Special Report Penang Property: Zooming in on Seberang Perai - Tapping the mainland’s potential

THE first thing that strikes you when you arrive in Batu Kawan in mainland Penang using the newly opened second bridge is how bare the area is. Plantations and trees flank most stretches of the road running through the town and there are few cars and some houses. Several cleared tracts ready for development can also be seen.

Traffic picks up and more houses and shops appear as you head further inland but it is a far cry from the bustling, congested and more developed island of Penang.

The island has been the state government’s focus for development over the past few decades and it has grown rapidly. Today, it is regarded as one of the most livable cities in the country and a popular tourist destination. Its property market has also thrived, becoming one of the most vibrant in Malaysia.

Be that as it may, the mainland, which is known as Seberang Perai, has been steadily generating a buzz with its growth potential since the announcement of the second bridge in the Ninth Malaysia Plan in 2006. The excitement has intensified with the opening of the bridge, particularly in the 6,400-acre Batu Kawan where the bridge’s exit is located.

The PDC has several high-impact projects in the works in the largely undeveloped Batu Kawan

Seberang Perai, which is split into North, Central and South, is about three times the size of the island and as at 2010, it was home to 818,197 people compared with 708,127 on the island. Some of the towns in the North are Butterworth, Kepala Batas and Bagan Dalam while Alma in Bukit Mertajam and Juru are in Central Seberang Perai. Batu Kawan, Valdor and Bukit Tambum in the South.

Central Seberang Prai is the most mature of the three districts while the South is the least, says Michael Geh, director at Raine & Horne International Zaki + Partners.

But things are changing in the South. “Developers have started buying land there, infrastructure is being developed and major projects are being built,” he says, adding that the stimulus has been the opening of the second bridge.

“The land has always been there, but prior to the bridge, there was no reason to develop it.”

Geh feels, however, that while the opening of the second bridge has spurred interest in the South, this district will take time to grow.

“I keep hearing non-Penangites talking about how exciting places like Batu Kawan are now that the second bridge is open. Such perception … will drive development … but it will not be instantaneous.”

While much work needs to be done, Seberang Perai has several factors working in its favour. The state government, via relevant agencies, has in recent years started rolling out plans to boost the growth of Batu Kawan, including high-impact projects such as the Penang Designer Village, Swedish furniture giant IKEA’s new store, a golf resort, a theme park and a university town. These, coupled with the scarcity of land and high property prices on the island, and ample undeveloped land in the mainland can make Batu Kawan an appealing and cheaper alternative for homebuyers.

Ample cheap land

The mainland has vast tracts of agricultural land for the palm oil, coconut and poultry industries, which in turn create demand for factories and houses, says Tan Chai Liang, director at Izrin & Tan Properties Sdn Bhd.

“With the opening of the second bridge, the mainland’s property market is set to grow. This is partly because development land is scarce on the island while the prices are high. Other factors are an increase in new industrial set-ups and the inflow of investment into the mainland, particularly South Seberang Perai.”

Goh Chin Heng, chief operating officer of Ivory Properties Group Bhd, notes that Seberang Perai has the longest industrial belt in the country and after taking into account the above factors, he believes more industrial players will invest in the mainland. “This will create huge demand for housing, especially in the South.”

According to Datuk Jerry Chan, Penang branch chairman of the Real Estate and Housing Developers’ Association Malaysia (Rehda) and managing director of Asas Dunia Bhd, the price of land in the mainland is about a quarter of that on the island. “The price of prime land for housing on the island ranges from RM800 to over RM1,000 psf while on the mainland, it is difficult to push prices past RM100 psf,” he says.

Geh notes that in general, land prices have increased by about 15% per year over the past five years while Tan believes the highest increase in land prices has been in South Seberang Perai. Nevertheless, land here is still inexpensive compared with that in the more established towns of Butterworth, Seberang Jaya and Bukit Mertajam.

Chan, meanwhile, opines that high prices and the scarcity of land on the island will push more developers and industrial companies towards the mainland.

“You can see far greater industrial expansion on the mainland. It’s not because people are naturally opting for the mainland. It’s because of the shortage of industrial land and land in general on the island. More factories mean more jobs and people go where the jobs are.”

From left to right: Geh: The land has always been there, but prior to the bridge, there was no reason to develop it Tan: Houses in the range of RM250,000 to RM500,000 will remain the popular choice for mainland residents Chan: What you can build on the island and Seberang Perai are two different things

Emerging growth corridors 

The areas that will benefit most from the opening of the second bridge are those closest to it, says Peh Seng Yee, director at CH Talhar Williams (WTW) Penang.

“In the South, we are looking at Batu Kawan, Bukit Tambun and areas along the old trunk road, such as Simpang Ampat, Jawi, Sungai Bakap and Nibong Tebal. These areas are the closest to the second bridge. In the North, Bertam, which has ample land, will see growth.”

Tay Tham, director of Knight Frank Penang, concurs. He adds Alma in Bukit Mertajam to the list of potential hot spots while Shanmughananthan Jeevan Muniandy, managing director of Sri Shan Realty Sdn Bhd, picks Nibong Tebal, Sungai Bakap, Valdor and Simpang Ampat because the price of land in these areas is below RM15 psf.

“The new growth corridor of Batu Kawan-Valdor will become the new property hot spot. Agricultural land with improved accessibility is likely to see its value increase manifold in the long term, but it will depend on the zoning, location, frontage, provision of infrastructure and amenities in the surrounding areas,” says Tan.

