.

According to National Property Information Centre, the average annual housing completion was 100,000 units against the average annual household formation of 140,000.

Iskandar, who is Glomac Bhd managing director and chief executive officer, said the public still have the misconception that developers are to blame for escalating property prices.

He said it is not possible for developers to reduce or maintain the selling price for new launches because of land cost, coupled with high conversion premium which has risen by up to 300 per cent recently.

“Glomac bought 80ha in 2009 in Puchong and paid almost RM15 million premium for conversion. In 2011, we bought an additional 80ha to expand the development and paid almost RM49 million,” Iskandar told Property Times.

On the cost of doing business, Iskandar said it has been increasing every year and developers are not enjoying the 30 per cent profit margin like before.

According to him, developers make around 15 per cent profit margin now because of high compliance cost, development and infrastructure charges, quit rent and stamp duty.

“Some 20 years ago, when we develop a piece of land, water and electricity is supplied to the area. All we need to do is connect the supply to the development. Today, we have to get water and electricity from the main source and this is costing us more.”

He said for landed properties, utility cost in terms of gross development cost (GDC) has risen by five per cent to 19 per cent in the past two years.

For strata title properties, the cost has increased by six per cent, and or townships, between nine and 25 per cent.

“The public should not blame developers for the increase in house prices.

Utility companies are making money from both consumers and developers.”

Iskandar said Rehda has been engaging with the government and companies like Tenaga Nasional Bhd, Telekom Malaysia and Indah Water Konsortium Sdn Bhd, among others, to find ways to resolve the matter.

He also said land is also getting scarce and more expensive.

“In early 2007, when Glomac bought land nearby the Petronas Twin Towers, the seller asked for RM1,000 per square feet (psf) but we wanted to pay only RM600 psf. I knew what we wanted to build on it so we paid RM1,000 psf.

“A few research houses downgraded Glomac because of that. Now, that same piece of land is worth RM3,500 psf and the value of the building has risen. Land cost has tripled in the last seven years.”

Iskandar said there are many issues that need resolving soon in the local property market, which is one of the pillars of growth for Malaysia.

“We are in an industry which is highly regulated. We are governed by three different authorities, namely the state government, the Federal Government and the local authorities. If we don’t comply, we won’t be able to get development approvals.

“Rehda has around 1,200 members, who directly and indirectly employ close to one million people. Last year, total loans given to the real estate industry was 40 per cent. It was the highest on record.

“In terms of compliance cost, the contribution to the local authorities is between four per cent and 18 per cent for landed properties, around five per cent for strata title properties, and as much as 20 per cent for townships.

“If we keep having issues such as rising cost of doing business, delays in approvals and more cooling measures, the sector will become stagnant,” Iskandar added.

Source: NST

[winston]

Poser on condo market

by thean lee cheng


http://www.thestar.com.my/Business/Busi ... do-market/

[winston]

Local demand for high-end condominiums expected to weaken

PETALING JAYA: Local demand for high-end condominiums is expected to weaken within the next 12 months, primarily in the Kuala Lumpur City Centre (KLCC) area, with more developers anticipated to tap foreign markets.

Jones Lang Wootton executive director Malathi Thevendren said the projection is based on the mismatch in the level of pricing by developers with local affordability.

"Supply coming in must match the demand level as there are not many people who can actually afford to buy the high-end condominiums.

"Some developers are even holding back their launches...(as) they know there's no market," she told Bernama on the sidelines of the 17th National Housing and Property Summit 2014 on Wednesdat.

Malathi is a member of the Royal Institution of Chartered Surveyors and Registered Valuer and Estate Agents with the Board of Valuers, Appraisers and Estate Agent, Malaysia.

She has more than 25 years experience in real estate professional services. and was a speaker at the two-day summit organised by the Asian Strategy and Leadership Institute (ASLI).

For affordable condominiums, Malathi said demand will see steady growth with young couples and professionals continuing to drive the market.

"People's preferences are still for landed residential properties. But because house prices have escalated over the past two to three years and way beyond the affordability level, many can't afford to own such landed property," she added.

