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Developers urge Government to bring down cost of doing business

PETALING JAYA: Property players are hoping that Budget 2013 would introduce encouraging policies or tax adjustments that allow businesses to thrive in the current local and global economic environment.

Mah Sing Group Bhd managing director Tan Sri Leong Hoy Kum hopes to see new financial incentives, tax breaks or even infrastructure projects that will directly and indirectly benefit the sector as it is a key growth pillar for the economy due to its impact on more than 140 industries.

“We hope there will not be any policies or requirements which will increase the cost of doing business. At the same time, we hope for measures to reduce compliance cost, ultimately promoting the property market,” he said in a statement.

Leong explained that by reducing compliance cost, it would directly reduce the cost of doing business and the savings passed on to buyers would improve the affordability of the properties.

He suggested some measures to increase affordability such as charging tariff-based utility fees, limiting the requirement of land to be surrendered to improve the efficiency of land use and applying plot ratio instead of density to encourage smaller, more affordable units and at the same time reduce land cost per unit of property.

He also suggested reducing stamp duty so that the cost of property and home ownership could be reduced.

“We propose that the stamp duty be reduced to 0.5% for the first RM300,000, 1% between RM300,000 and RM1mil and 2% in excess of RM1mil,” he said.

He added: “Property is acknowledged as the best hedge against inflation, and people buy properties as a form of wealth preservation and not speculation. We hope that the Government would balance its approach in stimulating the property sector which is an important engine of growth for the country.”

To minimise the Government's loss of income, Leong said that maintaining a favourable real property gains tax regime could potentially increase sales and stronger growth of property and housing industry, which in turn bring in higher stamp duties due to higher transactions.

To further stimulate the property sector, Leong recommended a tax relief extended to all interest incurred on end financing for the first home.

“Alternatively, the Government could consider providing grants of up to 10% of the purchase price of affordable properties, to first-time home owners,” he said.

Leong also hoped that the Government would further ease policies to encourage foreigners to buy properties in Malaysia.

“As foreign purchasers account for only 2% of property transactions in Malaysia, this will not be a big cost to bear, and at the same time, can project a pro-investment image to the world at large,” he said.

On another note, Leong said that with the escalating pressure of higher cost of goods, the Government could consider reducing the personal income tax rate or increase personal income tax relief to raise disposable income.

“As a business friendly measure to encourage economic growth and to be in line with regional practices, we hope to see a reduction in corporate income tax as well,” he said.

It was also reported that property and plantations group Tradewinds Corp Bhd had hoped for measures to sustain domestic economic growth in the wake of the uncertain world economy.

Chairman Tan Sri Megat Najmuddin Megat Khas said concerted efforts were needed for Malaysia's economy to continue to expand in order to cushion the impact of the current sluggish global economy.

He noted the bearish European economy and slowing growth in China has rubbed off on the local economy.

“We've to find our own solutions (to our own problems). We should not merely rely on other countries. Unfortunately, our country is still dependent on imported goods. Hence, we should improve on our competitiveness to produce more competitive products,” he said. - The Star

EPF others jointly buy London's Battersea site for RM2bil

LONDON: The Malaysian consortium comprising property developers S P Setia Bhd, Sime Darby Bhd and the Employees Provident Fundbecomes the official owner of the 39.5-acre Battersea Power Station site after paying £400mil (RM1.99bil) on Tuesday with a £300mil bridging loan from CIMB, said S P Setia president and CEO Tan Sri Liew Kee Sin.

The remaining £100mil was paid as per the equity stake of each of the three consortium partners, with both S P Setia and Sime Darby forking out 40% each and EPF the remaining 20%.

This will be the first and the largest property development for both Sime Darby and S P Setia in Britain with a gross development value of £8bil (RM39.8bil).

The completion of the purchase saw the boards of Sime Darby and S P Setia and a team from EPF descending on London along with analysts and the press.

