Malaysia - Housing

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Malaysian Property Prices Will Continue To Rise - Credit Suisse
17 September 2014

PETALING JAYA - Property prices, which rose 8 per cent in the first quarter of this year, will continue to head north, as developers pass on the rising cost of building houses to buyers, according to Credit Suisse.

But higher selling prices does not necessarily mean bigger profits for developers with Credit Suisse noting that developers' cost of doing business has reportedly risen 20 per cent in the first half of 2014.

"Margins are being compressed," it said in a sector report on Monday. The firm is negative on the sector.

Property sales, especially in the affordable category, had slowed since the start of the year with measures to curb speculative purchases dampening sentiment in the property market.

The report indicated that the Government was considering additional measures to cool down rising prices with specific plans to address the issue of affordable housing.

Credit Suisse said it believed that measures to facilitate home ownership among the lower and middle income groups such as allowing developer interest bearing schemes for first-time house buyers or those below a certain income level, would be positive for the market.

"However, a blanket policy to stop the rise in property prices would be negative as sentiment is already so low," it added.

According to the Real Estate Housing Developers Association's first half of 2014 property industry survey, a majority of developers are either neutral or negative about the outlook for the second half of 2014.

This sentiment is expected to carry through to next year, with only 13 per cent of respondents optimistic about the outlook in the first half of 2015. Developers have been holding back new launches this year, with only 39 per cent of respondents launching in the first half compared with 52 per cent a year ago.

Take-up rates fell to 49 per cent in the period, the first time it dipped below the 50 per cent level.

The main reason for slower sales was the difficulty for buyers in securing financing. Properties priced between RM250,000 and RM500,000 saw a 30 per cent rejection rate, while properties prices between RM500,000 and RM700,000 experienced a rejection rate of 24 per cent.

Additionally, growth in housing loan approvals has slowed since December 2013 and fell 13 per cent year-on-year in July 2014. For the first seven months of the year, total housing loan approvals were up only 1 per cent year-on-year at RM68bil.

But despite the soft market condition, Credit Suisse said it believed that prices would continue on an uptrend next year as input costs are pushed up by the Goods and Services Tax (GST).

"Residential properties are GST exempt, but developers would look to pass on the higher costs via higher launch prices," it said.

Source -- Asia One

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Selangor imposes restrictions on foreigners buying properties in some districts

http://www.thestar.com.my/Business/Busi ... districts/

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Properties of vast potential in the Klang Valley

http://www.thestar.com.my/Business/Busi ... ties-in-t/

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Developers: New Selangor property rules will have minimal impact, house buyers feel otherwise

BY ISABELLE LAI AND THEAN LEE CHENG

PETALING JAYA: Various stakeholders in the property sector hold divergent views on the new set of guidelines governing property purchases by foreigners in Selangor, with some believing it will prevent them from sweeping up properties and driving up prices.

National House Buyers Association secretary-general Chang Kim Loong applauded the state government’s move to set a minimum purchase price of RM1mil for the Hulu Selangor and Sabak Bernam districts (Zone 3) and RM2mil elsewhere (Zones 1 and 2).

According to an Aug 28 circular, the guidelines, effective Sept 1, apply to foreigners, permanent resident holders and foreign companies.

It added that the land office also only permits these groups to buy strata and landed strata properties.

Chang said this rule would prevent foreigners from grabbing up properties, using their superior exchange rate, which would result in increased prices and depriving Malaysians the opportunity to own such properties.

“Take, for example, the Singapore dollar against the ringgit. It’s peanuts to them,” he told StarBiz, urging other state governments, especially Penang and Johor, to follow Selangor’s footsteps to stop the steep rise in property prices.

Chang said Kuala Lumpur City Hall should also increase the minimum threshold to RM2mil, as RM1mil was considered a basic level entry price of a new property with a Kuala Lumpur address.

Meanwhile, the Real Estate and Housing Developers’ Association Malaysia opined that the new set of guidelines would not have much impact because the total number of foreign buyers here was minimal.

