RM1.5bil affordable housing project

PETALING JAYA: Construction company Pesona Metro Holdings Bhd is a frontrunner for a massive RM1.5bil housing project under the Government’s1Malaysia People’s Housing Scheme or better known as PR1MA.

Sources said the company, which was listed via a reverse takeover last October, is likely to be chosen due to its “expertise” and “track record”.

There were four other bids that were submitted for the job, which should take some 30 months to complete once it is awarded, a source noted.

An announcement on this will be made earliest in two weeks’ time.

Since its debut on Bursa Malaysia, Pesona has been relatively quiet until recently, that is.

In June, it announced that it had obtained an RM87mil job for the proposed construction and completion of the remaining and rectification works of a government office building.

Pesona had declared last October that it was bidding for construction projects under the PR1MA programme.

If this RM1.5bil job does go to Pesona, then it would more than triple its current orderbook of about RM570mil, making it a major construction concern.

Shares in Pesona ended 6% higher to 50.5 sen on a volume of 20.7 million shares at yesterday’s close.

It was announced last month that more than 20,000 homes would be built under 15 affordable housing projects in Greater Klang Valley, Johor, Penang, Sabah and Sarawak.

These 15 projects come under Phase 1 of the PR1MA programme, an affordable housing scheme announced under Budget 2013.

PR1MA Corp Malaysia chief executive officer Datuk Abdul Mutalib Alias had said last month that specifications of the houses, including pricing and floor plans, would be announced in the next few months.

However, it has been reported that the homes would be priced under RM350,000 per unit.

Recall, Pesona took over the listing status of financially-beleaguered Mithril Bhdlast year amid a restructuring exercise.

It had raised more than RM10mil for working capital via the issuance of 40 million new shares of 25 sen each then.

While Pesona may not immediately be a recognisable name, it has completed more than 30 projects valued at more than RM1.5bil.

Among its completed projects are a flood mitigation project in Sungai Kerayong, Kuala Lumpur, the construction of the Timah Tasoh Dam in Perlis and the Zehn Luxury Condominium at Jalan Bukit Pantai, Kuala Lumpur.

The company is also responsible for the construction of the Customs, Immigration and Quarantine Complex in Melaka, which it completed and handed over in the last financial year ended Dec 31, 2012 (FY12).

Citing internal projections, sources said the PR1MA project is expected to yield Pesona some RM202.5mil in net profit based on a projected 13% profit margin.

This is huge in comparison to its current earnings. For its six months ended June 30, Pesona’s net profit stood at RM8.39mil on a revenue of RM154.32mil.

For FY12, its net profit was at RM11.78mil on a revenue of RM220.78mil.

The group’s current net assets per share stands at 14.50 sen per share. It has cash and bank balances of RM25.5mil with minimal borrowings. - The Star

UK House Prices Rise Further, Sales Jump

British house prices recorded their fastest rise in almost seven years last month and a measure of sales volumes also jumped to a multi-year high, a survey showed on Tuesday.

The Royal Institution of Chartered Surveyors' seasonally adjusted house price balance climbed to +40 from a slightly upwardly revised +37 in July, staying at its highest since November 2006.

The balance reflects the percentage of property professionals saying that prices rose minus those reporting falls.

Britain's housing market has shown signs of a revival this year, spurred by a healing economy and help from the government and the Bank of England to ease access to finance. But the scale of the recovery has raised concerns about a new property bubble.

The RICS survey found that a net balance of +45 of surveyors expect further price growth over the next three months. Over the coming year, house prices are forecast to rise by 2.2 percent.

"Momentum is increasingly broad-based across the country; this isn't just a London story," RICS said.

The average number of sold properties per surveyor rose to 17.9 over the last three months, the highest since January 2010.

The number of properties going on sale also increased markedly in August, with the relevant balance jumping to +26 from 16 in July.

"With positivity starting to return to areas right across the UK, it seems those who may have been waiting for the right time to sell are choosing now to do so," RICS said.- Reuters

House buyers to shoulder burden of impact of fuel price hike, crackdown on illegals, say developers

Prospective house buyers face forking out at least 10% more for their dream home, with developers bound to push additional costs caused by an increase in fuel prices and worker absenteeism.

The Star reported that the construction industry had been hit by a double blow, higher costs of building materials due to the RM0.20 increase in the price of RON 95 petrol and a nationwide crackdown on illegal immigrants by authorities.

The Star quoted Real Estate and Housing Developers Association of Malaysia president Datuk Seri Michael Yam Kong Choy as saying the failure of foreign workers to turn up for work was causing delays, which added to costs.

He said developers had experienced this in the past when continuous raids by authorities resulted in legal migrant workers not turning up for work or delaying their return to Malaysia.

Yam said migrant workers, even those with proper documents, were intimidated by these raids.

"The shrinking supply of labour will force developers to pay workers more to meet contractual deadlines. Failure to meet these deadlines will result in financial penalties as developers are bound by the sales and purchase agreements signed," Yam added.

The Star reported that sales and purchase agreements stipulated that compensation will have to be paid by the developer to buyers if delivery of the said property is late. Contracts in the private sector also have no provisions for price adjustments.

