Going up the property value chain

High-profile projects like the KL Metropolis and Platinum Park are taking Naza TTDI to the next level of the property sector.

AUTOMOBILES often pop up in people's mind when Naza Group is mentioned. It's understandable given its history and position as the country's largest private car company.

There is, however, another part of the group's business that's fast catching up. The sprawling group years ago added property development to its portfolio of companies and it's looking to create the same type of awareness for that side of the business when it comes to name association.

Its ambition to get involved in bricks and mortar instead of just nuts and bolts came by way of an acquisition in 2004.

That year, Naza Group's unit, Ekspedisi Nikmat Sdn Bhd bought overTTDI Development Sdn Bhd from Danaharta. That was the first step and ever since then, that property business has slowly been manicured and groomed into Naza TTDI Sdn Bhd.

TTDI Development, formerly known as UDA SEA Park Development Sdn Bhd, was a joint venture between SEA Park Development Sdn Bhd and the Urban Development Authority (UDA) that turned 286ha of rubber estate land into the highly-acclaimed Taman Tun Dr Ismail (TTDI) township during the 1970s.

Today Naza TTDI is making waves with a number of high impact projects, notably KL Metropolis and Platinum Park, that will take it to the next level of the property value chain.

Naza TTDI deputy executive chairman cum group managing director SM Faliq SM Nasimuddin says these projects will showcase the company's branding to a broader market and build a higher profile for the company.

He is confident that Naza TTDI will be able to record RM1bil in sales this year. Last year, it recorded sales of RM655mil.

Faliq says that although the group's automobile business is the main growth driver and is doing well, its property division is also growing into an important contributor to the group's bottomline.

“Naza TTDI is probably one of the largest privately-owned property developers in the country today and our vision is to become one of the top ranking property players within the next five years,” he tellsStarBizWeek.

However, he says the company, being a private entity, does not want to expand too fast but prefers to grow steadily and systematically.

“What is important is that we have the right projects to meet an annual growth target of 10% to 15%, and a strong balance sheet.

“We want to make sure that any project we bring to the table will be of quality and will be ahead of schedule. That's why, first and foremost, we place great importance on building up an exemplary team with the right resources and expertise,” Faliq says.

Expressing his satisfaction with the company's performance thus far, he does not discount a listing of the property outfit in the future, but notes that the timing must be right to reap the right value from any listing exercise. The probable timeframe for listing is in the next three to five years.

“Our internal track record has been quite strong, and we already have in place the necessary corporate governance and performance standards required of a listed company,” he says.

Signature projects

One of the most touted projects by Naza TTDI is KL Metropolis a 75.5-acre mixed development comprising residential, commercial, retail, office towers, exhibition and convention, and arts and culture facilities.

Positioned as Kuala Lumpur's international trade and exhibition district, the development has been master planned by renowned international architect firm Skidmore, Owings and Merrill, famed for developments such as London's Canary Wharf, Burj Al-Khalifa in Dubai, and Singapore's Marina Bay.

The master plan of KL Metropolis, launched last October, shows that KL Metropolis will be based on sustainable development principles that promote the preservation of the environment as well as meeting the needs of the working and living population of the area.

According to Faliq, KL Metropolis is designed to the Green Building Index requirements and will be among the most environmentally sound mixed-use communities in the country. The development is also aiming for MSC Cybercentre status.

“It will be the first registered LEED for Neighborhood Development (LEED-ND) project in Malaysia. LEED-ND certification is an internationally-recognised green rating system that incorporates the principles of smart growth, urbanism and green building, that meets accepted high levels of environmentally responsible and sustainable development,” he explains.

Expounding on details of the master plan, he says it is designed in a manner where it can be implemented and developed in a series of manageable phases.

“This will encompass a new generation of buildings, with sustainable architecture and energy efficient engineering that is sensitive to the environment and directly improves the quality of life and productivity of their occupants.

“The RM15bil development will stretch until 2025 and will need a lot of our attention. We are talking to a few developers as well as retail and hotel investors to become partners for the various components in KL Metropolis,” he adds.

Naza TTDI's unit which is developing the project, TTDI KL Metropolis, signed a privatisation agreement with the Government and Syarikat Tanah dan Harta Sdn Bhd to develop the Matrade Centre for the Government at a cost of RM628mil.

Designed to promote year-round events, Matrade Centre on 13 acres will have a gross floor area of 1 million sq ft and net lettable area of 600,000 sq ft. The completed building is to be handed to the Government by end-2014.

Faliq says another major component of KL Metropolis will be the shopping mall which will be designed to allow future “horizontal” expansion after the gestation period is over.

“The retail component will be one of the key plays in KL Metropolis and will herald a new shopping experience with some key unique features,” he explains. Another of its high visibility project is Platinum Park, which is located on nine acres in the Kuala Lumpur City Centre vicinity.

Designed by Foster + Partners, the nine-acre project comprises three Grade A office towers, two luxury service apartment towers and one hotel cum luxury service apartment tower. There will also be 150,000 sq ft of retail space and a 1.5-acre park.

The first office tower, Felda Tower will be handed over in mid-2012 while the second tower, for a government-linked company, is due for completion in late 2013. The third tower for the Naza Group, Naza Tower, is to be completed in the second quarter of 2014.