Big developers from the Klang Valley have begun to notice the mainland’s potential. Last year, Mah Sing Group Bhd acquired 76.38 acres of freehold land in Jawi for RM12.80 psf; Eco World Development Group Bhd acquired a 60-acre tract near Simpang Ampat for about RM30 psf; and IJM Land acquired a 70-acre tract in Jawi for RM56 million in 2013.

Over in Bukit Mertajam and Bukit Minyak, DNP Land Sdn Bhd (a subsidiary of Wing Tai Malaysia Bhd) has a total landbank of 270 acres with an estimated gross development value (GDV) of RM1.8 billion and Sunway Bhd has its 82-acre mixed-use development Sunway Wellesley.

Penang-based Tambun Indah Land Bhd, which developed the RM2.7 billion Pearl City in Simpang Ampat, has eight acres in Bukit Mertajam with an estimated GDV of RM63.7 million. Tambun Indah has a remaining landbank of 584.56 acres in Pearl City with a GDV of RM3.8 billion. In Valdor, Asas Dunia has a landbank of 1,000 acres.

The area that has garnered the most interest is Batu Kawan, previously an oil palm plantation owned by Batu Kawan Bhd and later acquired by the Penang government in 1990.

The Penang Development Corporation (PDC), which has been tasked with the development of Bandar Cassia in Batu Kawan,  and has its master plan to turn Bandar Cassia into an eco-city. PDC is a state government agency set up to spearhead Penang’s social-economic development.

The PDC has several high-impact projects in the works that are aimed at boosting growth in Batu Kawan. In August last year, it called for a request for proposal (RFP) to buy 190ha in its Bandar Cassia township. Of the 190ha, 87 are designated for a theme park while 60 are for a golf resort. Eco World Development Group Bhd is considered a forerunner to win the bid, which is expected to open at RM45 psf.

Two months later, PDC signed a purchase and development agreement with PE Land Sdn Bhd to construct the RM1 billion Penang Designer Village. PE Land is part of Pan Sarawak Group, which owns and operates The Spring shopping mall in Kuching, Sarawak.

The development, the land premium of which is RM37.94 psf, comprises a shopping mall offering discounted products from luxury brands, a 300-room hotel, several F&B outlets, a landscaped garden and residential units. It is due for completion in three years.

In January this year, it was announced that IKEA will set up a store in Batu Kawan. Ivory Properties Group Bhd and Aspen Vision Development Sdn Bhd have set up a special purpose vehicle — Aspen Vision Land Sdn Bhd (AVL) — to work with IKEA on planning the new township with AVL holding a 49% stake and IKEA 51%. The total cost of the 245-acre tract is RM484 million.

According to Goh Chin Heng, Ivory Properties’ chief operating officer, AVL has signed a joint-venture agreement with Ikano Pte Ltd to develop the IKEA store (100% owned by the Swedish company) on 20 acres; the IKEA mall (70% IKEA; 30% AVL) on 55 acres; and a mixed-use development (20% IKEA; 80% AVL) on 170 acres.

Just last month, Paramount Corp Bhd acquired a 30-acre tract in Bandar Cassia from the PDC for RM65.55 million. The institutional tract was transacted at RM40.50 psf and the development land at RM55 psf. The tract is slated for a university metropolis that will be anchored by Paramount’s KDU Penang and an integrated development.

Malton Bhd has 300 acres in Batu Kawan that are slated for a mixed-use development with an estimated GDV of RM3.88 billion. Phase 1, said to comprise shopoffices and superlink homes, is targeted for launch in the middle of this year.

Also in Batu Kawan, Global Oriental Bhd has a remaining landbank of 350 acres in Bandar Cassia meant for a residential development with a GDV of RM2.3 billion.

Goh says Batu Kawan will be the next satellite city in the mainland while the other upcoming hot spots are Simpang Ampat and Juru due to their close proximity to Batu Kawan.

“Batu Kawan has the potential to become something that has never happened in Penang before — a town where retail outlets, theme parks and leisure activities are all in one place on a mega scale. Another hot spot will be Alma in Bukit Mertajam and in Butterworth, you have Bagan Ajam, Sungai Puyu, Teluk Air Tawar and Sungai Dua after the proposed undersea tunnel is completed in 2025. In terms of value creation, I think buyers can expect an appreciation rate of 30% to 40% but this would be in a longer period compared with the island’s appreciation rate.”

Locations in the mainland will not be the only beneficiaries: property experts have singled out Batu Maung and Balik Pulau on the island. The second bridge starts at Batu Maung, where Mah Sing’s 88-acre Southbay township is located.

Penang-based developer MTT Properties & Development Sdn Bhd has a 300-acre township - Botanica.CT - in Balik Pulau. MTT Properties & Development is the property arm of MTT & Priority Group of Companies.

Balik Pulau, in particular, would be a good choice for those who want to live on the island, but cannot afford the prices in George Town, says Geh.

“The prices of houses in Balik Pulau are about 50% of those in George Town. Many of our buyers are young professionals working in the Free Trade Zone (FTZ) in Bayan Lepas as the distance from Balik Pulau to the FTZ is shorter than if you were living in George Town,” says Angela Teoh, group executive director of MTT.

In fact, says Geh, most people would be happy to live in Balik Pulau instead of Batu Kawan or Bukit Tambun as most prefer to stay on the island where there are more activities and amenities.

Says Teoh, “Having an address in the mainland is not the same as having an address on the island. So, if Batu Kawan is developed with a strong industrial base, I’m sure those who work there will want to live in Balik Pulau.”

A market for home occupiers

The property market in the mainland is traditionally meant for home occupiers, says Geh.