Its vice-president Sivanyanam Sinnathamby said that according to statistics from Malaysian Properties Inc, the number of foreign buyers on a national basis stood at a mere 4% to 7%.

“The number of foreign buyers in Selangor is even smaller. In short, the Selangor state authorities are making rules which affect such a small part of the market,” he said.

He added that foreign buyers were concentrated in Kuala Lumpur, Penang and Iskandar Malaysia, Johor.

Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector president Siders Sittampalam opined that it was an “overall fair move”, but expected little impact.

He said Zone 1, which includes the districts of Petaling and Sepang, was the main attraction for foreigners, but said this number was very small even in these areas.

He said that the policy itself was fair in terms of quantum and structure, as prices had indeed moved up quite a bit in the last several years.

“So, even with the RM3mil threshold for the commercial and industrial sub-segments, it is fair. This move is not something that should shake the market,” he said, adding that it was also fair to limit Malaysia My Second Home participants to one property.

Property consultant Khong & Jaafar group of companies managing director Elvin Fernandez said this was a pre-emptive strike to prevent foreign developers from Johor from entering Selangor because they had been scouting around Kuala Lumpur for land.

“This policy is a deterrent to foreign developers,” he said.

Alzac Viva Sdn Bhd project director Mak Foo Wei agreed, saying this move was to deter foreign Chinese developers in Johor from operating here.

He said the move would also protect the locals should property prices go up further, pointing out that an RM800,000 property might move into a range eligible for foreigners to purchase had the threshold not been moved up to RM2mil.

However, Ken Holdings Bhd group managing director Sam Tan said the Selangor market was very different from Johor’s and questioned the need for the new guidelines.

“There are foreigners who just need a small pad. They don’t need to buy a RM2mil property,” he said.

Source: The Star

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Iskandar housing glut may hit rental yields: Rehda chief
http://www.businesstimes.com.sg/premium ... f-20140930

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CJ moots e-bidding for auctions

BY M. MAGESWARI

http://www.thestar.com.my/News/Nation/2 ... ng-loopho/

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The dark side of property auctions

http://www.thestar.com.my/News/Nation/2 ... press-sal/

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29 Sep 2014: BST DJ Nomura Initiates Positively on Malaysia Property

0250 GMT [Dow Jones] Nomura initiates coverage on Malaysia's property sector with "a positive view", recommending that investors buy into the sector despite a slowdown in sales and rising inventories.

Nomura argues that there is a valuation gap between some large-cap developers and small/mid-cap stocks in the sector, which could provide room for a recovery in the 2015 fiscal year.

Nomura says it expects that the high level of unbilled sales at developers can sustain property earnings despite the downturn, but warns investors to be selective.

"With a young demographic, investment in public transport, and proximity to Singapore, we are structurally bullish on Malaysian property," Nomura writes.

"However, for the next 6-12 months, we recommend a selective exposure to large-cap stocks given the slowdown expected in property sales and rising inventories."

It prefers Mah Sing Group (8583.KU), which it says has a 25% upside potential to its stock price, and Sunway (5211.KU), which it says has a 19% upside potential thanks partly to a diversified model that includes property offerings in the Iskandar southern economic zone near Singapore.

In the year-to-date the two stocks are up 7.1% and 28.3% respectively.


Source: Dow Jones Newswires

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Analysts ‘neutral’ on property sector

SILVER LINING: Large-cap laggards likely due for relief rebound

ANALYSTS remain neutral on the property sector, with some saying there is a likelihood of the introduction of developer interest bearing scheme (DIBS) for low- to medium-end properties.

Kenanga Research expects to see some slight positives, like DIBS, for properties below RM400k/unit when the 2015 Budget is announced next Friday, but said the incentive will only significantly benefit selective developers like Matrix Concepts Holdings Bhd, Huayang Bhd and Crescendo Corp Bhd.

However, as the market had widely anticipated this, property share price excitement may be slightly muted post-Budget.