The project with gross development value of some RM4bil is due for completion in 2016.

Spreading its wings

Naza TTDI has 1,300 acres of landbank 500 acres in the Klang Valley and 800 acres in Penang that the group feels have a potential gross development value of over RM20bil combined.

Faliq says Naza TTDI is looking to expand its market presence outside of the Klang Valley to other fast-growing markets such as Penang and Sabah.

The company owns 800 acres in Bertam on the mainland of Penang which it plans to start developing around end-2013.

As for Sabah, Naza TTDI is keen to explore opportunities in Kota Kinabalu.

He says the new airport in Kota Kinabalu and the many attractions there have contributed to a surge in tourist arrivals from various countries including Hong Kong and South Korea. Foreigners from those countries are keen to invest in properties there.

On whether Naza TTDI harbours any overseas ambition, Faliq says: “TTDI is a brand we can take overseas, but this will not be happening so soon. We are studying a number of opportunities.”

The markets being looked into include Singapore and the other Asean countries.

Faliq says being creative and having unique selling propositions to offer property buyers are very important criteria to succeed in the highly competitive property development sector.

“Creativity, functionality and quality are part of the value propositions of our projects whether it is a township, business park or retail development. Moving into the highly sought after Kuala Lumpur City Centre vicinity and other major integrated developments will offer the opportunity for us to do even better in those areas,” he explains.

Having completed more than 15,000 residences and commercial units spanning over 1,650 acres, the company has established a good development track record and sound fundamentals.

“The Naza TTDI brand is synonymous with quality, early delivery and proven capital appreciation in the secondary market,” he says.

Faliq says the company has to be vigilant on the challenges in the property business that include growing competition, getting hold of the right landbank for its projects, having to face an oversupply situation of high-rise residential projects and office space and rising cost.

According to him, the surplus in the high-rise residential market comprises mainly over-sized units of more than 2,000 sq ft while supply of more average sized residences is still limited.

To gauge the market's preferred size of residential property, a survey was conducted in Singapore last year, and the results show that the majority still prefer smaller units mainly for the reasons of affordability and easier maintenance.

“Demand is stronger for residences of average sizes of 600 sq ft to 1,500 sq ft which are still in short supply. This is the market we are targeting at,” Faliq says.

The company will also have larger units in the range of 2,000 sq ft or bigger but this will only account for about 30% of its projects.

Naza TTDI's portfolio of completed projects include Section 13, Shah Alam and Laman Seri semi-detached and bungalows.

Another TTDI project is Laman Seri upmarket semi-detached and bungalows enclave and Laman Seri Business Park commercial development in Shah Alam.

It successfully built the Giant Hypermarket within a record six months as well as constructed the Shah Alam Malawati Indoor Stadium in 1998 for the boxing event of the Commonwealth Games.

The company has two ongoing township developments TTDI Alam Impian, a 208-acre township development in Section 35, Shah Alam; and TTDI Grove Kajang, a 118-acre township in Kajang. These projects are the company's “bread and butter” which can cushion the company against a market downturn.

Another upcoming project set to kick off in mid-2013 is TTDI Puchong, a RM1.2bil mixed development on 53 acres in Puchong.

It also has some pocket developments at its two TTDI townships in Kuala Lumpur and Shah Alam the RM137mil TTDI Ascencia and RM207mil TTDI Adina. - The Star

Tradewinds to swap land status in Langkawi

PETALING JAYA: Tradewinds Corp Bhd has followed the precedence set by DRB-Hicom Bhd in swapping its Malay reserve land status in Langkawi Island with comparable non-Malay reserve land on the mainland at a conversion rate of RM5 psf. The proposed exercise, which is to enhance the value of the land in Langkawi, will see the status of 43.6 acres (17.4ha) under Tradewinds in Langkawi to be converted to non-Malay reserve status. Apart from that, Tradewinds also has an option to convert the status of another 119 acres in Langkawi with land in Kubang Pasu measuring 126 acres. The entire exercise will see the state receiving RM37.4 million in conversion fees based on RM5 psf. Tradewinds announced to Bursa Malaysia yesterday that through its subsidiaries THR Hotel (Langkawi) Sdn Bhd and Benua Mahsuri Sdn Bhd, it entered into agreements to exchange its land status with Northern Gateway Free Zone Sdn Bhd (NGFZ) at a ratio of 1:1.05 acres. NGFZ is a wholly-owned subsidiary of Northern Gateway Sdn Bhd, which in turn is a wholly-owned subsidiary of Benua Bayu Sdn Bhd, a company linked to Tan Sri Syed Mokhtar Albukhary. NGFZ is the owner of the land in Kubang Pasu that Tradewinds is swapping the status with. It is proposed that the Malay reserve status of THR Hotel land in Pantai Chenang, Langkawi measuring 6.9 acres be swapped with about 7.21 acres on the basis of 1:1.05 acres in Kubang Pasu. The land status swapping will cost THR Langkawi RM1.57 million. Benua Mahsuri, on the other hand, will swap the status of Malay reserve land of 36.7 acres in Padang Mat Sirat that it has leased from Lembaga Pembangunan Langkawi (Lada) with about 38.5 acres belonging to NGFZ in Kubang Pasu. The swap will cost Benua Mahsuri RM8.39 million. This is the second time a company linked to Syed Mokhtar has swapped its Malay reserve land in Langkawi with comparable land elsewhere in the state. Last December, DRB-Hicom exchanged its Malay reserve land in Pulau Rebak Besar, Langkawi with NGFZ’s tract also in Sungai Laka, Kubang Pasu, for RM76 million cash at a conversion rate of RM5.23 psf. Effectively, the swapping is a way for DRB-Hicom and Tradewinds to enhance the value of their land in Langkawi as it allows non-Malays to acquire properties developed on these parcels. Usually land with Malay reserve status carries less development potential as the sale of property is restricted. In DRB-Hicom’s land status swap agreement late last year, it said that to attract high net worth investors for the development of Rebak Marina, it has to convert the Malay reserve status into an open status land. Similarly, Tradewinds and Benua Mahsuri plan to develop the land after getting the status changed. In this respect, Benua Mahsuri said it intends to develop the Lada land to enhance the value and will submit an application to the state to de-classify the Malay reservation status of the Lada land. - The Edge Property