She noted that market prices of most existing high-end condominiums are expected to be stable over the short-term, while prices of low to medium end condominiums at more popular locations, may see some appreciation.

For new launches, prices are likely to increase in line with inflation and construction costs for labour, utility and new materials.

On supply, Malathi said it would see moderate growth with infrastructure, transportation improvements and condominium acceptance areas further from the city.

"With the expected slower demand and cost increases, developers are expected to maintain unit quantum prices, while reducing built up areas.

"Going forward, creating a sustainable property market, as well as the mismatch in supply and demand, will be among the challenges for the industry," she added.

Source: Bernama

[winston]

Property slowdown more evident in Johor BY JOHN LOH

Country Garden's project site in Danga Bay. Property agents say country Garden hasn't raised its maximum discount beyond 21% since launch day.

CRACKS are starting to show in Iskandar Malaysia’s once-booming property market.

UEM Sunrise Bhd, considered a bellwether to Iskandar, this week slashed its sales target for 2014 to RM2bil from RM3.2bil, citing weakness in the market for homes in the economic corridor south of Johor.

This comes as a slew of high-rise apartments – many of them from the China developers, and many of them on the waterfront – are set to flood the market.

And things could get worse before they get better.

A report in the Financial Times on Wednesday says China Vanke Co, the country’s biggest developer, is offering up to US$325,000 (RM1.02bil) in discounts via e-commerce site Taobao, to entice homebuyers amid slackening demand.

Sluggish sales and an oversupply in the second and third-tier Chinese cities are driving prices lower, Bloomberg reported.

Here, the talk among property circles is that Country Garden Holdings Co, which last year rolled out a record 9,000 high-rise units on the coastline enclave of Danga Bay, could follow suit.

It is believed that about half of the condominiums in Country Garden Danga Bay remain unsold, and the Guangdong-based property giant is now looking increasingly desperate to unload its stock by either hiking discounts of dropping prices, although the exact quantum is unknown.

Company officials did not respond to text messages from StarBizWeek seeking comment.

The Danga Bay project was launched with much fanfare last year at an average of RM900 per sq ft.

Most of the real estate firms in Johor Bahru have been roped in to sell homes for Country Garden Danga Bay, and it is dangling commissions of up to 8% versus the typical 2%-3% as an added incentive, brokers tell StarBizWeek.

In fact, says an agent, three people were spotted carrying sandwich boards near a bank in Johor Bahru last month advertising units in Country Garden Danga Bay. It is not clear who they were representing, but property executives speculate they could be acting for Country Garden’s foreign buyers.

Channel checks with agents reveal that the Phase 2 units are going for the same price for all floors, a departure from the usual practice of pricing the topmost levels at a premium.

Buyers can opt for the promotion price, which in some instances adds up to a 40% discount, provided they pay for the property in cash over several transactions. Doing so will shave RM300,000 off the price of a single-room unit measuring between 400 to 500 sq ft, which would normally cost RM800,000.

Country Garden hasn’t raised its maximum discount beyond 21% since launch day, say agents familiar with the matter, but it may not be long before the company has to dump prices.

Right next door, China’s state-owned Greenland Group will soon launch 2,478 units of apartments and townhouses, according to PA International Property Consultants Sdn Bhd executive director V. Sivadas.

R&F’s Princess Cove project will introduce about 3,000 units of apartments in the first phase, and another 30,000-plus units thereafter.

“There are also a few other projects in the Danga Bay area being prepared for similar types of developments,” he tells StarBizWeek via e-mail.

The problem here is clearly one of mismatch between demand and supply, Sivadas points out.

Demand remains strong for affordable homes costing below RM400,000, yet much of the new supply is heavily skewed towards high-rises.

“Our records indicate that slightly more than 100 high-rise projects scattered throughout Johor Bahru and Iskandar Malaysia, comprising a little over 100,000 units, are expected to come onstream in the next few years.

“One third of that is within the R&F site, and another 10% within known projects at Danga Bay, where Country Garden and Greenland are based.

“We expect more high-rise projects to be planned within waterfront areas in the Danga Bay region, such as Stulang Laut, Bayu Puteri and Puteri Harbour. The proposed Forest City at the Second Link in Nusajaya is another huge project on the horizon,” he quips.