Despite the call by Prime Minister Datuk Seri Najib Razak last week for businesses and traders not to increase their prices following the increase in petrol prices, Yam said it had affected the entire supply chain of the industry, involving more than 100 types of businesses.

Master Builders Association of Malaysia president Matthew Tee warned of a scenario similar to 2002, when the construction industry grounded to a standstill due to a shortage of workers.

He said their members were already complaining that their legal workers whose documents were being processed hadn't turned up for work.

"Our understanding is that all foreign workers will be detained unless they can prove that they have proper documentation. This can be difficult as their documents may still be with their employer or immigration pending the affixing visa of stickers by the authorities," Tee said.

In Penang, the Penang Master Builders and Building Materials Dealers Association says it expected construction costs to rise by 3 to 5%. The cost of transportation was likely to rise 10 to 20% and the prices of sand and cement by between 5 and 10%. - The Malaysian Insider

... But it is beyond our means, say youngsters

KUALA LUMPUR: Malaysian youths, who have been encouraged by the Real Estate and Housing Developers Association to buy a house before a car, say houses are too expensive and beyond their means.

Marketing executive Omar Islam Akhiruddin, 26, bought a second-hand car last year and lives with his parents in Puchong.

“I need a car because I need to move around and houses are expensive,” said Omar, adding that since he lived with his parents, a house was not a necessity yet.

Omar said he would prioritise buying a house if there was an LRT station nearby, adding that he would not depend on buses as a form of public transportation.

SEGi University lecturer Alex Chan, 28, says that even with the 1Malaysia Housing Programme (PR1MA), houses were too expensive for fresh graduates.

“As the Government has raised the ceiling price for PR1MA houses, they are too costly for fresh graduates who have loans to pay and other living expenses to meet,” he said.

Earlier this year, the Government raised the ceiling price of PR1MA homes to RM450,000 while the maximum household income eligibility was increased to RM7,500.

Chan, who bought a car earlier this year, said a vehicle ranked higher in necessity than a house in Malaysia.

“I can always rent a place but my house can’t take me places. People need transport,” said the Ipoh native, who has been renting rooms since he started working in 2010.

According to Chan, the public transportation system here was unreliable.

“KTM is not that good. The LRT is okay but it doesn’t go everywhere.

“When we have an efficient transportation system, which is also affordable and easily accessible, people can perhaps prioritise where their financial responsibilities lie,” he said.

Broadcasting student Joshua Nicholas Aeria, 24, said he was looking forward to moving out from his relatives’ house and buying a car once he finds a job.

“I want to rent a place and slowly save up for a car but finding a job is the top priority at the moment and having a car helps,” said Joshua. - The Star

Buy house first, youths told

PETALING JAYA: These days, it has become a trend among the young who enter working life to place priority on owning a car instead of a home.

Perhaps buying a vehicle which gels with their current lifestyle is cheaper for them, compared to purchasing a house.

Nevertheless, Real Estate and Housing Developers’ Association’s (Rehda) immediate past president Datuk Ng Seing Liong said the trend should be reversed.

“Buying a property, such as an affordable house, should be the main priority for youngsters and they should not wear out their salary on owning a car,” he told Bernama when met at Wisma Rehda here yesterday.

Thus, he suggested that youngsters begin buying property early in their careers, especially for those located in hotspot areas.

“I understand that a car is a necessity for the younger generation, but bear in mind that property prices will always go up. Take this as an investment and in the meantime commute via public transportation,” advised Ng.

He said there were affordable houses away from the city centre which were in high demand.

“Higher prices are only in the hot-spot areas, but it seems to reflect the whole market.

“If they look at the bigger areas, such as in Malacca, Pahang and Kelantan, the prices are still affordable.”

He also explained that the property value rise could be attributed to “people are not just buying a house, but they are purchasing the lifestyle that comes with the property”.

According to Rehda’s Property Industry Survey for the first half of this year, the top five hotspots in the Klang Valley are Puchong, Cheras, Kota Damansara, Kuala Lumpur City Centre and Shah Alam, with landed property ranking at the top followed by condominiums and serviced apartments. - The Star

Rehda wants monitoring of buyers of affordable homes

KUALA LUMPUR: The Real Estate and Housing Developers’ Association (Rehda) has called on the government to monitor buyers of affordable housing, saying there is no mechanism for this at present.

Rehda president Datuk Sri Michael Yam said while developers have done their best to provide houses in an affordable price range, it is also the government’s duty to monitor house buyers to make sure that affordable houses are going to the right people.

“I think as a responsible organisation, our developers have provided a million low- to medium-cost houses. But there has been no monitoring of the sub-sales of subsidised housing, and something has to be done in order to prevent profiteering.

“Under the context of the social housing system, developers are being responsible. But who monitors who gets the houses later? Going forward, if the government wants to reach the target audience for affordable housing, there has to be a body to control  subsequent transfers,” he told a media briefing yesterday.

Rehda immediate past president, Datuk Ng Seing Liong, said there has been a misconception among buyers in general with regard to rising house prices.

