Applying the brakes – made for the short term – can be dangerous

DOES the anti-lock braking system (ABS) really make driving safer? I thought so until I came across an interesting finding recently.

In his book What the Dog Saw, Malcolm Gladwell shared the result of a famous experiment conducted years ago in Germany. The experiment equipped part of a fleet of taxis in Munich with ABS. The rest of the fleet was left alone, and the two groups of drivers were placed under secret observation for three years.

Most people would expect that with the installation of the ABS in a vehicle, driving would be safer. The outcome of the experiment proved otherwise. For some drivers, ABS did not reduce their accident rates. It turned them into inferior drivers instead. They drove faster, made sharper turns, showed poorer discipline and braked harder.

The author explained this phenomenon with the theory of Risk Homeostasis which states that under certain circumstances, changes that appear to make a system or an organisation safer in fact do not. Human beings have the fundamental tendency to compensate lower risks in one area by taking greater risks in another. In that particular experiment, the drivers used the additional safety elements to drive faster and more recklessly.

Contradictions

To a large extent, this theory can be applied to many aspects of our life. While one can take the additional precautionary methods, the fundamental problems should also be addressed to achieve the desired results.

Recently there has been a proposal to raise the floor price of properties for foreigners from RM500,000 to RM1mil to curb or control the prices of houses from increasing too fast. This proposal is on top of the other “cooling off” measures such as the 70% housing loan policy for purchase of a third property, the increase of real property gains tax from 5% to 10% imposed on properties sold within two years of the sale and purchase agreement, and the new ruling on housing loan limits based on net income rather than gross.

There is no doubt that the introduced “cooling off” measures have reduced the buying spree of properties. However, the intended objective of these measures to control the price of properties has yet to be seen. Introducing measures without critically identifying the root cause of the increasing property prices may instead create situations that would not be beneficial to the industry as explained by the theory of Risk Homeostasis.

So, what determines rising prices?

We need to find the root cause of the issue in order to identify a long term solution. The basis for rising property prices now is largely due to the direct and indirect impacts of quantitative easing programmes i.e. the increase of money supply, carried out by governments around the world since the start of the global financial crisis. Value slump

When there is too much money chasing too few goods, prices will increase but not necessarily value. In reality, we are facing a situation where there is too much money in the system, causing a decrease in the real value of money and pushing up prices of goods and services including construction materials.

For example, in early to mid 2000, a condominium in Mont'Kiara which was sold around RM500,000 would now cost us about RM800,000, equal to a 60% increase. But measured in a different “currency”, that condominium would have cost us 8kg to 10kg of gold in early to mid 2000 and today, only worth about 5kg of gold. This is a sharp decline of 38% to 50% and is an illustration of how prices are going up due to the drop of currency value because of worldwide inflation and pump-priming policies.

However, if the property prices are not allowed to rise, it is not possible for developers to build below costs when the construction costs are constantly rising. This will cause a shortage of supply which will further push up prices in five to 10 years time.

Balancing act

Let us examine specifically the future supply and demand of properties in the Klang Valley.

On the demand side, the government aims to grow the population in Greater KL from the existing six million to 10 million by year 2020. Hence, an additional one million housing units (assuming four family members per home) is needed in the next eight years. It would mean that property developers need to supply 125,000 new housing units in Greater KL every year to meet the expected increase in population.

According to the statistics published by National Property Information Centre, the primary market only managed to launch 49,290 new housing units nationwide in 2011, with only 12,705 housing units in KL and Selangor. This indicates there is a demand exceeding supply scenario that can result in future severe consequences.

If the government continues to introduce more “cooling off” measures to curb or control house prices and to stifle temporarily the buying appetite of home buyers, it will slow down the rate of production of new houses by developers. The unintended consequences of stifling supply will create a massive housing bubble five to ten years later in Greater KL because of the extreme demand and supply imbalance.