 

Do not sell, rep tells Balik Pulau landowners

LAND owners here have been urged not to hastily sell off their plots for quick profits as this move could disrupt the physical environment of the area.

Pulau Betong assemblyman Muhammad Farid Saad said some land owners had received letters from a real estate agency asking them whether they have any intention to sell or rent out their lands.

“Just imagine if 100 acres of land were sold off.

“The landscape

of

Balik

Pulau would surely then change.

“The owners here are entrusted to the land. Please don’t sell it.

“The quick profits will not last forever. But with the land, we can keep it for the generations to come.

“Even if they build new houses here, it is going to be costly. Only outsiders can afford it, not the locals here.

“If possible, please maintain Balik Pulau as it is, “he said after presenting aids in the form of monetory aid, laptops, a personal computer and a printer totalling RM40,000 to 13 schools, the Fisherman Association and religious organisations in Balik Pulau.

Muhammad Farid, who also received the same letter, also questioned how the real estate agency got hold of their addresses.

“So far, I’ve collected 12 letters from the residents,” he added.

The letters dated March were sent by a real estate agency based in Butterworth.

When contacted, a spokesman for the real estate agency who declined to be named said that their company was assigned by a developer to obtain feedback from the residents.

“We are not forcing anyone to sell or rent their land.

“In fact, we have already received feedback from them. Some are not willing to sell but some are willing to provided the price is good. We will present the feedback we received to our client,” she said. - The Star

It’s a no-no to strong arm tactics

Police out to get contractors who flex their muscles to secure renovation jobs

POLICE have set up a task-force to zeroin on in-house contractors who are muscling for renovation jobs at newly completed apartments and condominiums using their links to triads in Penang.

An initial police probe found that many of them, who charged exorbitant prices for materials and workmanship, were protected by secret societies.

In the latest incident, police nabbed an “in-house” contractor, 34, after he had barred another contractor from starting renovation work at an apartment unit in Batu Lanchang here.

The suspect, said to have close links to the ‘08’ underworld gang, insisted that the house owner engaged him for the renovation or buy construction materials from him.

The victim, 59, lodged a police report on the matter.

George Town OCPD Asst Comm Gan Kong Meng said a suspect was picked up in Jelutong at 10am yesterday.

“He is now being investigated under Section 506 of the Penal Code for criminal intimidation.

“We have received four police reports of such similar cases at the same newly completed apartment block,” ACP Gan said.

“We will not tolerate this. House owners who are threatened by such contractors can come to us. House owners can engage any contractor they like,” he told a press conference at George Town police district headquarters.

He advised those who faced similar problems in Jelutong to contact ASP Azhar Abu Bakar at 012-9065999, Insp Megat Shafril Emran at 019-4100400 or lodge a police report at the nearest police station.

The in-house contractors who monopolise renovations at newly completed high-rise residential buildings are mostly linked to secret societies active in the district.

It is learnt that house owners who refuse to engage them would be posed with all sort of problems, ranging from stolen or broken window panes, or having their unit doors, or walls damaged.

House owners were also forced to pay exorbitant prices for a wheelbarrow of sand or a bag of cement. - The Star

‘Improve public transportation in Penang’

GEORGE TOWN: If public transportation system is improved, there would be no need for a third link between Penang island and the mainland, says Halcrow Consultants director Dave Turner.

Turner, a transportation planning expert involved in the Penang Transport Master Plan Study, said the third link depended on whether Penangites were ready to change and start using public transport.

“If we don't start using public transportation, we will eventually need a third link.

“If we don't make any improvement in public transportation, then cars will be the only option for most people's travel. If so, then by 2030, we will need a third link,” he said at a forum on the Penang Master Plan Study.

Halcrow Consultants and Singapore Cruise Centre are part of AJC Planning Consultants which was hired by the state government for the master plan study last May.

Turner, who revealed the findings after almost a year's research, said the study identified the issues on the lack of public transportation on the island and mainland, the pedestrian regime, and taxi and ferry services that needed attention.

