Tuesday, October 23, 2012
Monday, October 22, 2012
Location important factor for affordable housing
KUALA LUMPUR: Location is the most important factor where demand for affordable housing is concerned, a property consultant said.
CH Williams Talhar & Wong Sdn Bhd managing director Foo Gee Jensaid during a presentation at CIMB Preferred’s 76th Financial Advisory Series that there was demand for affordable, but the Government would need to put location at the forefront where such property projects were concerned.
“There is always a mismatch when it comes to affordable housing. You can’t build 10,000 low-cost units in Bukit Beruntung even if you sell it cheap,” he said.
“You cannot expect someone who earns RM1,000 a month to live in Bukit Beruntung and work in Kuala Lumpur. The fuel cost alone will kill him. When I visited Iskandar Malaysia (in Johor), I saw affordable apartments that were ready for occupation priced at RM75,000. I was told sales were only 15%.
“There was a big ‘for rent’ banner showing RM300 and they are even providing a shuttle bus service. It is not only about building many homes. The public needs to know where.”
On the Government’s proposal to defray the cost of infrastructure borne by developers, Foo suggested that rather than providing subsidies, it would be better to limit the number of items that property firms had to contribute to.
“They (developers) even pay for the traffic light. There is such a long list. Consumers end up paying for all this.”
Prime Minister Datuk Seri Najib Tun Razak had said last week the Government was considering a model to help pay for infrastructure so that developers could sell houses below the market price.
“We can come up with a Government allocation to defray the infrastructure costs,” he said in an interview with Chinese radio station Melody FM, adding that developers interested in building affordable homes could approach the 1Malaysia people’s housing programme (PR1MA).
He added that PR1MA would be given unutilised government land to build the homes.
Foo also said there were many plots of land along the Sungai Buloh-Kajang line of the My Rapid Transit with potential to be developed into sites for affordable homes.
These include Kota Elmina near Sungai Buloh and government-owned real estate in Jalan Duta and Taman Suntex, he said, pointing out that they were underutilised in terms of plot ratio and density.
“If the Government is serious about providing affordable housing, it has to take care of the urban poor within this location, not at Kuala Selangor.”
On another matter, he said occupancy and rental rates for the condominium market was expected to stay depressed for the foreseeable future due to incoming supply.
In the first half of the year, the existing supply of serviced residences and condominiums numbered 22,000 but the average take-up rate in the capital was less than 2,000 units annually, Foo noted.
He pointed out that the KLCC area was particularly hard hit with occupancy and rentals heading “down south”.
“The year 2008 was the trigger point, and it has never really recovered. Prices are holding up but that does not correspond with rates and occupancy.
“Everybody is aware of the oversupply in KLCC. Land cost has become so high that developers who have obtained development orders cannot go ahead with their projects or launches.” - The Star
S P Setia ranked first for seventh time
KUALA LUMPUR: S P Setia Bhd was ranked the No 1 developer in Malaysia at The Edge Malaysia Top Property Developers Awards (TPDA) 2012 for the seventh time.
The developer was first in the annual TPDA rankings from 2005 to 2008 and again in 2010 and 2011. This year, S P Setia led in both the quantitative and qualitative sub-rankings, winning the Best Qualitative Attributes Award trophy as well. Its president and CEO Tan Sri Liew Kee Sin took home The Edge Malaysia Outstanding Property Personality Award 2012.
The TPDA is the anchor award of The Edge Malaysia Property Excellence Awards. The awards presentation gala night was held last night.
Other developers that made it to the TPDA 2012 top 10 rankings were Sunway Bhd (2), Sime Darby Property Bhd (3), IGB Corp Bhd (4), UEM Land Holdings Bhd (5), I&P Group Sdn Bhd (6), Mah Sing Group Bhd (7), Gamuda Bhd’s property division (8), Bandar Utama City Corp Sdn Bhd (9) and IJM Land Bhd (10).
The Edge Malaysia Property Excellence Awards also featured The Edge-PEPS Value Creation Excellence Award and The Edge-PAM Green Excellence Award.