“It’s not for investment or buying a property as a second home. People will buy a home in the mainland first and a second home on the island. I don’t see a reversal of this trend in the future. The mainland will remain a home-occupier market.

“People who move from the island to the mainland are mostly those who want landed property. I personally know people who sell their apartments on the island to buy a comfortable semi-detached house in the mainland,” says Geh.

Landed homes make up the bulk of properties in the mainland as they are still the residence of choice for most Malaysians, especially where land is ample.

The 300-acre township Botanica.CT is being developed by MTT Properties & Development

“The island has more high-end products and prices of landed properties are almost more than double those in the mainland,” says Tay.

“If you were to buy a terraced house in Sungai Ara on the island, it will cost you at least RM800,000. To be able to afford that price, you will need a net income of RM10,000 and obtain a 90% loan with a 35-year tenure. How many people, especially the young, can afford that?” asks Teh Kiak Seng, managing director of Tambun Indah.

Citing Tambun Indah’s Pearl City as an example, Teh says a terraced house in a gated area costs about RM410,000 while a similar house in a non-gated area is about RM370,000.

Geh says property prices have increased over the past five years — around 5% year on year on both the primary and secondary markets. “It has been a steady rise with the secondary market accounting for most of the transactions.”

The upside in Seberang Perai is greater because of the lower land prices, which translate into cheaper houses, says Rehda’s Chan.

“However, I can’t say if the price gap between Seberang Perai and the island is narrowing as we don’t have much to compare with at the moment. What you can build on the island and Seberang Perai are two different things.”

Tan believes the price disparity between the island and the mainland will remain. “The island will become the choice residential area for the wealthy and higher-income group while the middle and lower-income group will opt for more affordable houses in the mainland.

“Affordable landed homes with security services in a modern township complete with amenities and facilities are safer bets to appreciate over time. Houses in the range of RM250,000 to RM500,000 will remain the popular choice for mainland residents.”

Tan also notes that for the price of a condominium of below 850 sq ft on the island (RM400,000 to RM500,000), buyers can own a landed home in the mainland.

According to Teh, there is already an increasing number of buyers from the island. “Last year, some 37% of our purchasers were from the island and the year before that, it was about 20%. This year, we foresee an increase to 40%. More and more people from the island are buying homes in the mainland, especially young couples and professionals because they have no choice.”

Tan and Peh believe that this trend will continue because of affordability, the potential for long-term growth and price appreciation, and the increased accessibility via the two bridges.

While Shanmughananthan agrees that this trend will continue for some time, he believes younger buyers, in particular graduates, will eventually buy properties on the island when they have more money. “The island simply has more to offer and is a more prominent address.”

Room for improvement

While the mainland has growth potential, there is still a reluctance to live there. Rehda’s Chan says much of this can be attributed to the state government’s lack of focus on the mainland.

A commercial and housing part of Butterworth

“We have the same government, but you can see how different the island and mainland are. The island is cleaner and much better developed. The same kind of effort has not been put into the mainland for a long time. So, are we going to finally see the ugly duckling turn into a swan?” he asks.

“On the island, people are complaining about the congestion and high property prices. I’d tell them, here’s an alternative, why don’t you buy a house in the mainland instead? It’s cheaper, it’s not as congested and for the same amount you pay for a small apartment on the island, you can get a nice landed property.

“If I were the government, the first thing I would do is even things out in the mainland. There is much room for improvement.”

Knight Frank’s Tay believes many Penangites on the island are reluctant to move to the mainland because of the good living environment on the island with its array of eateries and shopping centres. It’s easier to get around there and there are fewer foreign workers.

“The heavy industrial sites are mainly in the mainland, so there’s much more noise and pollution,” he says.

“The island is more vibrant and it is well known as a tourist destination. When people say they want to go to Penang, what they mean is the island. The mainland has its strengths too — less congestion and more affordable housing — but you have to create appeal and make it a more desirable place to live,” says Peh.

Geh feels that the state government should lead the charge in developing the mainland. “The government should be the catalyst to get the ball rolling, which it has started to do on its land [Batu Kawan]. Now [it should focus on] the rest of the mainland.”

Chan says the first thing the state government needs to do is to make the mainland as livable as the island.

“George Town is one of the more livable cities in the region, but what about the mainland? You should aspire to be the best, but you should strive to be the best across the board, not just in one area. If you look at Singapore, whatever they do and aim for is across the board.”

All the consultants agree that infrastructure and public transport need to be looked into.

“Infrastructure and public transport are insufficient. The mainland is a vast area with a lower population density than the island. Priority has always been on the island’s public transport due to tourism,” says Tan.

Tay concurs, noting that at present, the number of buses and taxis in the mainland is insufficient.

“The infrastructure bottleneck in Batu Kawan is a key concern as the existing trunk roads are unable to cope with the sudden influx of vehicles and need upgrading. There is also a need to have new links to Batu Kawan as well as the smaller towns of Sungai Bakap, Jawi, Simpang Ampat and Nibong Tebal to cater for increased investment and industrial activities,” says Tan.

According to the Seberang Perai Municipal Council (MPSP), based on a study before the completion of the second bridge, about 20% to 30% of the traffic from the first bridge was expected to move to the second bridge.

“As the second bridge was opened not long ago, traffic census and traffic flow patterns on the second bridge and in the vicinity of Batu Kawan have yet to be fully identified. However, based on our monitoring, an increasing number of vehicles is passing through Jalan Bukit Tambun and Bandar Cassis since the second bridge opened,” says an MPSP spokesman.