The ABS experiment mentioned at the beginning taught us a valuable lesson. Understanding any long-term-unintended consequence is paramount before taking any actions. Putting measures in place that do not resolve the root cause may instead backfire on us. With that in mind, perhaps we shouldn't apply the brakes on housing need and instead look at the bigger picture to find longer-term solutions to our housing industry. - The Star

FIABCI Asia Pacific chairman, Datuk Alan Tong has over 50 years of experience in property development. He was FIABCI World president 2005/06 and was named FIABCI Property Man of the Year 2010. He is also the group chairman of Bukit Kiara Properties.

Security at what cost?

WHAT does it take to build a city a simple, functional spot under the sun that draws people in and provides enough for them to build a home, find work and enjoy all that is within their resources to enjoy?

Let's forget about phrases like “world class city” or “state-of-the-art city”. These are just empty phrases that do not mean anything. There are many components that go towards building a city security, clean air and water, healthcare, education, a city employment opportunities, public transport and other services. The list can be a lenghthy one.

But let's just focus on security, which is likened to a roof over our heads. The roof keeps out the rain and other elements. There is no point in having a leaky roof.

Of late, we read constantly about crime being reduced. But while there are statistics that point to this, we feel no safer than before.

Last Thursday, the country rejoiced when 12-year-old Nayati Moodliar was reunited with his parents after going missing for a week. Many missing children either end up dead, or continue to be separated from their loved ones.

His abduction prompted the introduction of new measures like putting up closed-circuit television surveillance cameras (CCTVs) around school premises. Mont'Kiara, which comprises predominantly high density condominium products, is known for its layers of security features. That is one of the reasons why many live there, forgoing a landed property with a compound.

In high-rise residential projects, there are access cards programmed to allow entry to the floor one is staying in and to public areas like the swimming pool and gym. We also have gated and guarded communities. Some of the newer townships in Petaling Jaya employ their own security guards with the permission of the local authorities and put up bars and other security features like rows of drums to seal off escape routes in the event of a break-in. Other residential areas do not strictly go by the gated and guarded definition but have security guards and perimeter fencing.

In our search for peace and safety to build and raise a family, we have put a premium on security, either by installing alarms or living in places that comes with such features. There is nothing wrong with this.

But has anyone asked why we have come to this? And to what extend can these measures ensure that our children and loved ones will be secured and safe? While it may be relatively safe within the gated and guarded community and internal break-ins may, or may not, be an issue it is what happens on the streets that is of concern today.

Once a person is outside these “safe” perimeters, he or she is at the mercy of unsavoury and unwanted attention, which may be in the form of snatch theives, robbers, kidnappers or other tricksters, as in the case of Nayati, who was kidnapped while walking to school. Does this mean we install these features in public areas and how far should we go in pursuit of these measures?

While installing CCTVs in public areas like schools, malls and basement car parks and shops may help, there is the cost of keeping them in serviceable condition. But even if the images of tricksters and kidnappers' get-away cars are caught on camera, is there a system where this images and information can be relayed in minutes or seconds to police patrols who will then take it from there? In other words, patrol cars equipped with audio visual gadgets. It sounds so Hollywood. But we've seen enough of police car chases on TV.

This goes back to the systems we have. If cars can come with TVs and police patrol cars with walkie-talkies, why can't these gadgets and their functions be integrated in order to relay images to speed up the pursuit of criminals on-the-run?

But we have to admit that installing security gadgets that integrate seamlessly with policing comes with a cost. Another simple and cost effective way would be police presence.

Yes, there is a need for the men in blue to ride around on motorcycles, some to be in police patrol cars. But we also need those who will patrol on foot on a sustainable intermittent basis, not just because a high-profiled crime has been committed. This will give a sense of security to the people and at the same time serves as a deterrent, to a certain degree, to street crime.

There is something very wrong when the people spend so much money on being safe when they are at home, yet remain vulnerable to all sorts of crime when they hit the streets. We need police presence, and we also need to weed out corruption at all levels of the Government. We need a roof over our heads, but not a leaky one. - The Star

Deputy news editor Thean Lee Cheng thinks the building blocks that go towards making a city liveable is more than gleaming towers.