He said the population growth would result in travel demand increasing by around 25% or more by 2020 and 50% or more by 2030.

“The methods we have taken to handle this problem are highway-based, public transport-based and policy intervention-based,” he added.

“As such, we have come up with two approaches the Highway Improvement-Based Approach and the Balanced Approach Vision.”

He said both included the Core Package, which was an improvement on the highways, public transport and implementation of policy intervention.

“The Highway Improvement-Based Approach consists of the Core Package along with the Third Crossing, Cross City Link from Jelutong to Air Itam bypass, North Coast Pair Road, Air Itam to Relau Pair Road and the North-South Expressway Link,” he said, adding that the costs were estimated at RM12.5bil.

“The Balanced Approach Vision consists of the Core Package along with the Penang Outer Ring Bypass, the North-South Expressway Link, trams, ferries, commuter rail and George Town/Butterworth Access chargers,” he said. - The Star

Govt may double minimum price of houses foreigners can buy

KUALA LUMPUR: The Government is considering raising the minimum floor prices of houses foreigners are allowed to buy to RM1mil from the current RM500,000 in an effort to control the rise in property prices, sources said.

They said such a decision was “in the pipeline” and the implementation would be made by the economic planning unit (EPU) under the Prime Minister's Department currently headed by Minister Tan Sri Nor Mohamed Yakcop.

“From what I understand, these revised guidelines have been discussed at the ministerial level and should this be enforced, it will mean that foreigners will only be allowed to buy properties priced above RM1mil. For now, the base price is set at RM500,000 for foreigners. This base price is a bit low looking at present circumstances,” a government source who requested anonymity said.

“The current trend in the property market indicates that prices are still continuing to climb despite measures by Bank Negara to curb property prices from spiralling out of control. We need to act before it goes further out of hand,” the Putrajaya source added.

Another source said the revised guidelines would also consider a slightly lower base price threshold of RM800,000 for residential properties in selected economic corridors such as Johor's Iskandar Malaysia to ensure the development and success of these corridor hotspots.

“This base price will also be subject to reviews by the Government from time to time depending on the inflationary situation of the economy and to keep overall inflation in check,” the source said.

Deputy Finance Minister Datuk Donald Lim had recently told the press that the Government would take “strict measures” to avoid a US subprime mortgage financial crisis after average house prices jumped almost 7% in the fourth quarter of last year despite measures announced by Bank Negara to rein in property prices.

“The Government is worried about property prices causing a bubble and we don't want banks to overlend to the property sector,” Lim said.

Industry sources surveyed by StarBiz said foreigners that tend to buy properties in Malaysia were those from South Korea, Japan, China and Singapore.

“This move will give an advantage to locals, especially those in the middle-income category as locals will not need to compete with foreigners. I am not surprised by this move, but our agency has so far seen mostly people from China and Singapore buying properties above RM1mil anyway,” a KL-based licensed real estate negotiator who did not want to be named said.

“However, we may see fewer transactions from the Koreans and Japanese. Westerners such as those from the United States and Europe won't usually buy. They prefer to rent instead,” the real estate negotiator added.

Meanwhile, the implementation of the higher floor price is expected to have a minimal impact on the property market in Malaysia as official statistics show that only 2.4% (worth RM1.45bil) of transactions conducted in the residential sector last year were worth RM1mil and more.

The Finance Ministry's Valuation and Property Services Department Property Market Report 2011 released last week showed there were 269,789 residential property transactions worth RM61.83bil transacted last year, the highest recorded in the last five years.

“Both volume and value recorded double-digit growth of 18.9% and 22.1% respectively. The All House Price Index surged to 156.9 points in the fourth quarter (Q4) of 2011 against 147.2 points registered in Q4 2010,” the report said.

The report said that landed housing was on a “general upward trend” in Malaysia and also attributed the rise in property prices to the Sungai Buloh-Kajang My Rapid Transit project.

“Across the board, terraced houses in KL recorded increases of 8%-13%. Increased prices of landed houses on Penang island were apparent. The highest transacted price of two- and three-storey detached (houses) were at RM2.05mil and RM5.15mil respectively,” the report said. - The Star