Plans for site: Liew (second from right) giving a briefing on development proposals for the Battersea Power Station site. Also at the briefing in London are Tincknell (left) and Murphy (right). — Bernama

Minister in the Prime Minister's Department Datuk Seri Idris Jala and London mayor Boris Johnson gave speeches to mark the official cocktail held on Wednesday evening.

At an earlier press interview on Tuesday morning British time, Liew said “although the consortium may not have the experience in this side of the world, we have the British technical team to see to it while we provide the concept and the funding.”

A newly-minted British company Battersea Power Station Development Co Ltd has been formed “a few days ago” with a logo of the Battersea Power Station and its four chimneys. This team from Battersea Power Station Development Co comprises the technical, management and financial team from those previously involved in the Battersea Power Station when it was owned by Irish firm Real Estate Opportunities (REO) before the site was placed under administration last year.

The newly-formed company's chief executive officer Robert Tincknell, who has been employed by REO for the last 10 years, will manage the project.

“Now that the project is fully paid, the next step is to work out the financing structure, whether it will be in Sterling pounds, whether it will be issuing of sukuk and seeking the best rates among banks,” said Liew.

The financing team headed by Battersea Power Station Development Co chief financial officer Simon Murphy and those in Kuala Lumpur “will find the best structure going forward for the long term,” said Liew.

Malaysian project: SP Setia president and CEO Tan Sri Liew Kee Sin showing the Battersea power station site in London that will be developed by Battersea Power Station Co Ltd, a consortium consisting of Sime Darby Bhd, SP Setia dan Employees Provident Fund. — Bernama

“We will enhance the value of the site,” he said.

What is important at this juncture is that the site is purchased clean of liabilities and it comes with an approved planning consent. The master plan is being done by renowned award-winning architect Rafael Vinoly.

The master plan will feature 3,400 new homes, 160,000 sq m of new office space, 56,000 sq m of retail and 9 ha of public parks and spaces.

Besides the long-term financing structure, the next step is to plan the development of phase one.

This will comprise the development of the residential units next to the power station and the refurbishment of the power station itself.

The units will be officially launched next year with construction to begin in April.

On comments that the deal hinges on contributions to British infrastructures, Liew said that other than the purchase price of £400mil, the consortium had to contribute £211mil over the duration of the 10- to 15-year project for infrastructure works.

“This is to be paid on a staggered basis as we go along,” he said, The first portion of £38mil will be paid in two equal portions of £19mil each in 2014 and 2015.

A major portion of £203mil will be for the extension of the Northern Lines, which involves the development of two stations with one of them at the power station site itself and the remaining £8mil for other infrastructural works.

He said this contribution towards infrastructure works was not due only from the Malaysian consortium but from other developers whose projects would benefit from the extension of the Northern Line calculated at a certain rate in proportion to the land they own and planned for development.

Liew said the fact that planning consent was already given by the British authorities and that there were already plans to extend the Northern Line close to the power station by the local authorities were huge plus factors.

Other features which add premium to the site are the nearby 200-acre Battersea Park, River Thames frontage and Chelsea and Sloan Square located on the other side of the Chelsea Bridge.

The site is also part of Vauxhall Nine Elms' largest urban regeneration project in central London.

Sime Darby president and group chief executive Datuk Mohd Bakke Salleh said the support given by the British government was tremendous.

“The British are very keen to develop and regenerate the site and this support will work for all parties concerned,” he said.

On who would be the target purchasers, Bakke said the project would be sold to everybody.

“London has a huge global market. The fact that the eurozone is facing some challenges at the moment has also enhanced the safe haven aspect of British properties,” he said. - The Star

Affordable housing a Budget priority

PETALING JAYA: Affordable housing will be one of the highlights in Budget 2013, said Datuk Donald Lim Siang Chai.

The Deputy Finance Minister said among the initiatives being looked into was the enhancement of low-cost home development projects, particularly the My First Home Scheme.