Tambun Indah seeks JV partners for Klang Valley projects

PROPERTY developer Tambun Indah Land Bhd is looking for joint-venture (JV) partners to spread its wings out of Penang where its flagship project is based.

“We would like to expand into the Klang Valley, but our focus will be more on the outskirts like Kajang and Rawang where there is still plenty of land,” managing director Teh Kiak Seng says.

The company is in “several discussions” with landowners for this purpose, he says but nothing has been firmed up.

“We prefer to do JVs with landowners, the overall returns may be lower but we will not have to come up with so much money to buy land, there's less risk then,” Teh tells StarBizWeek.

For now, Teh and his team are focusing on their flagship project, the Pearl City integrated township in Simpang Ampat, which will have a gross development value (GDV) of more than RM3bil when completed.

The mixed residential and commercial township sits on a 1,001-acre site which is expected to be fully developed by 2020, complete with a business park which will house schools, hotels and hypermarkets.

So far, 450 acres have already been developed into residential and shop units.

There are plans to launch two more projects within Pearl City this year.

“We are enjoying a spillover of buyers from the island where property prices have skyrocketed since 2010,” Teh says.

For example, a terrace house on Penang island now costs around RM800,000. On the mainland, the same type of house would cost some RM300,000, he says.

“We see the gap (in price) eventually closing,“ Teh says, attributing it to new infrastructure coming onstream such as the Second Penang Bridge and the Double Track Commuter Train which will enhance connectivity between the island and mainland.

The proximity of the Pearl City development to more than 10 industrial parks, which are capable of generating thousands of job opportunities, will also play a part in ensuring that its properties enjoy a steady price trend as workers buy up units to live in, according to Teh.

He says that apart from the two residential projects within Pearl City that Tambun Indah will launch this year, there are three more, namely the RM39.3mil BM Residence in Bukit Mertajam, RM41mil Carissa Villas in Bagan Lallang, and the RM180mil Straits Garden in Jelutong on the island.

The funding of Tambun Indah's new projects will be through the issuance of 88.4 million shares through a rights issue which will raise RM44.2mil.

The two-for-five rights issue, which was approved at a recent shareholder meeting, is expected to be completed in June. It would also effectively increase Tambun Indah's share capital to RM154.7mil, comprising 309.4 million shares.

After these new projects are launched, Tambun Indah will have more than 600 acres of undeveloped land, mostly in Pearl City and some on the island.

The company currently has 10 ongoing projects, mainly residential that it launched over the past two years.

“These have had an average take-up rate of more than 80%,” Teh says.

Gross margins stand at about 30%, he adds.

Tambun Indah, which claims to be the first to introduce the concept of guarded and gated (landed property) in Seberang Prai, made a net profit of RM23.6mil for the financial year ended Dec 31, 2011 against a net profit of RM25.2mil a year earlier.

“I personally believe that prices on the island, the highest at about RM1,200 per sq ft now from about RM800 per sq ft in 2010, will not go up further due to increasing competition. We intend to benefit from that,” he says.

On average, Tambun Indah's Seberang Prai properties are selling at below RM300 per sq ft. More than 90% of its property development projects are located on the mainland. - The Star

Shopping mall in the cards

MAH Sing Group Bhd plans to develop a 1 million sq ft shopping mall for the Southbay City mixed-development project on a 13.7ha site in Batu Maung, Penang, next year.

Group chief operating officer Teh Heng Chong said the shopping mall would be positioned to attract shoppers from the northern region market.

“Once the second Penang bridge is ready next year, we can anticipate a strong flow of visitors from Seberang Prai to the island.

“Thus, we want to have a mall in Southbay City to tap into the business opportunities from the north and Seberang Prai,” he said in an interview.

He said they planned to start the project’s construction next year, adding that they had yet to work out the cost of the mall which would be part of the approved Southbay City master plan.

On the two residential suite towers in the RM329mil Southbay Plaza, which is part of the Southbay City project, he said Mah Sing had sold the bulk of the units for both the towers.

“Since the launch of the two towers late last month, we have sold 80% of 106 units belonging to the 32-storey Tower A and 75% of 100 units belonging to the 31- storey Tower B.