All that has led to a visible slowdown over the past 10 months.

“Many investors, particularly foreigners (the main target for high-rise projects in the waterfront areas), appear to be adopting a wait-and-see attitude.

“We have not helped ourselves by changing policies and the price threshold limits. We, however, do not expect to see a crash in the market unless there is a catastrophic failure at the national, regional and global levels,” Sivadas notes.

“In property development, success is predominantly driven by demand, not supply. There is an urgent need to boost demand and facilitate ease of purchase by locals as well as foreigners.

“There needs to be more employment generators in Iskandar Malaysia and facilitated migration and immigration to ease or solve acute labour shortages across many sectors. There is also a need to seek a balance to ensure controls on speculative activity, which were prevalent for the past few years up to end-2013.

“In the meantime, the question almost everyone is asking is, who will occupy the vast numbers of high-rise, high-priced waterfront units which were mainly purchased for investment?” he asks.

“We are not sure at the moment.”

But there are bright spots, says Landserve (Johor) Sdn Bhd executive director Wee Soon Chit.

“I believe that value-for-money products will still see demand. For example, Botanika@Bayu Puteri (by Tebrau Teguh Bhd) is doing well because their prices range from RM430 to RM500 per sq ft.

“We expect the industrial sector to grow further due to demand from Singapore industrialists, especially the Jurong area. The Singapore government recently announced that the Jurong area will be re-zoned, and the victims will be industrial companies who have no choice but to relocate,” Wee reasons.

A number of recent Iskandar launches, like Sunway Bhd’s Citrine office suites and Eastern & Oriental Bhd’s Avira Terraces, were snapped up.

But sentiment could get worse in 2015-2016, when a large number of the high-rises sold during 2012 and 2013 are handed over, according to Maybank IB Research analyst Wong Wei Sum. The problem is especially acute in hotspots such as Nusajaya, Medini and Danga Bay.

“We welcome foreign direct investment into Johor, but not at the expense of the local players,” laments one industry executive.

“It was going so well until a couple of years ago. Now they seem to have killed the goose that laid the golden egg.”

While the Chinese may be accustomed to building thousands upon thousands of apartments, the Malaysian market simply can’t take that kind of volume, the executive says.

“I hope the market will cool just enough to make them realise that. The state government also needs to take a good, hard look at the situation.”

Source: The Star

[winston]

Malaysia's property sector cooling off BY LIZ LEE
September 12, 2014

PETALING JAYA: Property developers have come out with some hard facts that suggest that the sector is cooling off.

According to the first half 2014 Property Industry Survey by the Real Estate and Housing Developers’ Association Malaysia (Rehda), properties in the affordable housing price range below RM1mil have been facing a tough sell largely because of homebuyers’ difficulty in getting financing and a glut of unreleased bumiputra lots.

Also, some 31% of properties in the RM500,001 to RM1mil range were still left unsold after completion in the past three years. These were largely in hot property markets like Selangor and Johor.

Properties in the price range of RM250,000 to RM500,000 also faced the same dilemma, with 34% of the completed units unsold. These were located mainly in Perak and Pahang.

Close to 90% of the respondents experienced a slowdown in property sales due to cooling measures announced in Budget 2014 and over 80% of the respondents of the survey held a “neutral” to “pessimistic” outlook for the first half of 2015.

Rehda president Datuk Seri Fateh Iskandar Mohamed Mansor said demand for property was intact but with the Government’s cooling measures introduced a year ago, developers were finding it difficult to successfully sell in the affordable housing segment.

“A property is a person’s biggest wealth creation asset, yet they can’t seem to own one,” he noted. He suggested that the Government reinstated the developers’ interest bearing scheme for first-time house buyers to allow the working class to own a roof over their head.

The survey found that while 84% of developers were able to get bridging financing for their projects, 53% of their buyers faced challenges getting financing to buy the properties. Among the loan rejections from financial institutions, the highest rate was among home buyers in the RM200,001 to RM500,000 property range.