Lim said the Government had proposed to increase the limit of house prices under the scheme from RM220,000 to RM400,000 to fulfill the needs of those earning below RM3,000.

“Over 70% of Malaysians live and work in urban areas and easing their financial constraints will be highlighted in the upcoming Budget,” he said.

In July, the ministry concluded discussions via 18 focus group meetings exploring areas like affordable housing, urban transformation plan, small and medium enterprises and green technology.

More than 84 memoranda and proposals from various groups, NGOs and individuals were handed to the ministry for the Budget.

Topping the wish list were affordable housing, lower taxes, cheaper food and better public transportation.

Budget 2013 will be tabled in Parliament on Sept 28.

Lim said Malaysians should not rule out the possibility of a second round of the 1Malaysia People's Aid (BR1M) programme.

“We respect Deputy Prime Minister Tan Sri Muhyiddin Yassin's wishes for a second BR1M and are looking at our financial standing before making a decision,” Lim said after launching myTRADELINK, a new trade facilitation portal.

The portal, an initiative by the Finance Ministry and operated by Dagang Net Technologies Sdn Bhd, acts as a platform where businessmen can exchange documents required to fulfil regulatory trade processes for import, export or transit via the Internet. - The Star

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3工程月杪竣工 敦林大道即将告别“塞车”

槟城4日讯）敦林苍祐大道3项提升工程将竣工，峇六拜工业区上班族在10月起，即可摆脱塞车之苦。

敦林大道于今年初进行提升工程，主要是疏解该大道在繁忙时间出现的交通阻塞状况。历经半年后，负责这项工程的怡保工程置地公司北马区总经理杜进良向《光华日报》证实，工程将于9月杪全面竣工。

他说，这3项提升工程包括：从牛汝莪高架公路及敦林苍祐大道交界处开启回转路线、加宽敦林大道峇都蛮路段（N-PARK前）的双向车道，从原本4个车道，增加至6个车道，以及重建该处的行人天桥。

“我们将于本周六（8日）移交 U 转路线的权限给大马大道局，由当局来决定几时启用该 U 转路线。承包商已安装上指示牌及完成美化工程，只要大道局开放，公众就可使用。” - 光华

Nomad unit buys Penang hotel

KUALA LUMPUR (Sept 5): Nomad Group Bhd's wholly-owned unit has proposed to pay RM25 million for 100% of Bella Varia Sdn Bhd, which undertakes hotel operations and rents commercial space in Grand Paradise Hotel in George Town, Penang.

"The proposed acquisition represents an opportunity for the group to increase its hospitality assets base and to expand its geographical location to include Penang," the company said in a statement on Tuesday, adding that the purchase price took into consideration the "comparable market value of similar properties".

Grand Paradise Hotel — a nine- storey two-star hotel with 96 rooms along Jalan Macalister — is built on a 13,278 sq ft land with a net book value of RM11.9 million, the company said.

Nomad's unit Nomad Properties Sdn Bhd will assume the RM9.04 million outstanding loan owned by Bella Varia to Bank Perusahaan. There are no other material financial commitments apart from the purchase price and renovation costs which are yet to be determined.

Bella Varia made a net loss of RM98,932 for the year ended March 31, 2011 and its net assets stood at RM2.64 million. The sellers are Datuk Pardip Kumar Kukreja Gurbachan Singh and Datuk Abdul Halim Abdullah, who own 40% and 60% of Bella Varia respectively.

The deal, expected to be completed by Oct 1, is not expected to have a material impact on earnings for the year ending Dec 31, 2012 but could boost future earnings, said Nomad. The deal will be funded with a mix of internal cash and borrowings.

This article appeared in The Edge Financial Daily on Sept 5, 2012.

Resilient property market expected

Developers optimistic of H2 but not sure about 2013

PETALING JAYA: The Real Estate and Housing Developers' Association Malaysia (Rehda) expects the housing and property market to plateau in the second half of 2012, but will remain resilient.