In addition, four new awards were introduced this year — the Best in Qualitative Attributes Awards, The Edge Malaysia Outstanding Property Personality Award, The Edge Malaysia Notable Achievement Award and The Edge Malaysia Outstanding Property Project Award.
The Edge Malaysia Notable Achievement Award was won by UOA Development Bhd, the developer of Bangsar South. This award recognises the developer that has made significant success in raising its profile and reputation through its products and branding as a leading player in the country in recent times.
The Edge Malaysia Outstanding Property Project Award, which recognises completed projects that have made an impact through their design and concept, was awarded for the iconic Petronas Twin Towers in KLCC, and conservation project Cheong Fatt Tze mansion in Penang.
Shopoffices in The Lake Precinct Business Park 2 in Kota Kemuning, Shah Alam, and cluster homes at The Gateway precinct in Horizon Hills, Nusajaya won The Edge-PEPS Value Creation Excellence Award 2012 in the non-residential and residential categories respectively. Kota Kemuning and Horizon Hills are joint venture projects between Gamuda and DRB-Hicom Bhd, and Gamuda and UEM Land respectively.
The value creation award jointly initiated by The Edge and the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector (PEPS) recognises developments that have rewarded their purchasers in terms of capital appreciation in an outstanding way.
Platinum Sentral, a low-rise office building in KL Sentral developed by MRCB Sentral Properties Sdn Bhd, a subsidiary of Malaysian Resources Corp Bhd, is the winner of The Edge-PAM Green Excellence Awards 2012. The award was initiated in partnership with the Malaysian Institute of Architects (PAM) to recognise projects that demonstrate sustainable design innovation while contributing positively to the community.
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| (From left) Au, Chor, Liew and Kam striking a pose for the camera at the awards ceremony. |
Housing and Local Government Minister Datuk Seri Wira Chor Chee Heung presented the awards. Chor said the prestigious awards allow top-notch developers to stand out.
“Kuala Lumpur’s city skyline changes every six months thanks to the continuous efforts by our local developers and investors making Kuala Lumpur similar to any top-notch city in the world,” he said.
“Kuala Lumpur’s city skyline changes every six months thanks to the continuous efforts by our local developers and investors making Kuala Lumpur similar to any top-notch city in the world,” he said.
The Edge Communications Sdn Bhd managing director Au Foong Yee said in her speech, “The Malaysian property investment landscape is fast evolving and this year marks a new milestone for The Edge property awards. We hope to further raise the bar on the quality of Malaysian property.”
Introduced in 2003, this year marks the 10th year of the TPDA. Property developers are ranked based on their quantitative and qualitative attributes from the consumer’s perspective.
All companies listed on Bursa Malaysia’s property sector are automatically eligible for the awards.
The judges included International Real Estate Federation (Fiabci) Malaysia past world president Datuk Alan Tong, Fiabci Malaysia immediate past president Datuk Richard Fong, Real Estate and Housing Developers’ Association (Rehda) Malaysia past president Datuk Jeffrey Ng, Fiabci Malaysia recent past president Datuk Teo Chiang Kok, Fiabci Malaysia past president Kumar Tharmalingam, Rehda Malaysia past president Datuk Eddy Chen, Rehda Malaysia president Datuk Seri Michael Yam and Ho Chin Soon Research founder Ho Chin Soon. The Edge was represented by its managing director Au Foong Yee and executive editor, property, Sharon Kam.
The main sponsor of the awards was Malayan Banking Bhd and the supporting sponsor Malaysia Property Inc.
Full details of The Edge Malaysia Property Excellence Awards 2012 will be published in the Oct 22 issue of City & Country, the property pullout of The Edge.
This article first appeared in The Edge Financial Daily, on Oct 19, 2012.
Sunday, October 21, 2012
Group: Homes in Penang beyond youths’ reach
PETALING JAYA: Youths in Penang, who make up 40% of the state's population, want a change in policy to check escalating house prices.
Penang 4B Youth information chief Hisham Abd Hamid said more than 90% of the young people in the state could not afford to buy homes in Penang because the state government appears to be more developer-centric.