MPSP agrees that there is a need to improve the infrastructure and public transport, and several projects have been put in place towards this end in the Penang Master Plan 2013-2030. They include road widening and upgrading exercises costing more than RM1.2 billion; a bus rapid transit system from Butterworth to George Town and in the South’s corridors; and an extension of park and ride facilities.

Other than livability, infrastructure and public transport, Tan and Tam feel that there is a need to have better zoning and planning for industrial, residential and commercial developments.

“The state government should expedite the implementation of the local plan for South Seberang Perai and unveil the master zoning plan for Batu Kawan to ensure more transparent and coordinated planning and development strategies. At the end of the day, equal focus should be given to the mainland to promote balanced and sustainable development within Penang,” says Tan.

With careful planning, coordination and implementation, the mainland has a bright future and one that is a long time coming.


This article first appeared in The Edge Malaysia Weekly, on April 21 - 27, 2014.

Special Report Penang Property: Zooming in on Seberang Perai - My Space: Bridge to growth

TO say that the opening of the Second Penang Bridge has injected new life into the real estate potential of Seberang Perai is an understatement.

While the ordinary property investor is still debating to what extent the area’s prospects will be boosted by the enhanced accessibility, Seberang Perai has been on the radar of astute property developers since the second bridge project was announced back in 2006.  

Naturally, interest from developers grew when work started, and it intensified with the completion of the bridge coupled with indications of the Penang government’s commitment to develop the mainland. The bridge, spanning 24km and costing RM4.5 billion, was opened to the public on March 1.

As it stands now, the landscape in the mainland is a far cry from the hustle and bustle of Penang island. A good portion of it is covered in plantations and vegetation, reminiscent of how a stretch of Jalan Damansara in Kuala Lumpur — between Bandar Utama and the junction with Jalan Kepong — used to be like in the early 1980s. A recent trip to the mainland shows that the area is still primarily agricultural, even in Batu Kawan, where one end of the second bridge sits.

Meanwhile, established and high-profile developers based outside Penang have been flocking to the mainland. So, one can expect the unveiling of interesting and creative development concepts that will spice up the market there.

Generally speaking, land prices in the mainland, although they have moved up in recent years, can still be cheaper by more than half that on the island. This would make homes in the mainland a lot more affordable and attractive, thanks to the second bridge.

Those who cannot afford to own a home on the island can now look at the mainland as an alternative. At the same time, property owners on the island looking to cash out can relocate to the mainland with a hefty bank balance to boot.

However, not everyone on the island would be willing to make the mainland their home despite the enhanced accessibility.

The appeal of the island — apart from having all the amenities city dwellers would want — lies in a unique blend of heritage, art and culture, and food. The island’s attractions have been drawing tourists in increasing numbers, both from within and outside the country, especially in recent years. Many KLites are known to own weekend homes on the island.

On the part of the state government, efforts to promote Penang island are ongoing, such as featuring Penang in a popular Chinese serials screened on Astro Wah Lai Toi.

A growing expatriate community and rising tourist arrivals, meanwhile, have led to the mushrooming of boutique hotels, quaint cafes and eateries. Some of these have, in turn, become attractions on their own.

Will such activities migrate to the mainland to take advantage of the significantly cheaper real estate costs? I don’t think so.

Here’s why. Interestingly, the value of an address is tied to how sexy it is deemed to be. A loose measure of that would be how popular the preferred address is. The location factor is important as are accessibility, amenities and the profile of residents.

Take Damansara Utama in Selangor. For a very long time, real estate values in the development remained inferior to those of its neighbour Bandar Utama, just beside it, and Taman Tun Dr Ismail, located across the road.

It has only been in the last 10 years or so, thanks to a surge in demand for landed homes, that prices in Damansara Utama have managed to narrow the gap with those of its neighbouring developments.

Property prices on Penang island, which is more established in the eyes of investors, will stay ahead of prices in the mainland. Considering the development game plan unveiled thus far by the state government, one can expect more excitement on the real estate scene, both on the island as well as the mainland.


Au Foong Yee is managing director of The Edge Communications Sdn Bhd 


This article first appeared in The Edge Malaysia Weekly, on April 21 - 27, 2014.

How property is priced by the market

IN a system where income levels, savings, costs, population density, demand, supply, rents, property sizes, property condition, property usage and preferences are so different, how does a property acquire “a” price that is acceptable to a buyer and subsequently acceptable to the market?

Why does a property sell at RM1.6mil when almost everyone living there can at best afford only RM800,000 or sell at RM800-RM1,000 per sq ft when up to a short while ago the maximum was only RM350 per sq ft?

Can 350 new properties in a scheme sell at the same price as one single latest transaction of an existing property in the vicinity? Can 10 developers sell 350 new properties each based on the abovesaid one single latest transaction?

Let’s take a look over the last 30 years at how properties had been priced in the market. Subang Jaya would make a good starting point.

In 1980 when I first started working, I noted that the latest phase of the new single and double-storey terrace houses in Subang Jaya were priced at between RM90,000 and RM140,000 per unit respectively, up from their previous pricing of between RM60,000 and RM90,000 in 1979. The 1980 pricing echoed the newly revised housing loan amounts of Division 2 and Division 1 government officers. All the launched units were quickly sold with the new and huge demand. In the subsequent phases, the pricing followed the momentum of the earlier fully sold sale prices with additional premiums for time, newer design and specifications and variations in the floor and land areas.