“The Tower A and Tower B units with built-up areas of between 1,107sq ft and 1,761sq ft, and 1,433sq ft and 1,714sq ft respectively, are sold from RM830,000 and RM1.2mil onwards,” he said adding that most of the units would be sea-fronting.

Teh said the two residential towers would be equipped with facilities such as infinity pools and gymnasiums.

“Below the two towers is a four-storey shopping podium with 100,000sq ft of retail space.

“There are a total of 731 car parking bays, of which 213 bays are for the commercial scheme while the rest are for theresidential suites,” he added.

Teh said the Southbay Plaza residential suites sold well because they were near to Queens-bay Mall, Eastin Hotel, Equatorial Hotel, Penang International Airport, and 1km away from the second bridge.

He said the entire Southbay City project would take five to eight years to complete. - The Star

The private home buyer’s journey — Ong Kah Seng

MAY 11 — Private home buying interest has remained significant despite the Singapore government imposing five rounds of market cooling measures in the past 2½ years, with sales of suburban condominiums remaining buoyant even as prices scale new heights.

The proliferation of shoebox apartments has also meant that more are able to embark upon their personal quest for a dream property. Indeed, the surge in supply of these small units in recent years has been met by overwhelming buyer response.

Whether it is an individual home buyer or joint property investors or families going for a better quality of life by upgrading from HDB flats, there is often a strong motivation for targeting that favourite property.

For investors, the motivation is more direct — perceived financial returns. Investors generally are seasoned property players, although there will be the new investors. The newbies, together with single owners of small apartments as well as some HDB upgraders, may have been primed for the purchase by various factors. They will find that the quest can be both exciting and stressful.

The majority who embark on buying private property decisions have been roused in some way.

For some, such awakening may have come from seeing their peers profiting through property investments and speculation. For some singles who buy shoebox apartments, it may stem from a desire for independence, to live apart from their families. There may also be those who have visited friends who live in private homes and are inspired to own one as soon as possible.

Daily leisure activities may also have shaped one’s desire to buy a property. In addition to fanciful show flats, shopping can also conjure up a liking towards property. With the arrival of many mega malls and big-box retail stores that present a convenient array of exciting offerings, the leisure shopper is spoiled for choice.

Home design concept stores, furniture chains and boutiques showcase all kinds of DIY offerings or professional services to consumers, some of whom are planning to own a home. And for those on tight budgets, buying a smaller or far-flung property will become more of an urgency.

Upon setting his or her mind on buying a home, the property seeker will likely use different means to source, compare and affirm the property choices. Most property seekers will validate these through studying and understanding district development plans, consulting friends in property and mortgage-related trades to ascertain the property’s potential and financing requirements.

The process will be both intensive but exhilarating for the earnest buyer, particularly for one with limited investment background who gets to understand many property and financial concepts.

The recent months have seen tremendous sales perks from developers — in the form of rebates or discounts from listed prices. Such schemes are surely attractive for those who have already tuned themselves psychologically into the mode of buying. The quest for private homes has also extended from developer sales to the resale market recently.

Buyers who have concluded their house hunting and purchase will be most excited to share the journey with peers. But it must be noted that while the property hunt is thrilling, the actual journey begins after one commits to a purchase.

The real benefits and the financing requirements will go hand-in-hand, depending on prevailing market conditions and whether the rental income is sufficient to meet the mortgage payments and other expenses. These have probably been downplayed in today’s context of an increasing desire for wealth opportunities and higher risk thresholds.

The current thinking is that given the large number of uncertainties, whether economic or supply-led fluctuations or possible policy calibrations, a buyer should not think too far but enjoy the direct benefits of owning the property. Since there are so many uncertainties, it is “the journey that counts rather than the destination”.

The past decade has seen the prevalence of “specu-vestors”, but since the harsh additional seller’s stamp duty of last December, speculation has become a thing of the past.

Most investors are now also thinking of owner-occupation should the property not be able to be rented out, hence creating another group that can be called “investor-piers”. That’s also a major property-owning mindset for many shoebox apartment buyers.