“The Penang government must first control the escalating price of land, as it has a compounding effect on the house prices.
“We cannot put the blame entirely on the developers, as building affordable homes is not feasible when the land price is too high,” he said yesterday.
Hisham was responding to a report in The Star on Thursday on the drastic increase in house prices within just a year.
The Property Stock Report for the first quarter of this year showed house prices in Penang had far exceeded the 2014 price projected by Penang Institute's City, Urbanisation and Environment head Stuart MacDonald.
Valuation and Property Services Department data shows a drastic increase in residential property prices between the first quarter of last year and this year; condominium/apartment went up by 411%, detached units (up 103%), low-cost flats (157%) and other flats (339%).
Former Penang Municipal Council Town Planning Department actingdirector Khoo Boo Soon had said property prices had soared following increase in surcharges imposed by the state government. He had said the attributing factors include increase in infrastructure contribution charge from RM5 per sq ft to RM15, increase in re-zoning fee from 25% to 50% on the current land value, and contribution of RM120,000 per unit in lieu of building low-cost units.
“All these additional charges are passed on to the buyers, hence the drastic increase in house prices,” said Khoo.
Federation of Malaysian Consumers Association (Fomca) deputypresident Muhammad Sha'ani Abdullah said the charges were probably imposed to avoid speculation and profiteering by developers.
“However, genuine buyers should be exempted from re-zoning fees,” he said.
Penang Research Centre in Socio Economy (PReCISE) executive director Nizam Mahsha said the low- and middle-income groups were deprived of chances of owning homes because new housing projects focused on high-end units.
“No mechanism is in place to keep houses within an affordable range.
“Most people in Penang could not afford the houses built in the state,” he noted.
Penang Ratepayers Association president Datuk Eddy Choong said the state government should return the money collected from the developers to the people. - The Star
Saturday, October 20, 2012
Do crime rates affect property prices?
ALIA bought a house in an established neighbourhood in Kuala Lumpur a couple of years ago. There were security personnel patrolling the area. Two months after formalising the purchase, the guard patrols stopped because more than half of the residents in the area did not want to pay the monthly RM60 security fees.
Street crime and break-ins occurred, one of which resulted in the death of a youth who charged at an off-duty police personnel with several others with parangs. It was not that the neighbourhood was crime free before. It was just that some residents wanted a higher level personal security and had hoped that the rest of the community would support the cause.
Alia decided to rent out the place instead after the security services were discontinued.
In another part of the Klang Valley, a young family paid the deposit to rent a landed property after having lived for years in a condominium. They changed their mind after a drive to their “new” home one evening and discovered the area to be rather dark even at 7.30pm, despite the street lights.
While the above may be anecdotal, does the fear of possible crime affect property prices, and their yield? While there is no empirical evidence to suggest the affirmative, research in Britain and the United States between crime rate and property prices suggest that crime and the fear of possible crime does have an effect on urban property prices. The studies were not just referring to ghettos but took a broad look at different areas and types of properties.
If we consider the current property prices and the rate of crime in the Klang Valley and major cities, there does not seem to be a correlation between the two. Crime is rampant despite what the crime index indicates. And prices have moved up considerably, despite what many consider to be a general increase in crime in various parts of the Klang Valley and major cities.
Notwithstanding that, the question whether crime rate has an effect on property prices is an interesting one.
According to a 2003 research The Costs of Urban Property Crime by Steve Gibbons, published in The Economic Journal 114 (November), urban crime has effects “over and above the direct costs to victims, the costs of deterrence and the costs of law enforcement. The fear or crime', while not a uniquely urban phenomenon ... has ... a powerful influence on perceptions of area deprivation.”
The research paper divided crime into criminal damage to properties and burglary in dwellings. Gibbons concluded that criminal damage to dwellings which includes “vandalism, graffiti and arson have a significant negative impact on prices” while “burglaries have no measurable impact on prices.” He based his research on London.