Then in the 1990s in the condominium city of Mont’Kiara, I noted the new condominiums were priced based on the price range of the existing two-storey terrace houses in Sri Hartamas/Desa Hartamas which were no longer being built due to land shortage and high land prices. The new condominiums provided an ideal alternative for the affluent younger Malaysians who were seeking a lifestyle change. The prices were also influenced by foreign buyers who preferred a new property with security and property management services at prices and rents which they could afford.

When the number and type of foreign buyers and tenants increased, the developer started to build larger units which were priced based on the price range of semi-detached and detached houses in the neighbourhood. This was well accepted by the market as it was based on actual demand for new, secure and well managed properties by foreigners especially since there were two international schools in the vicinity.

I also noted that in pricing the newly-launched terrace houses in the mid-1990s in Bandar Utama, the prices were 10% to 20% lower than the last transacted prices of existing comparable houses in the same neighbourhood such as TTDI, Damansara Jaya and Damansara Utama. Here the rationale was that the price of the newly-launched house should reflect a discount compared to an existing property, to take into consideration the 2-year waiting period during which interest has to be paid to the bank and rents have to be paid to stay in the current accommodation. It is interesting to note that this rationale is no longer followed by developers and their marketing gurus who now price the newly-launched schemes at higher prices than the highest sale price of an equivalent existing house. The basis being, “why not” when everybody wants to invest in properties and loans are easy and cheap.

Pricing trend

Another pricing trend noted was the continuous rise in the prices of shopoffices in Bangsar and Desa Hartamas, etc. Here the price rise was directly influenced by the rentals paid for the ground floor retail units which were in high demand by food and beverage outlets. This trend continues in all the new smaller shopping complexes as well, where the food and brewerage (F&B) outlets form the largest composition of tenants. The reason they can pay higher rents is because there are a large number of people/small entrepreneurs who find this sector the easiest to enter or invest in, as the payback period is only a short 3 years and there are no barriers to entry.

The other occupiers of the shopoffices and small shopping complexes have no choice but to cough up the same rent as the F&B outlets, as they set the “tone” for the rent in that particular row of shops. As the rents rise, so will the prices as they are directly related.

Similarly, properties in areas which can be converted to a different use where new demand is being created such as showrooms, bridal studios, etc can afford a higher rent. Prices rise due to the higher rents paid. Then by way of the much misused comparison method of valuation, other properties in the vicinity also rise in price, irrespective of their current use, rent and turnover.

I note that in highly popular areas where supply of a particular type of preferred property is limited, like in Damansara Heights/Bangsar etc, the number of transactions per year is very limited as no one really wants to sell since there are no other similar alternatives to move into. Then when out of the blue, a unit here is advertised for sale (usually because the owner is migrating or just wants to test the market) a “special purchaser” will come along and easily pay 20% to 30% above the last transacted price to secure the unit. This is repeated in the next sale when the second “special purchaser” pays another 20% to 30% above the last special purchaser price.

After two such transactions, the price paid by the “special purchaser” becomes the market price and extends to all other properties which are considered comparable, such that the price is now beyond the capacity of the people who have always lived or traded in that vicinity.

The price here is based more on the price which someone living or trading elsewhere is prepared to pay. This is what is happening in Singapore, London, etc. where foreign purchasers set the price. In Malaysia this is happening in Iskandar, KLCC and Penang.

Prices are also directly influenced in the following manner. Say a typical terrace house in a locality measuring 20’ by 60’ and 20 to 30 years old, is fetching prices in the range of RM350,000 per unit. A new scheme comes up in the area where the new unit measures 24’ x 80” and is of modern quality. Here the two properties are not comparable in terms of size and quality. The new unit is priced at say twice the price of the older smaller unit (based on cost, floor area and land area) and sets a new price benchmark for that locality. Then in a matter of time, all the existing properties in the vicinity (particularly all those that have been renovated) try to adopt a similar selling price per sq ft as the new property, using the location, location, location theory, never mind that upon purchasing the older property, the new buyer has to spend a hefty sum to make it livable to modern standards.

Then there is the effect of the policies of the lending institutions on the price. The policies of the lending institution in respect of loan tenure, interest rates and the loan to value ratio directly influence the pricing of a property. During a period of high confidence, sellers can quote high prices just to test the market, but as long as the purchase of the property can be financed, the buyer is prepared to pay the higher asking price as the loan is spread over 20 to 35 years and almost 90% to 100% of the purchase price can be financed.

And all it takes is for one property to be sold and financed at the newly tested price and the new price level will then be tested even higher with the next lending institution. This is particularly true for new types of properties which the buyer and lending institution cannot compare with an existing property.

The above real examples clearly indicate how properties have been priced by the market. It is noted that despite property being a long-term investment and outlay, the market’s pricing mechanism is very short term and dynamic particularly when moving upwards. The prices being set by the market in the short term may not always equate with sustainable market values. It is a strong probability that if one blindly follows the pricing set by the market during a very short-term dynamic cycle, life can become one of endless and needless debt. - The Star

> P.B. Nehru is the managing director of City Valuers and Consultants Sdn Bhd

E&O bullish about Seri Tanjung Pinang project

EASTERN & Oriental Bhd’s unit Tanjung Pinang Development Sdn Bhd can look forward to getting the go-ahead from the Penang government for its Seri Tanjung Pinang (STP) phase two project if it complies to all the technical and regulatory requirements for the project.

In an interview at the Chief Minister’s office in Komtar recently, Penang Chief Minister Lim Guan Eng says as long as the developer complies with the conditions and requirements, the state government will grant approval.