“There have only been a few hotspots where property prices have gone up. However, it must be understood that people are not buying homes, but rather a lifestyle. There are many second-hand houses that have not seen much of a take-up rate due to financing issues,” said Ng.

According to recent Rehda research findings, residential selling prices averaged between RM500,000 and RM1 million during the first half of the year, mostly in Selangor, Kuala Lumpur, Johor and Penang.

The survey, which sampled 150 Rehda association members across 12 states, found that the number of respondents that will be offering houses priced within the RM250,000 to RM500,000 range is expected to increase to 25% of total units in the second half of 2013 after falling to 23% in the first half.

Yam: ... something has to be done to prevent profiteering.

The survey also showed that some 95% of buyers were local, whose main purpose was for their own occupation. The remaining 5% were foreign buyers who purchased the units  for investment purposes.

The survey respondents were optimistic of the outlook for the second half of 2013, with the sentiment expected to continue into the first half of 2014.

Future launches are expected to increase to 63% or 18,181 units year-on-year for the second half of 2013, with strata properties expected to dominate launches in KL, Selangor and Johor.

The survey also found that the local property market is facing its fair share of challenges, which could change sentiment.

Yam said rising labour costs and shortages, inconsistent supply and the increasing cost of building materials were the main challenges plaguing the construction side of the industry.

Almost half the respondents have reported a 5% to 10% increase in the cost of doing business.

“There was also a significant increase in the buyers (about 62%) reporting to our members that they were having issues with end-financing, as a result of the stricter borrowing requirements imposed by the banks,” Yam said.


This article first appeared in The Edge Financial Daily, on September 03, 2013.

Looking after the affordable housing community

PETALING JAYA: Measures to curb speculation in the property market and cross-subsidisation do not make for a healthy property sector in the medium to long term, according to the Real Estate and Housing Developers’ Association of Malaysia (Rehda).

Rehda president Datuk Seri Michael Yam drew attention to the affordable housing segment, which suffers the brunt of such measures like the real property gains tax (RPGT) as well as the impact of cross-subsidisation from the low-cost segment.

“Property speculation is in hotspots, not among the affordable housing community, but if the Government continues to have tightening measures, then it could affect 95% of the market,” he said at Rehda’s 2013 first-half property industry survey, noting that the secondary property market, for example, would not be able to sell well.

“We need to examine carefully the various categories of buyers and speculators and prescribe a more focused action plan against the right people,” he said, explaining that the broad brush-stroke approach of dealing with speculators had unjustly impacted other asset classes as well.

Past president Datuk Ng Seing Liong added that the hoo-hah about property price hikes was not reflective of the whole market, as steep rising prices occurred only in certain hotspots.

“Price hikes in these hotspots were reflected in the media and then caught by house buyer associations, which started asking the Government to clamp down on property speculation via the RPGT and other tightening measures,” he said, “Remember, these people are buying into a lifestyle, and hence, the price has to go up.” Ng noted that there were reasonably priced basic houses out there and that there was supply in the secondary property market. “The choice is still with the buyer, they should not just claim that prices keep going up.”

He also commented on the build-then-sell (BTS) mechanism, which he believes will negatively affect house buyers in the end, as supply falls subsequently.

“With BTS, when we start restricting supply, house prices would go up.”

Aside from the curbing measures, Yam also pointed out a need to revise the cross-subsidisation, which has also led to swelling property prices across the board.

“The low-cost subsidised housing is sold for RM42,000 when the building cost is RM100,000. So, who is paying the difference? The subsidy is passed through to other housing categories and subsequently, those who buy in these other categories,” Yam said, adding, “Thus, prices have gone up.”

To address this issue, he recommended that the Government focus on affordable housing, which could be built without a loss so that developers need not pass the cost to other buyers. “Now that low-cost housing is no longer required, the Government should focus on affordable housing, be it through the 1MalaysiaHousing Programme, or PR1MA, or even developers,” he said. - The Star

More property launches expected in H2

PETALING JAYA: The number of property launches expected in the second half of 2013 will be higher compared with the first half, trending towards smaller and affordable units according to Real Estate and Housing Developers’ Association of Malaysia’s (Rehda) property industry survey.

The survey showed that 63% of respondents have product launches in the coming months with 18,181 units in the pipeline, which is 11% higher than the first half of this year.

Rehda’s findings also found that smaller and affordable units are expected to be the trend of the future as landed property launches drop from 53% in the first half to 38%.

“There are more strata property in upcoming launches in the second half of 2013, with 15% increase in numbers compared with the first half, coming from Kuala Lumpur, Selangor, Penang and Johor,” Rehda president Datuk Seri Michael Yamsaid.

“This is because as property prices go up, developers have to shrink the unit sizes so that the absolute value is within the reach of first-time homeowners and young professionals,” he said. While two and three-storey terrace houses were the most popular property types launched in the first half, condominiums and apartments will take the lead in the coming period.

In the commercial segment, 48% of upcoming launches will be SoHo (small office home office), SoFo (small office flexible office) or SoVo (small office versatile office) units. - The Star

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