“We can build but it is a different story for those with the capacity to buy the homes,” he said, adding that the 70% loan-to-value ratio was beyond the capability of many home buyers too.

Hence, Fateh Iskandar appealed to the banks to revisit the guidelines for responsible lending to property buyers.

He further pointed out that for the first time in the recent history of the property sector, less than 50% of units launched were sold in a half-year period.

Of the total 10,189 units launched in the first half of this year, only 49% were taken up. Of that figure, 41% of the launches were in the RM200,001 to RM500,000 price range, mainly located in Johor and Pahang, while 31% were in the range of RM500,001 to RM1mil. This trend was similar to the the second half 2013 period. ( investideas.net )

At the same time, property developers have had to struggle with the lack of demand for bumiputra lots in locations where bumiputras do not traditionally settle in.

Fateh Iskandar said the authorities’ call to raise the bumiputra quota in property developments up to 70% would only further squeeze developers who would not be able to sell the lots despite their best efforts in marketing the projects to the targeted buyers.

“Demographics and locality can’t be pushed. If you were to ask a non-bumiputra to buy a property in Kampung Datuk Keramat or a bumiputra to buy a house in Jinjang, for example, it’s going to be difficult,” he said. “Yet these quotas are still being put in place everywhere.”

Fateh said developers were supportive of the original quota of 30% bumiputra lots but felt a higher quota would not serve certain locations.

Rehda has suggested for the automatic release of the unsold bumiputra lots in tranches – 10% release every six months from the launch – but this notion has not been taken up by the federal nor state authorities.

Source: The Star

[winston]

Catch-22 in the property market? BY LIZ LEE

THERE seems to be a Catch-22 situation in the property market as more developers plan new launches in the second half of this year (2H14), knowing that demand remains solid, and yet may end up accumulating more unsold units going forward.

Many property players have been holding back their launches in the first half (1H), banking on homebuyers’ rush to buy in the face of the Government’s imminent Goods and Services Tax (GST) implementation in April 2015.

Market experts, however, believe the sector does not have to worry about a Catch-22 situation.

CB Richard Ellis (M) Sdn Bhd executive director Paul Khong says that with nominal Government intervention, the property market will automatically find its own equilibrium.

“No private developer will continue to build if demand does not exist. With the market doing fairly well, developers are pushing harder for sales with various incentives,” he says, touching on how players are adapting to the environment the best they can.

Khong notes that the market has had a quiet start in 2014, as forecast earlier, due to various tightening measures taken by on the Malaysian property market through Budget 2014.

While players have had to bite the bullet and adjust their business strategies according to the new reins, he has observed more traction in the market towards the second half.

“Launches are now more frequent, with developers actively marketing their products ranging from new launches to unsold unit stocks,” he says.

Zerin Properties Sdn Bhd chief executive officer Previndran Singhe agrees, stating that developers are a market-savvy bunch who will adapt to demand.

In the first-half 2014 Property Industry Survey by the Real Estate and Housing Developers’ Association Malaysia (Rehda), the association states that 49% of its respondents will have new launches in the second half compared to 39% who had launched in the first half.

In terms of units, there will be a [b]total of 15,820 new residential and commercial units launched[/b] into the market by year-end. In the first half, there were 10,189 units launched.

This is despite the number of unsold units in the affordable housing range under RM1mil being rather high at over 30%.

As Rehda has discovered, some 31% of properties in the RM500,001 to RM1mil range were still unsold after completion in the past three years, largely in more popular property markets like Selangor and Johor.

For properties in the price range of RM250,000 to RM500,000, 34% of the completed units were unsold, located mainly in [b]Perak and Pahang.[/b]

Rehda’s survey also found that local buyers are leading the market, making up 80% of the total purchasers, and of that, 85% are buying for self-dwelling.

At the presentation of Rehda’s survey findings on Thursday, president Datuk Seri Fateh Iskandar Mohamed Mansor suggested that the Government reinstate the developers’ interest bearing scheme (DIBS) specifically for first-time homebuyers.

To this, Khong echoes Rehda’s suggestion.