Under a concession agreement signed in 1990 by the previous state government and the company awarded the concession to undertake the reclamation and development of the land in Tanjung Tokong in the north-east coast of Penang, there are a number of terms and conditions for the project’s approval.

“If the terms and conditions are fulfilled by the developer, the state government will have to respect the sanctity of the agreement, otherwise it will have to pay compensation to the developer for non-compliance,” Lim says.

On April 10, the Department of Environment, Ministry of Natural Resources and Environment (DOE) granted a conditional approval for the detailed environmental impact assessment study and conceptual masterplan for the proposed STP phase two.

The proposed reclamation for STP phase two involves 760 acres of man-made islands and 131 acres of the Gurney Drive foreshore that will be handed over to the state government for infrastructure development of a new expressway, a new Gurney Drive Promenade and a parallel linear park for public recreational purposes.

Given that the state’s approval is still pending and the tender process yet to commence, analysts say the proposed reclamation work for the 891 acres of the STP phase two is expected to begin only early next year.

Reclamation works are expected to take two years and the first launch assumed to commence towards the end of the reclamation works, possibly in the second half of 2016.

Responding to queries from StarBizWeek, E&O managing director Datuk Terry Tham says E&O is now proceeding to make the necessary applications as required by the relevant authorities in respect of the proposed STP phase two development plans.

Tham gave the assurance that E&O will continue to give full compliance to all regulatory requirements, as it has done with the first phase of STP.

“Going forward, E&O is fulfilling its rights and obligations as set out in the concession agreement for the reclamation of STP phase two.

“The proposed STP phase two is of significant size, hence the conditions set out by the DOE are to ensure that the project is carried out in an environmentally responsible manner, consistent with the prevailing regulatory framework,” Tham points out.

The DEIA approval is conditional upon the following terms:

·It is applicable only to the proposed reclamation of 760 acres of man-made islands and 131 acres of the Gurney Drive foreshore, and dredging activities at the “flushing channel”;

·The provisions of the Environmental Quality Act, 1974, must always be complied with;

·The proposed STP phase two must be in line with the project concept stated in the DEIA and is subject to the approval of separate environmental impact assessments by DOE for activities prescribed under the Environmental QualityOrder (Prescribed Activities) (Environmental Impact Assessment) 1987;

·The necessary approvals from the state government and relevant government departments must be obtained before the proposed STP phase two is implemented;

·The DEIA approval conditions and recommendations of the DEIA consultant must be incorporated as conditions of tender documents and contractual agreements, to be fulfilled by any contractor/subcontractor involved in the implementation of the proposed STP phase two;

·The DEIA conditional approval is valid for two years from the date of issuance; and

·All works to be undertaken in the proposed STP phase two must further comply with specific work-related requirements and specifications as set out, including reporting obligations under the relevant laws and regulations.

New lease of life

Tham says that in addition to the 60 acres on STP phase two that will be reclaimed and surrendered to the state government, E&O is also reclaiming 131 acres along Gurney Drive to be handed over to the state.

“This land is for the state government to use for the benefit of the people of Penang. A linear park along Gurney Drive has been proposed as part of the 131 acres,” he says.

E&O is not the first developer involved in the reclamation and development of the land.

The project’s history can be traced back to 1980’s, when it started off as a joint venture between Permaijana Ribu (M) Sdn Bhd (owned by UEM Bhd, Penang Bumiputera Foundation and Magma Bhd) and Koperasi Gabungan Negeri Pulau Pinang and Penang Development Corp.

The original project proponent faced a challenging start and reclamation works were twice abandoned due largely to the Asian financial crisis.

In 1992, Tanjung Pinang Development Sdn Bhd was granted the concession to undertake the project. The reclamation of Seri Tanjung Pinang phase 1 commenced in 1997 (not by E&O). Within the same year, works were suspended due to the Asian financial crisis. In 1999, reclamation resumed only to halt again in 2000. The project was left idle for the next three years.

E&O came on board in 2003 to revive the existing but abandoned project, and Tanjung Pinang Development became a subsidiary of E&O. The project is now known as the masterplanned seafront development Seri Tanjung Pinang by E&O.

Reclamation for STP phase one comprising 239 acres was completed in 2005, and within the same year the first homes were launched. To-date, about 2,500 housing units have been completed at Seri Tanjung Pinang worth an estimated gross development value (GDV) of RM4bil.

In 2011, the Penang government granted in-principal approval to reclaim the proposed STP phase two. The second phase is expected to generate some RM25bil in GDV.

The project had been incorporated as part of the National Physical Plan 2007-2020 as well as the Penang State Structure Plan 2020.

During the interview with the Chief Minister on Penang’s development, Lim gave the assurance that the state government will ensure a holistic and balanced development model for the state, and one that is not too commercial.

“For example, we will preserve landmark historical and heritage sites, like the Penang Esplanade, and will not allow the development of this landmark historical site for commercial purposes,” Lim says.

The founder of Penang, Captain Francis Light, a former Royal Navy midshipman and trader, who founded Penang in 1786, had landed on a point somewhere at the Esplanade. The Esplanade, which can be regarded as the growth centre from which Georgetown developed and expanded, is today an important venue for many of Penang’s important events, including the Merdeka Parade on August 31.

The state’s efforts to preserve the heritage, cultural and historical sites will be in line with the 2008 inscription of the inner city of Georgetown as a Unesco World Heritage Site.