涵盖造路平衡发展两大案 槟交通大蓝图草本出炉

（槟城9日讯）耗资350万令吉完成的槟州交通大蓝图草本已出炉，为槟州未来20年的交通把脉，同时提出造路及平衡发展两大案，其中后者更“否决”引起争议的第三通道海底隧道计划。
受聘拟定槟州交通大蓝图的Halcrow公司董事特纳（Dave Turner），于周一举行的槟州地方政府论坛上公布已完成的交通大蓝图草本及举行汇报会。在记者会上他指出，目前槟州交通处于十字路口， 政府及人民须在“继续造路”及“鼓励公共交通系统”上作出选择。
否决海底隧道计划
他即提出，若槟州要打造成为宜居城市（Livable City），那他即建议选择平衡发展计划，放弃海底隧道作为第三通道计划。他提出的造路（Highway Approach）及平衡发展(Balanced Approach)方案中，两个方案中都要求纳入耗资25亿令吉的“主要配套”（Core Package）计划，主要配套计划分别在道路、公共交通系统及政治干预方案提出整治计划。
在两大方案中提出的造路发展方案中，耗资125亿令吉，除了概入主要配套外，同时加入系列的造路计划，包括打造第三通道（海底隧道）、城市衔接道路（Cross City Link）、日落洞至亚依淡交替路、北岸配对路、南北大道衔接路。
而在平衡发展方案中，耗资同样高达130亿令吉，比前者多出10亿令吉，除了同样主要配套外，同时加入槟城外环交替路、南北大道衔接路、电车（Trams）、新渡轮服务、有轨载客系统（Commuter Rail）以及乔治市/北海进城收费。
放任造路车流量增　槟城人民须作选择
特纳在记者会上表示，槟州人民须在造路方案及平衡发展方案中选其一，人民须改变态度，若继续放任造路，相信在未来20年后，槟州或需要第三通道来取代饱和的第一及第二大桥。
“反之，若槟州选择公共交通系统，同时配搭在方案中打造一些外环路来疏散进城的交通，槟州就不需第三通道。”
他警告说，若不现时选择公共交通系统，在20年后槟州的车流量将增加更多，届时将难走回头路。在问及槟州拟打造成国际城市同时朝绿色及环保州迈进时，他以加拿大温哥华市举例，后者有良好的公共交通系统，没有大型公路系统，同时是一个良好宜居城市，所以槟城若要达成类似目标，平衡发展方案将是槟城的首选。
曹观友：草本公开展示后　将交州政府拟执行方案
槟州地方政府委员会主席曹观友行政议员指出，槟州政府将在交通大蓝图草本公开展示后，即提交州政府以针对蓝图方案作出决定，同时拟定执行方案。
他表示，槟州政府在聘请交通谘询公司时，提出槟州政府拟定交通是以鼓励公共交通及可行性为重要考量，不过交通蓝图提出方案与槟州政府要求的路上公共交通使用，及私家车的比率目标有很大距离。
针对蓝图草本提出的平衡发展方案中否决海底隧道一事，他表示，海底隧道计划尽管已进入承包商投标资格鉴定阶段，而蓝图草本的出炉也将作为海底隧道计划的参照。
他表示，蓝图是由交通专家所拟定，槟州政府一定会依照其专业的建议进行决策，唯他也表示，海底隧道计划虽然在平衡发展方案中没有被列入，唯槟州政府不一定完全采取单一的方案，可能最终选择混合方案。
而他表示，在落实交通专家的蓝图方案时，同时须顾及其涉及的权限（Jurisdiction)、其涉及的财务等。- 光华

Sound investment in Penang

Leading audio equipment manufacturer set to open facility in Seberang Prai

ALEADING US audio equipment manufacturer for luxury automobile brands such as Audi, Ferrari, Maserati, Mercedes-benz and Porsche plans to make Penang its manufacturing base.

The company, headquartered in Massachusetts, in the US is expected to ink an agreement with the state government soon to establish a manufacturing facility in Seberang Prai.

It is learnt that the company is looking to invest between Us$100mil (Rm306mil) and Us$200mil for its facility to be located on an 8ha site that will be leased from Penang Development Corporation.

The investment is expected to generate about 1,000 job opportunities in Penang.

Founded in the 1960s, the privatelyowned US company is best known for its loudspeakers, noise-cancelling headsets, automotive sound systems, amplifiers and headphones.

The company also makes multimedia, home entertainment systems and speakers for homes.

The company’s audio systems are also used in cars from Buick, Holden, Cadillac, Chevrolet, GMC, Acura, Hummer, Pontiac, Saab and Alfa Romeo.

Besides the US, the company operates in over 130 countries in Europe, South America, Asia Pacific, and the Middle East, owning 16 international subsidiaries, eight manufacturing facilities and 100 retail stores worldwide, employing approximately 8,000 workers.

According to a report by research company Strategy Analytics, the rise in global vehicle production and increasing requirement for communications and navigation will see revenues from the infotainment semiconductor market increase from Us$4bil in 2012 to Us$6.4bil in 2018.

The same report also forecast that due to the rise in global vehicle production and the increased implementation of infotainment solutions for communications, entertainment and navigation, the total market value of original equipment manufacturing infotainment systems is expected to increase from Us$34bil in 2010 to more than Us$50bil in 2018.

Strategy Analytics is a global organisation with analysts based in Europe, Asia and the Americas, who specialise in analysing the market trends for the wireless devices, consumer electronics and automotive electronics industries.

Robert Bosch Car Multimedia division and Clarion (Malaysia) Sdn Bhd are two internationally known manufacturers of multimedia systems for the automotive industry currently producing from Penang. - The Star

The unfair advantage

Foreigners, with their higher currency exchange, are competing with the locals in the landed housing market.

THE hike in property prices of the last two years should be a good enough reason to pull out all the plugs that have stifled home ownership among the people.

House prices in the property hot spots of Kuala Lumpur, Petaling Jaya and Penang have way surpassed the affordability level of the average Malaysians and more proactive measures are needed to extend a helping hand to them.

The latest statistics contained in the Property Market Report 2011 by the National Property Information Centre showed that average house prices climbed 6.6% in the fourth quarter of 2011.