“We hope to see a slight liberalisation on financing guidelines, with the DIBS being made available again, especially to first-time house buyers targeted at the mid-end segments of the market.”

He says this will help solve overhang issues as well and encourage better house ownership in this category, possibly up to the RM1mil price tag for Klang Valley buyers. However, this is subject to actual affordability.

Khong adds that property investors will always continue to come around when the market moves actively, but there is a current need to address the real demand from first-time buyers which is critical.

Previndran also believes that the DIBS should be reintroduced for first-time house buyers. He too believes that financing needs to be less restrictive, especially on first-time homebuyers.

“(Being able to get financing) can be the solution to the amount of unsold units in the affordable home segments. What the central bank is doing in having these cooling measures is good, but I think the guidelines for financing should loosen up for properties under RM500,000,” he opines.

“The rich can take care of themselves but the vast majority of people who are buying for own occupation need financing,” he adds.

On whether more new launches in 2H this year would create more supply of unsold units, Previndran believes that more forthcoming launches will be in the higher-end property segment, although he admits he does not have the data at hand.

“There may be more launches selling above the RM500,000 price tag, therefore, they are bypassing the group of homebuyers who are facing difficulty in getting housing loans,” he says.

Rehda’s survey points out that the segment of homebuyers with the highest loan rejection rate is in the RM250,000 to RM500,000 property price range, with 30% of the loan applications being rejected. The second-most vulnerable segment is in the RM500,001 to RM700,000 range, where 24% of applications were rejected.

For 2H, most planned launches in the RM500,001 to RM1mil range are in Selangor, Johor and Penang. Kuala Lumpur will continue to see launches above RM1mil per unit, while all other states are mostly launching in the RM200,001 to RM500,000 range.

On the flip side

A market observer believes that the Government’s current cooling measures are sending out the right signals, having taken speculators out of the market. “The transaction volume is returning to where the market was about five years ago, which is not too bad.”

For him, it is necessary for the market to do a little correction post the booming times in the few years prior.

“The sales volume is dropping, but there is still an 8% to 9% improvement in pricing this year,” he said, noting that a double-digit growth in housing prices will not likely come by.

He points out that the survey numbers may have distorted market perception slightly, as the highest financing rejection rate in the RM250,000 to RM500,000 range was largely for projects located in Perak and Pahang, which are not primary property markets in Malaysia.

He notes that the main property markets are still around Greater Klang Valley and Johor, where new property launches were by and large priced above RM500,000.

The market observer also notes that the survey findings came in a timely fashion, leading towards the Government’s Budget 2015 which will be announced less than a month from now.

“The players are definitely pressuring the Government to lift the measures that are cooling the market,” he says. One of the biggest impacts to the property sector from Budget 2014 was the removal of the DIBS, which heavily dampened sales growth.

“Of course, access to financing is harder for first-time homebuyers now, but perhaps it would be more meaningful to provide them with grants like in Australia. But this would need to be enforced efficiently,” he says of the genuine homebuyers’ dilemma. This suggestion takes into account the impending GST implementation next year, reflecting Australia’s First Home Owner Grant scheme which was introduced on July 1, 2000 to offset the effect of the GST on home ownership.

The market observer believes that developers with the right product that fits the demands in the locations they build in will not face a big problem with their launches.

On housing prices, Fateh says they would stabilise rather than fall because the cost of doing business has gone up by 20%, according to the survey. That, plus market demand holding strong in the medium term as Greater KL sees further urban migration, are factors that will keep property prices buoyed.

“Realistically, prices cannot go down because cost and land prices have gone up while the economic growth in Greater KL is expected to create a population of 10 million by 2020. Bear in mind, 67% of Malaysians are below the age of 35, meaning demand will continue to be there,” he shares.

To add on to that, when the GST kicks in, Rehda expects property prices to rise 3% to 4% across-the-board. For developers who have not budgeted for the GST, Rehda notes that they could face a margin compression of about that much as well.

Source: The Star

[winston]

Malaysia targets retired Hong Kong residents

A Malaysia My Second Home agency says the country is ideal as a retirement destination for Hong Kong nationals, due to its excellent healthcare and cheap cost-of-living

Thousands more people are moving to Malaysia through the government’s second home scheme, new data shows.