With the right concerted efforts between the state and industry players to ensure a proper balance between the built and unbuilt environment for Penang, and an integration of the old world charms with new neighbourhoods like Seri Tanjung Pinang, Penang will be assured of a place among the handful of well-regarded liveable international cities of the world. - The Star

No surprises in property report

PROPERTY experts say the findings of the Property Market Report 2013, released last week by the National Property Information Centre, came as no surprise, with the various cooling measures having their intended effect of curbing speculation and excessive price growth.

Less certain is whether demand will recover in earnest during the second half of this year, in what some expect to be a “pre-GST boom”.

CEO-Agency of property consultancy PPC International Sdn Bhd Siva Shanker tells StarBizWeek that he sees buyers making a beeline to snap up property in the two quarters prior to April 2015, when the GST takes effect at an initial rate of 6%.

Shanker, who is also president of the Malaysian Institute of Estate Agents, does not believe Malaysia will follow the example of Australia, where prices soared and then tumbled pre- and post-GST back in 2000.

“In Malaysia, what goes up does not come down. I think our property prices will rise ahead of GST and find their level there,” he says.

According to the Property Market Report 2013, volumes shrank 10.9% to 381,130 transactions but their value rose a marginal 6.7% to RM152.37bil from RM142.84bil in 2012, indicating that prices gained strength despite a raft of measures designed to rein in speculation, including a ban on interest-bearing schemes and a higher real property gains tax.

“Most people say 2014 and 2015 will be tough years for the property market. A slowdown usually lasts for two years.

“But looking at the report, my view is that 2013 and 2014 are the slowdown years. I expect the market to normalise in 2015 and make a full recovery in 2016 and 2017,” Shanker remarks.

“This year’s volumes will probably be flat, but prices are not likely to go down.”

As in the past, the report showed that the residential market dominated close to two-thirds of all transactions.

Approvals for housing loans, however, fell sharply compared with an expansion the year before. Total loans disbursed for the purchase of residential properties rose to RM74.4bil from RM64.1bil.

The report says construction activity stayed solid, backed by high-rise and high-end properties in the Klang Valley, Penang and Johor. The shop and industrial segments also saw higher starts and building plan approvals in 2013.

The occupancy rate for retail and office space remained firm, buoyed by a moderate increase in new supply, as well as fewer starts and new planned supply.

But the market showed evidence of softening across the board. All sectors posted reductions in transaction activity, led by commercial and industrial properties.

Most states fared worse save for Johor and Perlis, which recorded high single-digit improvements.

Five states experienced double-digit contraction in activity, with Putrajaya, KL and Kelantan topping the list.

According to the report, residential properties saw improved sales of new launches and more housing starts and completions, which helped pare down the number of “overhang” properties.

The all house price index jumped to 192.9 points against 172.8 points the year before. Average prices rose 10% to RM266,304 from RM241,591.

In terms of volume, most states posted a downturn except for Johor, which expanded 16.6%.

In value terms, all major states saw growth except for Kuala Lumpur, which declined by 9.7%. Johor was most improved with 63.2% growth, while Selangor recorded 2.8% growth and Pulau Pinang, zero growth.

Houses priced between RM250,000 and RM500,000 were the most popular, capturing 27.3% of all transactions, while demand for those in the low-cost RM100,000-RM200,000 category weakened.

Terraced houses made up the largest share of residential transactions, with Selangor, Johor and Perak contributing to more than half of the market share, followed by condominium and apartment units, most of them being transactions in Selangor and Kuala Lumpur.

The number of new launches fell last year after three straight years of growth to 48,290 units from 57,162 units in 2012, even as their take-up receded to 45.1% against 47.7%.

Kuala Lumpur, Selangor and Perak topped the list of new launches, commanding 57.4% of the national total.

From a price standpoint, the Kuala Lumpur market continued to be resilient. The report reveals that single-storey terraced homes at Bukit Bandaraya and Lucky Garden, both in Bangsar, saw 25.3% and 11.4% growth, respectively, pushing the value of a unit to upwards of RM1mil.

Spurred by the MRT factor, homes in Taman Bukit Anggerik and Salak South Garden posted 17.2% and 17.8% growth, while double-storey terraced units in Kepong’s Desa Park City ranged between RM1.31mil and RM2.48mil.

The report highlights that select condominiums in Kuala Lumpur, such as Bangsar Puteri, OBD Garden Tower and Casa Vista experienced growth of over 20%.

A downtrend was seen in Mont’Kiara Damai and Tijani 2, however, as prices tumbled by 5.7% and 12.4%, respectively.

Home prices also stayed firm in Selangor, but Johor’s landed residential segment jumped by double-digits in certain areas, particularly Johor Baru.

Condominium pricing in Johor Baru remained competitive, with the highest transacted price being RM500,000 per unit in Taman Pelangi. On average, units were priced between RM150,000 and RM350,000.

Up north in Pulau Pinang, residential properties were stable as the limited number of terraced houses on the island boosted demand for the Timur Laut and Barat Daya districts.

While Iskandar Malaysia was clearly a boon for Johor, CH Williams, Talhar & Wong managing director Foo Gee Jen says he is concerned if that performance is sustainable.

The veteran property consultant also expects a pre-GST rush for property.

“Buyers are concerned that prices will go up. If you are looking at a piece of property, now is the time to lock in your purchase,” he quips.

In Foo’s estimation, residential property could experience an 8%-10% jump in price after GST, and the landed segment a stronger 10%-15%.

“There is no oversupply in landed homes, but I can’t say the same for condominiums, especially the Soho (small office home office) or Sovo (small office versatile office) types.”

Kim Realty CEO Vincent Ng tells StarBizWeek that demand in the primary market remains firm and will likely continue apace unless interest rates go up.