While the destination may not count as much as the journey, if the buyer enters the market at the wrong time or overestimates his long-term financing capacity, the journey will be a long and difficult one. — Today

* Ong Kah Seng is director at R’ST Research, an independent property market research company in Singapore. - The Malaysian Insider

提议槟恢复自由港 邓章耀出秘密武器？

（槟城10日讯）槟州恢复自由港，国阵夺回槟州政权有望？消息说，新科上任的槟州国阵主席邓章耀已向中央政府提议，恢复在1969年被取消的槟州自由港地位，成为即临大选赢回槟州民心的“秘密武器”。
一般相信上述建议一旦获国阵中央政府点头，将是一项振奋槟州人心的消息，对槟州国阵图夺回政权将是一项杀手锏，民联政府或可能在被动下，面对挨打局面，甚至可能在人民相信民联入主槟城无望下，造成后者丧失政权。据英文新海峡时报在周四的封面报导即引述消息说，邓章耀已将建议提呈给首相署部长丹斯里莫哈末耶谷以及马来西亚旅游局主席拿督黄泳铼，而邓章耀也针对消息，没有作出否认，使到一般相信有关消息来源并非空穴来风。
据了解，从邓章耀在周二选择在面子书上提出着重服务业及将槟城打造成国际旅游天堂的说法，那么自由港或是其实现其远大计划的其中必要先决条件，一般相信邓章耀必然是胸有成竹下才会提出国际旅游天堂的远景，恢复自由港或将成为槟州国阵争取选民支持的“礼物”。
无经济效益　丁福南唱反调
恢复自由港一厢情愿，邓章耀成“独行侠”？有消息指邓章耀向联邦政府提议恢复槟州自由港引起关注时，槟州民政党主席拿督丁福南医生不只对此事不知情，更与邓章耀唱反调，反对槟州恢复自由港。也是前行政议员的丁福南即向本报记者认为，恢复自由港相信只是全国大选即临时政党的一个花招，反对党在多次选举时也提出恢复自由港一事，而他认为，时代改变了，自由港对槟城不会带来太大的经济效益，反之他说槟城已有自由贸易区，在自由贸易区的外国货源在不须缴税务下再加工后转运至其他国家。更何况他说，很多货品已豁免税务，比如皮革品、电器等都不须税务，不过，他承认一些奢侈品比如香水、烟酒还须税务。尽管他说在自由港下汽车也将免除税务，唯他认为知易行难，若要还回槟州自由港，头痛的问题是它将只限槟岛还是扩大至威省，形成一州两制？他说，若只限槟岛，那么将如何顾及威省人民的感受，若扩大至威省，那么将在执行监控上面对困难，到时将会有很多的漏洞，造成政府把关不易。- 光华

Tanah Dikehendaki Di Penang

Tanah dikehendaki di Gelugor, Penang untuk perniagaan cuci kereta, sesiapa yang berminat untuk menyewa tanahnya sila berhubung kami, Penang I Property dengan klik sini secepat mungkin. Terima Kasih.

Penang Land Wanted

Land wanted in Gelugor, Penang for car wash. Those who wish to let his or her land along Sultan Azlan Shah, please contact us, Penang I Property by clicking here. Thanks in advance.