In July 2014, the Malaysia My Second Home (MM2H) programme has attracted 26,063 participants since its launch in 2002, says MM2H agency, Aubella. At the end of 2013, the figure stood at 24,105 approvals.

Malaysia makes an ideal retirement location due to its healthcare service and low cost of living, says Aubella general manager Vincent Fong, who teamed up with Rainbow Credit Union, Hong Kong, to promote the Roppongi Cyberjaya project to 7,000 retirees.

The development offers investors and retirees a 10-year social visit visa and a freehold property in Cyberjaya for RM500,000 (US$168,000) for five years, the Bernama news agency reports.

Aubella General Manager Vincent Fong told the programme launch and agreement-signing ceremony that investors nearing retirement age could rent out their units.

We believe that retirement should be sustainable and stress-free. This joint venture is a sign of us constantly innovating our business model to meet the market needs. This is a step forward in MM2H offerings from Malaysia.

“In the long run, the net worth of the property will grow due to capital value appreciation,” he told the launch at the Malaysia Healthcare Travel Council (MHTC) office in Wan Chai.

Also present were Terry Liew, Director of Rainbow Credit Union, an international financial cooperative, and BND Global Development Chief Technology Officer, Seow Gim Shen, the project developer’s representative.

The eco-friendly development for sustainable living, aimed at senior citizens, families, students and expat workers. It takes its name from a district in Tokyo and is expected to be completed in 2019.

Roppongi Cyberjaya, near Kuala Lumpur, is the first ‘micro-climate township’ in Malaysia. The mixed-use project features residential, commercial, hotel, office, retail and educational elements, including the Cyberjaya campus for SEGI College Cyberjaya University College of Medical Sciences buildings and an international school. With an initial student population of 7,000, rising to 15,000-plus in the future, the education precinct will be a lively and bustling community.

An adjacent hospital means that residents can opt for managed healthcare services in their homes, with optional nurse call or integrated healthcare monitoring equipment.

“Roppongi will support a diverse population. Our civic facilities will complete the balance in lifestyle and convenience for all residents,” he adds.

http://www.opp-connect.com/19/09/2014/m ... residents/

[winston]

Malaysia's housing market holds risks for Chinese investors

Many small and medium-sized Chinese enterprises have forayed into the Malaysian housing market this year despite concerns about government policy and lack of transparency in the Southeast Asian country.

Guangzhou's 21st Century Business reported that several Chinese housing business giants based in southern China have invested sizeable funds in Malaysia over the past two years.

This year, Chinese investors have bought a total of 10.5 billion yuan (US$1.7 billion) worth of housing units in a real-estate development project in Johor Bahru in Johor state in southern Malaysia.

In August, representatives of business groups from southern China, including the Guangdong Fugland Group, gathered in Malaysia for the signing of a cooperative investment project with a local real estate developer, GD Group, to build villas in Nilai, a town that is home to several popular colleges and universities, including Nilai University and INTI International University.

The joint venture is valued at about 1.9 billion yuan (US$310 million), and is the first overseas investment by the Fugland Group.

Currently, most Chinese housing investments in Malaysia are focused on two places– Johor Bahru, which neighbors Singapore, and the capital city of Kuala Lumpur. Housing prices in johor Bahru are only a third of those in Singapore.

The paper stated that over the past three years, housing prices in Malaysia have grown by 8%-15% each year, but the return rate for rental housing has reached 5%-8%, higher than that on the mainland, Hong Kong and Singapore.

For Chinese real estate companies, the risks of investing in Malaysia is governmental policy and economic planning in terms of currency exchange rate system reforms, ways to attract foreign investments and data transparency.

The US dollar is not commonly used in most Southeast Asian countries. Investors normally have to exchange the greenback for local currencies while making investments in these countries, thereby putting them at risk of incurring losses.

Malaysian vice finance minister Chua Tee Yong has said that the issue of currency exchange has had a long-term impact on trade and investment between China and Malaysia.

It will take the next 10 to 15 years to resolve the problem, Chua told the paper.

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