He writes that while it is “surprising that prices respond more to acts of criminal damage than to burglaries given the apparent physical and emotional costs”, Gibbons explains that “vandalism and graffiti are important factors” that motivate “fear of crime in the community,” even though “these types of crimes are not strongly correlated with incidents of a more serious nature.”
Gibbons also quoted earlier studies in 1978 and 2001 which concluded that “crime rates do affect property values, although the effects may be small ...”
Another study by Stephanie Swift in 2005 found that “crime, violent and non-violent, has an affect on housing prices.” Swift chose a Florida setting.
Swift concluded that “crime does affect housing prices.” She also concluded that “residents are willing to pay more in order to keep themselves and their families out of danger.”
This may explain the emergence of gated and guarded strata projects and its non-strata variant. The more established neighbourhood has also taken to cordoning off certain roads and hiring their own security personnel although there is a tendency for such ad hoc arrangements to be temporal as not everyone in the community may want to contribute to the monthly security fees. In a strata project, owners are legally bound.
The demand for security stems from the perception that they and their loved ones will have a certain measure of security, although this is open to dispute.
If we were to broaden the question, does crime rate affect a city's liveability, the affirmative may be more apparent, although factors contributing to liveability include other variables, just as house prices are determined by various factors.
In Triumph of The City by Edward Glaeser, an urban economist and professor at Harvard University, Glaeser writes about the importance of cities. One of the features of liveability, besides a string of other factors, is the importance of personal safety and security and the perception of this security.
Concerns about personal security have been noted in a survey of international firms by the American Chambers of Commerce in South-East Asia, published in September 2012.
In that survey, 38% of Malaysian-based respondents registered concerns with personal security, a higher proportion than in the other Asean countries surveyed.
This argues for a closer look at crime prevention, for the sake of enhancing Malaysia's competitiveness so as to stimulate foreign direct investments and exports, and to give greater fundamental basis to property price increases.
In another press report, Rajiv Biswas, senior director and Asia-Pacific chief economist at IHS Global Insight Singapore, said foreign investors need a sense of comfort and security that Malaysia is a better place to do business compared to its neighbouring countries.
Hence, despite claims that the crime index is down, increasingly people near and close to us are experiencing it.
Since budget day on Sept 28, four of The Star employees have been robbed of their new car and belongings, and two of them have their houses broken into. A fifth related the incident of a brother being robbed while having drinks in a pub. The lack of personal security is no longer a perception. It is real. - The Star
Deputy news editor Thean Lee Cheng is of the view that there is a need for greater police visibility, among other crime management strategies.
Should you buy an abandoned house?
BUYING property and then selling (or renting) it is often viewed as a good form of investment by many. This is especially the case for strategically-located homes that are either new or have been well maintained by a previous owner.
However, sometimes, an abandoned house or even an old, dilapidated one, could be worth investing in. Admittedly, reviving an abandoned house can be a daunting task. But with a little bit of patience, effort and money, the home you're looking to revive could just end up being a diamond in the rough.
Abandoned house
According to reports, there are 177 private housing projects that have been abandoned as at May 31.
Finding abandoned houses is actually not that difficult, as they tend to stick out like a sore thumb! The main issue, however, comes after you've found one, and then need to locate its owner.
“One simple way is to ask the neighbours,” says James Wong, director of international property consultants, valuers and estate agents, VPC Alliance (M) Sdn Bhd.
Wong: ‘One simple way (to find out about the owner of an abandoned house) is to ask the neighbours’.
However, a house could be abandoned for so long that even the neighbours might not know of the owner's whereabouts.
“The official way is if the house is within the jurisdiction of the municipality, local council or district council, and to go to the assessment section to check the owner and address,” says Wong.
“If the house is outside the jurisdiction of the municipality, local council or district council, then you need to go to the land office to do a title search on the property, which will reveal the ownership of the title. Then, you have to check the owner's contact details and contact,” he adds.
But what if the owner is deceased?