“After a stunning performance by small- and mid-cap developers, we think large-cap laggards are due for a relief rebound, especially if the Budget is “neutral” as expected.

“We advise investors to be selective in terms of picking affordable plays or under-researched property counters with deep values and also select big-cap laggards with an emphasis on the Klang Valley.”

Kenanga’s top pick for the sector is KSL Holdings Bhd.

Kenanga said the sector is trading at historical average valuation level.

“Industry news flow will be largely infrastructure related, although we reckon more concrete news will be felt early next year rather than in the fourth quarter. Land banking is also expected to remain relatively quiet,” it added.

Property stocks could rally on the premise of a pre-GST demand rally, which hinges on banking liquidity.

“At this juncture, property lending has been challenging, as seen with lacklustre loan indicators. Our banking analysts expect the current lending momentum to remain till year-end and that banks may narrow lending spreads in future due to unsustainable Net Interest Margin compressions.

“This could dampen hopes of a pre-Goods and Services Tax demand rally. Meanwhile, our economists anticipate another 25 basis points hike in Overnight Policy Rate by next month.

“All these factors could lead to developers missing the current year’s sales targets or growth in next year’s targets. Hence, we take the view that rallies in the fouth quarter may be short lived or selective,” it added.

Meanwhile, Maybank Research said it remains cautious about the increasingly crowded development space in Johor’s Iskandar Malaysia (IM).

Oversupply of apartments, retail spaces in hotspots such as the Nusajaya-Medini and Danga Bay areas may cause a decline in property values over the medium term.

The research house said Johor’s House Price Index contracted 1.6 per cent quarter on quarter in the second quarter, the first decline in 27 months on weaker buyer sentiment due to government cooling measures effective from January.

“Malaysian developers are scaling back, slowing down on their new launches in IM hotspots and shifting their focus to landed, industrial properties due to rising competition in the high-rise integrated property segment.

Geographically, the research house prefers the Klang Valley over IM. “In our view, the strong population growth potential in the Klang Valley offers more sustainable demand for properties. That said, the Johor Baru-Singapore rapid transit system could re-ignite investors’ interest in IM and IM-related stocks,” it added.

Source: NST

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‘Budget - Positive for property sector’

KUALA LUMPUR: Real Estate and Housing Developers Association Malaysia (Rehda) president Datuk Seri FD Iskandar Mansor says the 2015 Budget was fairly positive for the property sector and hopes banks will ease their lending rules for first-time house buyers.

“We are happy as the issues faced by youths were addressed in this budget. We hope the banks will take to lending. It is their job to lend. We developers want to build more affordable houses. But if people can’t borrow, then how are we going to build?” FD Iskandar told Business Times.

The government is increasing house ownership with the Youth Housing Scheme, which offers a funding limit for a first house not exceeding RM500,000 for married youths aged between 25 and 40 years and with household income not exceeding RM10,000.

Under the scheme, the government will provide a RM200 monthly financial assistance to borrowers for the first two years to reduce the burden of monthly instalments.

The government will also give a 50 per cent stamp duty exemption on transfer documents and loan agreements for properties worth up to RM500,000 until December 31 2016, and 10 per cent loan guarantee so that they could obtain 100 per cent financing.

Borrowers will be allowed to withdraw from their EPF Account 2 to top up their monthly instalment.

“The government understands how difficult it is for people to come up with upfront money and is sensitive to their needs. Waiving 50 per cent on stamp duty is a step in the right direction. We hope the banks will follow,” he said.

FD Iskandar also said the allocation of RM1.3 billion to build 80,000 homes under the 1Malaysia People’s Housing Programme was encouraging for the sector.

“The National Housing Department is going to build 26,000 units for RM644 million while Syarikat Perumahan Negara Bhd will construct up to 37,000 homes. This will help to address the issue of house ownership at affordable prices.

“We, developers, are not running away from building affordable homes. Since both the federal and state governments have the land to build, let us, developers, focus on building homes for the whole nation,” he said.

Source: NST