Deputy Finance Minister Datuk Donald Lim rightly pointed out that the Government was worried of the emergence of a real estate bubble and did not want a United States sub-prime mortgage crisis in Malaysia.

The situation has to be addressed urgently before the high property prices cause more hardship to the people. Any further hike in housing prices will aggravate the climbing cost of living and derail efforts to promote home ownership.

Bank Negara's measures to rein in rising property prices and deter speculative property buying, including a maximum loan-to-value ratio of 70% for third-time mortgage borrowers and using net personal income calculation instead of gross income to decide on the quantum of loan approved, are showing results.

Banks should be prudent in their lending practices and if the speculative buying persist, tighter lending measures, like a further lowering of the LVR for multiple mortgage borrowers, should be implemented to nip property speculation in the bud.

However, first-time house buyers should be made a priority sector and they should be granted full financing if they met the lending conditions.

To ensure the home ownership programme will be a success, the efforts have to be undertaken holistically with the ultimate objective of making it easy and affordable for all households to own at least a home each.

The programme needs a masterplan that looks into the overall supply and demand scenario in the property market, and should not be undertaken on a piecemeal basis.

Given the importance of the family unit to the well-being of the country's social fabric, ensuring that every household has at least a house of their own will have many spillover benefits for the overall good of the country.

To address the supply side, sufficient land should be allocated to be developed into affordable housing townships that offer well-planned housing units priced between RM200,000 and RM400,000.

Instead of having different authorities or agencies, a dedicated umbrella body in the like of a National Housing Board should be responsible for all the Government's affordable housing initiatives to plan and execute projects for the 1Malaysia Housing Scheme and My First Home Scheme.

A closer scrutiny on the demand side points to the fact that besides strong buying interest by local purchasers, there has been an influx of foreign buyers, including from the Middle East and China, who have been snapping up local properties, thus contributing to the sharp spike in prices.

The situation is further compounded by the market cooling measures undertaken by governments in Singapore, China and Hong Kong to stem price hikes in their property markets.

Besides making it difficult and costly for their own nationals to buy multiple properties, strict conditions have been meted out on foreign buyers.

Last December, Singapore imposed a 10% stamp duty on foreign buyers to control the high number of foreign purchases.

The aim is to prevent property prices from boiling over which may lead to mayhem in the market should a property bubble happen.

Having seen the effect of the spiralling property prices in raising the cost of living,

I believe the holistic measures to contain property prices in our country should include some form of curbs on purchases by foreigners.

In view of the strong interest for landed housing units and sharp price hikes in this product segment, foreign purchasers should be disallowed from buying landed residential properties, except the super high-end ones.

Like in Singapore, landed housing projects, except the super high-end projects on Sentosa island, is made a critical sector that is only exclusive to the local buyers.

Foreigners should only be allowed to buy high-rise properties that are priced at more than RM1mil and multi million ringgit landed housing.

With these measures, the foreigners with their higher foreign exchange advantage will not be competing with the locals in the high demand landed housing sector which is one of the reasons driving prices to the current high levels today. - The Star

> Deputy news editor Angie Ng subscribes to the age-old wisdom of “charity begins at home” and hopes all Malaysians will live as a big happy and supportive family. 

Prices, rentals stabilising

Prices and rentals for residential properties in the Klang Valley should stabilise this year due to credit-tightening measures by banks and investors' cautious sentiment after prices of houses rose by 6.6% last year, according to property consultants.

However, they point out that property developments in selected locations, especially in areas where the proposed Klang Valley My Rapid Transit (MRT) and Light Rail Transit (LRT) stations are, would still perform well in terms of capital appreciation.

Property consultancy CB Richard Ellis (M) executive director Paul Khongsays price increases in the Klang Valley residential market had slowed down slightly in the last two quarters.

“Property developers are offering more incentives and freebies to push sales, ranging from free SPA (sales and purchase agreement), stamp duty, free air-conditioners to even trips to Hong Kong,” he says.

Johor’s property market is expected to continue to perform well this year. Houses in areas within Nusajaya such as Taman Nusa Idaman and Horizon Hills record price increases of 6.4% to 9.1%, with prices ranging from RM392,000 to RM448,000.

Khong says that this year, buyers are more cautious as prices are currently toppish.

“Loans are now getting difficult to secure. Larger numbers of buyers especially investors, have now taken a more conservative stand.”

Some heat has been taken out of the speculative end of the property market in recent months, says property consultancy Khong and Jaafarmanaging director Elvin Fernandez.

“Speculation is an accepted and needed element in any market, excessive speculation is not,” says Fernandez.

One property research analyst says the residential property market is set to take a breather, and prices should be flat in 2012 and 2013.

“Last year was a sterling period when property prices went up a lot, especially for new development launches.

“So, we are coming off from a very high base set in 2011. Can the market maintain this kind of momentum?

“We do not think so as there are no major catalysts and banks are cooling down the residential property sector,” he says.

The property analyst also says a lot of residential properties launched in 2010 would be completed this year.

“Many owners will try to flip' their units. So, there will be affordability issues if prices keep going up.”