“In a situation where the owner is deceased, one can appoint a lawyer to make checks at the central probate registry at the High Courts to verify whether the family members of the deceased have filed for a petition for a grant of probate (where the deceased died leaving a will) or for letters of administration (where the deceased died intestate),” says National House Buyers Association (HBA) secretary-general Chang Kim Loong.
He says checks could also be made at the related land office to ascertain whether an application has been filed (at the land office).
Chang: ‘Checks about an abandoned property could be made at the related land office’.
“They could also make enquiries at the Amanah Raya office for confirmation. Having established the identities of the beneficiaries to the deceased estate, one can approach them and negotiate the offer to purchase.”
Cheaper price
Elvin Fernandez, managing director of property consultancy firm Khong & Jaafar Sdn Bhd, points out that abandoned houses, or homes that have deteriorated over the years, tend to be cheaper.
“When you buy a home, you are buying it for the land and the building. The value of a property is what the building and the land are collectively worth.”
He says that the value of a property is affected when the condition of the building has deteriorated.
“If the house has been left unattended for a long time or has depreciated quite substantially, then usually the land value remains the same but not the building value.
“The greater the depreciation, the lesser the value. In fact, there might actually come a time when the building will have no value at all,” Elvin says.
He says in rare instances, the building's deterioration level could be so bad that it could create a spillover effect on the land and affect the land's value as well.
“It's not a rule that's set in stone, but usually it's the building value that drops,” Elvin says, adding that even the location of the property could play a role in the property's value.
“It depends. A house in Damansara Heights that's been abandoned for a while could still have its value intact, while a house in a poorer (rural) neighbourhood that has been left unattended for just six months could already see a substantial depreciation in its value.”
A good buy
Elvin believes that buying an abandoned house is definitely worth the investment, seeing as these homes generally retail for a much cheaper price (compared with new properties or lived-in ones in the secondary market).
“Abandoned properties could be worth a good buy and definitely a must to look at,” he says.
Malaysian Institute of Estate Agents (MIEA) deputy president Siva Shanker also feels that purchasing an abandoned house is a “great investment opportunity.”
Elvin: ‘The value of a property is affected when the condition of the building has deteriorated’.
“You have a lot of this going on nowadays, especially within Petaling Jaya. There are a lot of old houses in that area and many people are buying them either to move in or to flip it (resell) for a profit.
“It's a great investment opportunity. People buy the home for between RM600,000 and RM700,000, then spend RM500,000 on refurbishing it and then selling it for about RM1.3mil. You can easily make a profit of between RM200,000 or RM300,000 right there!”
Siva believes that refurbishing an old or abandoned house is much more cost effective than buying a brand new one (or a lived-in one in the secondary market).
“The Malaysian property buyer is such that once he's bought a house, whether straight from a developer or an existing buyer, he's going to tear it down and make renovations of his own.
“And this is not at all cost effective, because the developer (or previous owner) has probably already given the buyer everything he needs. But after buying the house for say, RM1mil, he's then going to spend another RM500,000 on renovations. Better to buy an old house, which is cheaper, and then install whatever you need.”
MIEA president Nixon Paul, meanwhile, feels that it's “safer” to buy a house from the primary or secondary market.
“Buying an abandoned house will be cheaper, but think of the refurbishment that you're going to have to do, which could cost a lot more than what you would normally do for a new one.”
Siva: ‘Purchasing an abandoned house is a great investment opportunity. You have a lot of this going on nowadays.’
“You're going to need to spend a lot of money on a lot of things that have either deteriorated or are totally gone.”
Siva asserts that although buying an abandoned house and refurbishing it is a good investment opportunity, he does add that it's not for everyone.
“If you have the money, the holding power and the property know-how, then it's a good way to generate income.”
On a personal note, he does wish that it would be possible for buyers to “pre-customise” their homes when they buy it from a developer, and not purchase a “finished” product that will not necessarily appeal to everyone.
“Wouldn't it be nice if the buyer had a choice on the level of fixtures that go into a home, so that the price could be reduced accordingly? Because most people are going to move in and make changes that will end up being a waste of money.
“We need to slowly move into a more mature market where there can be more flexibility in the property that we buy,” he says. - The Star
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