According to a survey Rehda conducted, property developers are optimistic of the second half and more respondents plan to launch projects.

The survey is based on a sample size of 180 companies, out of the 1,003 Rehda members.

Property developers are less optimistic of the first half of 2013 due to certain factors, including the outcomes of the 13th general elections and Budget 2013. The current global economic situation also contributes some uncertainty.

The results of the survey show that the property market in the first half of this year is still driven by the domestic market, despite beliefs that foreigners are buying more local properties. Last year, only 2% of total properties transacted were from foreigners.

Rehda president Datuk Seri Michael Yam said the Government should review building less low-cost homes. In 2011, 1.04 million units out if the total 4.51 million total residential stock were low-cost homes.

“As Malaysia moves towards striving to reach developed nation status by 2020, the Government should review if there is a need for so many low-cost homes,” Yam said.

Rehda national treasurer N.K. Tong said: “Perhaps the Government should consider implementing a limitation to low-cost homes like what Singapore has done with the HDB (Housing and Development Board) flats.”

HDB flat owners-to-be are not allowed to own any other properties in Singapore, or in any other part of the world. Tong said if such a plan was implemented in Malaysia, there would be less abuse of these properties, unfairness caused to developers and to a larger extent the people.

“I'm more concerned with the supply factor. It is moving downwards due to the shortage of prime land and rising building costs. Come 2015, if the Government is serious about implementing the build-and-sell plan, the supply (of houses) will reduce by about 80%,” Rehda past president Datuk Ng Seing Liong said.

His main concern if the plan was implemented was that property prices would continue to trend upwards due to the supply and demand equilibrium.

“In terms of the property sector, we must look at a long-term scenario,” he said in regards to future plan implementations.

Rehda public relations, communications and publication committee member Che King Tow said the Government usually owned the best-located properties.

He said it would benefit the public if the Government could consider releasing its land in high-density areas such as Jalan Duta and Selangor Golf Course in the upcoming budget.

“Those are suitable prime land for mass housing. They can cut down on ownership of cars, and use public transport instead,” he said.

Yam also urged the Government to establish an automatic-release mechanism to enable the release of unsold bumiputera units. Although Rehda has not complained about allocating a portion for bumiputera buyers, the unsold properties are affecting the developers.

“More projects are having unreleased unsold bumiputera lots which impact the developer's cash flow. An auto-release mechanism should be put in place to automatically release the unsold properties after a stipulated time to prevent this,” he said. - The Star

Property price rise not due to foreigners, says MPI

KUALA LUMPUR (Sept 4): It is only a perception that foreigners influence the rising property prices in Malaysia, as they are involved in a very small percentage of property transactions, says the Malaysia Property Incorporated (MPI).

General manager Veena Loh Geok Mooi said foreigners owned only two% of total properties transacted last year in Malaysia, although in certain states the percentage was higher, at 25% in Johor and 11.5% in Kuala Lumpur.

"In Johor, property prices appreciated 0.6% over the last 10 years while prices in Kuala Lumpur appreciated 5.5% over the same period.

"In almost all states in Malaysia except Sarawak, foreigners can only purchase properties above RM500,000 and in the past eight years, there has been little price appreciation of properties above RM500,000," she told a media briefing here on Tuesday.

Loh said over a 10-year period, the highest house price appreciation was in states with low population of foreigners — namely, Sabah, Terengganu, Perlis and Pahang.

She said overall for Malaysia, prices started rising after 2009, going up 6.7% and 9.9% in 2010 and 2011 respectively.

"We should not actually label the foreign buyers as foreigners. The main foreign buyers are actually Malaysia My Second Home buyers, expatriates and diasporas.

"The large percentage of foreign owners from Johor are likely to be the Malaysian diaspora residing in Singapore," she said.

Loh said higher property prices have very little to do with foreigners but instead are due to such factors as supply, shortage of prime land, rising building material costs, all-time low lending rate since 2006 as well as speculative activities in the local property industry. — Bernama