Tighter financing

According to data on Bank Negara's website, the number of loans applied for purchases of residential property increased by 17% year-on-year in the first two months of 2012 to RM26.7bil.

The amount of residential property loans approved during the period was RM12.25bil, which was 2.7% higher compared with a year earlier.

Meanwhile, the amount of loans applied for purchases of non-residential property increased by 15.3% year-on-year in the first two months of 2012 to RM13.83bil.

The amount of non-residential property loans approved during the period was RM6.83bil, which was 8.4% higher compared with a year earlier.

Another property research analyst says the central bank's data shows that credit-tightening measures are working to cool down the property sector. “This year to date, demand is still very strong, and has in fact increased substantially, especially for residential properties.

However, the amount of loans approved was not substantially higher compared with the same period last year,” he says.

Fernandez says there is evidence that the run-up in prices for the various “hot spots” of housing in the Klang Valley and in Penang, have been arrested due to cooling measures undertaken by Bank Negara and the tightening on housing loans by banks.

Effective this year, banks have started using net income instead of gross income to calculate the debt service ratio for loans.

Fernandez also points out that coming out of the holiday season this year, there was a distinct slowdown in enquiries for mortgage valuations and house purchases in the secondary market.

“The Government has said it was serious about preventing a property asset bubble. So, even if banks start to loosen the lending guidelines in the later part of the year, how much can property prices go up before measures such as increasing the real property gains tax (RPGT) are imposed?”

The 2011 property market report, compiled by the Finance Ministry's Valuation and Property Services Department, says the Malaysian All House Price Index had surged to 156.9 points in the fourth quarter of last year compared with 147.2 points a year earlier.

The report also says the demand for high-end units priced above RM500,000 had increased in the country, with 21,905 transactions last year (compared with 16,782 in 2010).

“This could be attributed to the increase in affordability level and supported by the ease in borrowing as well as attractive loan packages offered by the financial institutions,” says the report.

Khong says this is also largely due to the fact that there is a substantial increase in the number of units priced above RM500,000 in recent times within the Klang Valley.

“Many residential properties have gone beyond this price level. So, a lot of sales done would largely be in this category now.”

Khong points out that nowadays, it is virtually impossible to buy a landed property at RM500,000 or below in good locations in Petaling Jaya and Kuala Lumpur.

“A terrace house in Taman Sri Hartamas is already above RM1mil and even one in SS2, Petaling Jaya or Bandar Setia Alam, Shah Alam has also moved up above this RM500,000 range.”

The report noted that last year, prices of houses continued to consolidate, with landed housing in general on an upward trend.

Across the board, terraced houses in Kuala Lumpur recorded price increase of 8% to 13%.

For example, the prices of single-storey terraced houses in Lucky Garden, Taynton View and Salak South Garden rose by 8.1% to 11.9% while double-storey terraced houses in Bandar Tasek Selatan saw price increases of 11.7%.

However, the prices of high-rise developments in Kuala Lumpur showed mixed trends.

Low-cost flats in Taman Batu Permai recorded price increases of 11% due to strong demand while the prices of low-cost flats in Bandar Baru Sri Petaling dropped by 5% due to competition from other stratified buildings in the area.

Apart from that, the prices of condominiums at Casa Kiara II and Mont Kiara Pines rose by 12.8% and 13.3% respectively.

Residential housing prices in Selangor were also influenced by projects such as the MRT and Light Rail Transit, with single and double-storey terraced houses in locations such as Petaling Jaya, Subang Jaya and Bandar Utama registering double-digit increases of 14% to 34.3%.

In the high-rise segment, it is noted that apartment units in Bandar Puchong Jaya and Taman Puteri Impian recorded price increases of 3.3% and 21.5% respectively.

Meanwhile, in Putrajaya, prices of residential properties also recorded strong growth.

Prices of double-storey terraced units in Precinct 11 increased by 18%, with the highest price registering at RM430,000 (against RM370,000 in 2010) while prices of low-cost flats in Precinct 9 rose by 10%.

The report also points out that the 55km Sungai Buloh-Kajang MRT alignment, which is expected to be completed in 2017, could result in an appreciation in property values within the areas served by the project such as Taman Tun Dr Ismail and Phoenix Plaza.

“Those who have parcels of developed or undeveloped land along the alignment are poised to enjoy the spillover effects of the rise in property values.”

Residential rentals

Across the board in the country, the rental rate of both landed and stratified residential properties is stable.

However, there are exceptions particularly in the Klang Valley.

In Bandar Utama, Selangor, rental of two and two-and-a-half storey terrace houses grew by 30% and 36.4% respectively with rental ranging from RM1,900 to RM2,900 per month.

Rentals for single-storey medium cost terrace houses at Bandar Sri Damansara increased strongly by 35%.

Meanwhile, in Kajang, single-storey terrace houses in Taman Cheras Jaya and Taman Bukit Mewah showed rental growth of 9.1% and 5.3% respectively due to their strategic location near the exit to SILK Highway.

Increases in rentals are also seen in low-cost flats and apartments in Damansara Damai, Bandar Puchong Jaya and Taman Kinrara.