生产高科技音响系统 波士在槟投资设厂

槟城9日讯）槟州首席部长林冠英宣布，世界其中一家高科技音响公司波士（BOSE）将在槟城设立在亚洲太平洋地区的首间工厂。他说，波士每年收入约22亿8000万美元，在美国福布斯2011年最大私营企业排行第195，这家生产高科技及高素质音响系统的公司，是为了他们在亚太地区的客户，来到槟城设厂。
林冠英：槟州又再领先
他认为，这是槟州又再领先的喜讯，因为槟州向来是知名的半导体中心，最近也是发光二极管的中心，而波士公司在槟城设厂，将使音响爱好者感到雀跃。他是于周三在光大28楼见证槟州发展机构与Bose机构签署土地买卖合约时，致词中如此指出。据波士制造及全球供应链副总裁柏莱恩透露，以单一建筑物而言，槟城的厂房将是该公司在北美洲以外最大的厂房。
峇都加湾设厂　明年料生产
他续透露，槟城波士工厂将在峇都加湾一块23英亩土地上建立，厂房面积为60万平方尺，以及预料将于2013年投入生产。他强调，槟城工厂主要是为亚洲太平洋地区的顾客提供服务，这包括澳洲、中国、印度、日本、阿拉伯酋长国及东协国家等。但他不愿透露波士将在槟城投资的总额。
波士集团执行副总裁赫伯透露，该公司是于1964年由阿玛G波士博士创立，当时他是美国马萨诸塞州工艺研究中心的电器工程教授，他在该工艺研究中心的毕业研究导致他开发新的专利工艺，以及在该破空中心的激励下，他以有关的专利工艺创立自己的公司。他说，波士是一间由私人拥有的公司，波士博士为主席及技术总监，以及该公司也继续在长期研发方面作出显著的投资。他强调，波士在研究方面的投资承诺，是为了达到公司的主要目标，即开发突破性的产品及工艺，以改善人们的生活。他续透露，波士于2011年销售额为25亿美元 ，所雇用的员工超过9千人。- 光华

Rising value of properties a real concern

KUALA LUMPUR: The Government needs to address the issue of affordability of residential properties as persistently high prices have become an issue to many people.

“We have computed the affordability (issue). Prices have risen to a level that has created some concern. In fact the International Monetary Fund (IMF) in its Article 4 consultation report has mentioned that this is the main risk or vulnerability facing the Malaysian economy: overvalued house prices,” Ratings Agency Malaysia Holdings Bhd (RAM) chief economist Dr Yeah Kim Leng said.

“It is not a bubble yet largely because for certain segments the income level is sufficient to absorb those kind of (high priced) houses. But there comes a point where you will find declining demand largely because of rising vacancies or declining rental yields that will help to cap property prices,” Yeah told journalists at a press briefing yesterday after RAM's annual general meeting.

Yeah expected an eventual soft landing for the property market in Malaysia but also said that developers should be ready for any change in market dynamics.

“Developers must take the risk that should there be a slowdown or market crash (that) they are in a position to absorb it without creating problems for the banking sector or economy. But at this juncture we are quite comfortable that most developers are going in (to the market) with their eyes fully open,” Yeah said.

“Most of the property companies that we have rated (credit rating) are fairly strong in their credit quality. Overall we are looking at maybe certain smaller developers that will be at risk but by and large I think that the property market is in a sustainable basis. But watch out for too high prices that will create affordability problems,” he added.

Meanwhile, RAM's CEO Foo Su Yin said the agency expected corporate bond issuances for the whole of Malaysia will total between RM80bil and RM85bil this year from about RM70bil in 2011 noting that issuances had accelerated in the first four months in 2012 compared to the previous year.

“The issuance in the first four months of RM44bil has already exceeded what was (at the level) half year last year so the RM80bil-RM85bil is achievable this year. We expect most of the bond issuances to come from the infrastructure and the banking sector,” Foo said.

On another matter, Yeah said that the Malaysian economy should be fairly protected against any economic shocks that comes out of Europe due to the ongoing economic crisis there and that the first quarter economic growth may even beat analysts expectations.

“Domestic demand has been fairly robust and with slightly firmer exports we should be doing fairly well. Nevertheless the risks still remain substantial because of the, so-called, regime changes that had happened in Europe that put the whole Euro at risk. Malaysia has so far been able to ride through the soft patch in the global economy,” he said.

Meanwhile, on the issue of the growing government debt or also known as deficits of presently about 56% of GDP, Yeah said this figure may hover at about 56%-57% by the end of this year and said debt should ideally be used to finance productive investments to ensure future economic growth.

He also said the risks from the non-bank lending sector also known as the shadow banking system could be limited as its portfolio was relatively small compared to total bank loans portfolio and may not pose a systemic risk to the economy at this point in time.

“We may have however, isolated problems arising but it should not pose a systemic risk to the economy or banking sector,” he added.