Double-digit rental growth is seen in condominiums at Bandar Baru Ampang, Taman Pandan Mewah, One Ampang Avenue and Pelangi Damansara.

In Kuala Lumpur, rental increase of 4% to 13% is seen for single and double-storey terrace houses in Danau Kota, Happy Garden, OUG and Salak South Garden.

Rental of apartment units were generally stable, except for certain high-rise developments in Kuala Lumpur, the Petaling district and Ampang which increased by 5.5% to 18.2%.

However, Fernandez says rental yields for ubiquitous two-storey terrace houses in selected areas in the Klang Valley are getting lower.

“The trend has been towards lower returns, slipping below the critical 3% benchmark. Below 3% is a cause for concern as houses should return between 3% and 6% (all risks net return) depending on house type, and whether it is landed or strata.”

One property analyst also says it is getting tougher for residential property buyers to obtain decent rental yields.

“Rentals will always be area specific. But generally, how many people in the Klang Valley can afford to pay rental of RM2,000 a month with the exception of foreigners. Typically, young professionals and couples are paying rentals in the range of RM1,000 to RM1,500 a month.”

Boom for shops

In Kuala Lumpur as well as the Petaling and Batu districts, prices of shops increased by 2.9% to 21.4%.

Those in Taman Alam Damai (Damai Niaga) recorded the highest average price change, from a range of RM895,000 to RM910,000 in 2010 to a range of RM1.1mil to RM1.2mil last year.

Notable price increases for shops are also seen in Happy Garden (8%) and Salak South Garden (11%).

In Selangor, shop prices increased by 18% and 42.4% in the central town prime areas in Subang Jaya and Kota Damansara respectively as positive expectation from the proposed MRT and LRT projects spurred the commercial segments.

Meanwhile, rentals for commercial shops showed optimistic performance last year.

Rental of ground floor shops in Jalan Masjid India, Kuala Lumpur continued to be the highest at RM20,000 to RM25,000 per month.

Ground floor shops rental that showed double-digit increases include Kuchai Entrepreneurs Park and Taman Connaught at 16.6% and 11% respectively.

For Selangor, good areas in Petaling Jaya recorded rental increases of 13.3%.

Khong says shop rentals will continue to escalate slightly this year, reflecting the high prices that investors paid for such shops.

“In areas where commercial activities are bustling, rents will be good as well. Rents may not fairly match the capital values in many cases.”

However, he points out that shophouse rents will depend largely on the actual commercial performance of the individual centre.

One property analyst says shop owners in new housing projects where there is population growth will benefit.

“Remember, there are limited supply of shop lots. And, those who buy shop lots tend to have holding power, so they can afford to wait for better times.”

Other states doing well

Johor's property market performed well last year, with 52,946 transactions worth RM17.1bil.

Compared with 2010, Johor's property market volume and value increased by 9.1% and 44.6% respectively.

The report says Johor's residential property prices are generally stable with instances of mixed performance.

Single-storey terraced houses within areas in Johor such as Taman Puteri Wangsa, Taman Ungku Tun Aminah, Taman Bukit Indah and Taman Perling see price increases of 2.9% to 11.1%, with prices ranging from RM125,000 to RM220,000.

Houses in areas within Nusajaya such as Taman Nusa Idaman and Horizon Hills record price increases of 6.4% to 9.1%, with prices ranging from RM392,000 to RM448,000.

In Johor's high-rise residential segment, developments such as Straits View Condominium in Bandar Baru Permas Jaya saw price increases of 5.2%, with transactions done at RM470,000 to RM570,000 while Taman Perling Apartments registered the highest price increase of 23.3%, with transactions done at around RM220,000.

However, prices in Tanjung Puteri Apartment declined by 12.6%.

Property analysts are confident that the property sector in the Iskandar Malaysia economic growth corridor will perform well.

“The boom area will be Iskandar Malaysia. Lately, many major property developers have made forays there.

This is what happened with areas like Cyberjaya and Puchong, Selangor in the past,” they say.

Meanwhile, Penang's property market had an outstanding year with 39,415 transactions worth RM13.1bil, thus registering growth of 51.7% and 39.5% respectively compared with 2010.

It is noted that Penang's residential property prices are also on an upward trend, due to the scarcity of land on the island.

For example, double-storey terrace and semi-detached houses at Island Park see price increases of 13.4% to 30.8%, as the area is buttressed by neighbourhood developments such as Tesco hypermarket, Queensbay Mall, hospitals and schools.

As for Sabah, the property market improved slightly last year, with 10,321 transactions worth RM4.43bil, thus registering growths of 1.4% and 12.8% respectively compared with 2010.

In Sabah, prices of residential properties were generally unchanged, with a few exceptions.

For example, double-storey terrace houses in Seri Millenium Kingfisher, Kota Kinabalu are transacted at higher prices of RM400,000 to RM450,000 due to the area's proximity to the city centre.

In Sandakan, similar property in Taman Indah Jaya and Taman Fajar witnessed 20% and 14.6% price increases respectively.

The high-rise segment in the state also recorded price increases, and highlights included condominium units in Grace Ville and One Borneo Tower A in Kota Kinabalu, where prices increased by 17.9% and 10.8% respectively. - The Star