“The primary market may gain traction in the second half as developers have been holding back on launches. Those with unsold stock will want to unload them before GST,” he points out.

“I don’t think prices will be cut drastically, but developers will make it attractive for buyers.”

Nonetheless, Ng acknowledges that the banks have tightened the screws on mortgages, leading to a mass of loan rejections.

“From what I understand, 30%-50% of the people who have put in deposits have had their loan applications denied for various reasons,” says Ng.

“The damage has already been done. More cooling measures will kill the market,” says another property agent. - The Star

Property transactions dip, but house prices continue to rise

KAJANG: The various cooling measures on the property sector dampened transactions last year, with the volume of properties bought and sold dipping by 10.9% from 2012, even as total value rose 6.7%, a sign that prices did not come down.

According to the Property Market Report 2013 released by the Valuation & Property Services Department, there were 381,130 transactions in the country in 2013 compared with 427,520 the year before, although their value climbed to RM152.37bil from RM142.84bil.

The all house price index edged up to 192.9 against 172.8, and all house prices to an average of RM266,304 from RM241,591.

The residential subsector retained the lion’s share of the market at 64.6% of volume and 47.3% of value.

This was buoyed by the prevailing low interest rate environment on the back of a base lending rate of 6.53% and weighted average lending rate of 5.4%.

Last year saw 246,225 residential property transactions and worth RM72.06bil, which declined 9.7% and rose 6.3%, respectively.

There was a slight decrease in the sales of new launches but the number of overhang properties also dipped.

In the primary market, new launches shrunk after three consecutive years of growth, with 48,617 units of new launches rolled out from 57,162 in 2012. Some 45.1%, or 21,904, of these units were sold.

Five states exceeded the national average take-up, of which three – Putrajaya, Selangor and Pahang – surpassed the 55% mark.

In terms of units launched, Johor, Selangor and Perak topped the list with 20.9%, 13.5% and 11.85 of the national total.

Terraced units made up the bulk of the new launches with 47.8% comprising 9,080 single-storey terraces and 13,273 two to three-storey units.

Condominiums and apartments contributed to 19.1% or 9,265 units. The sales of both these categories stood at 50.9% and 44.8%, respectively.

In terms of value, the Valuation Department said most states saw a downturn in market activity save for Johor, which grew by 16.6%.

Transaction volumes in Putrajaya fell the most by 41.7%, and Kelantan 34.6%, a reversal of its 93.6% growth in 2012. This was followed by Kuala Lumpur (-34.4%), Labuan (-33.9%), Penang (-23.9%) and Selangor (-14.3%).

By market share, Selangor outpaced the other states, contributing to 26.1% of all residential transactions. Johor was next at 13.7%, followed by Perak, Penang and Kedah.

In terms of value, only Kuala Lumpur saw a contraction in value of 9.7%. Johor posted the best growth of 63.2%, Selangor grew 2.8% and Penang saw no growth. Perlis, however, shot up 80.7% from the previous year.

The report said the different market segments as measured by price indicated a divergent scenario.

Transactions in the lower-price range softened last year. Compared with 2012, the market activity of homes in the RM100,000 to RM150,000 and RM150,001 to RM200,000 bracket fell 26.6% and 17.9%, but the RM250,001 to RM300,000 range climbed by 23.2%.

Houses priced between RM100,001 and RM300,000 were the most active, capturing the largest share of the market at 42.9%.

Housing approvals fell sharply by 22.5% from an expansion of 47.4% in 2012, while total loans disbursed for the purchase of residential properties increased to RM74.4bil from RM64.1bil.

Deputy Finance Minister Datuk Ahmad Maslan told reporters after the launch yesterday that the goods and services tax, which comes into effect next April, was not expected to raise house prices significantly as the tax was exempted on the home itself. - The Star

Developers' focus shifts with the opening of the second Penang bridge

DESPITE a softening property market on Penang island and Seberang Prai, Kuala Lumpur and Penang-based developers will be undertaking projects to the tune of RM4.56bil this year, a check with various developers show.

The island, however, is seeing fewer residential property launches due to land shortage, higher land cost and a challenging property market environment. Nevertheless, Raine & Horne director Michael Geh says the gross development value (GDV) of the projects launched on the island this year will still be higher.

Geh says the price of vacant land in Batu Maung has increased to RM250-RM300 per sq ft.

Of this RM4.56bil, about RM1.86bil will be residential and commercial projects planned in Seberang Prai, while the remaining RM2.7bil will be on the island.

Although in value terms the island will have a lion’s share, much of the focus is expected to be on Seberang Prai, located on Peninsular Malaysia.

To a large degree, the focus on Seberang Prai has been triggered by the announcement of the second bridge by Malaysia’s fifth prime minister and Penangite Tun Abdullah Ahmad Badawi in the Ninth Malaysia Plan in August 2006. Since then, property prices in Seberang Prai and on the island have risen significantly. One can consider 2006 as the watershed where Seberang Prai is concerned.

The opening of the RM4.5bil second Penang bridge on March 1 is also expected to spur a second wave of interest.

The connectivity is expected to boost retail, for a start. There are plans to develop a RM200mil premium retail outlet known as Penang Designer Village and an integrated shopping mall which will be anchored by an IKEA store in Seberang Prai.

Fook says land prices in south Seberang Prai has jump to RM40-RM50 per sq ft.

PE Land Sdn Bhd will undertake the Penang Designer Village, while the integrated shopping mall with residential components will be developed by Aspen-Ikano.

Residential development is also expected to improve with the entry of big players into that area in terms of style and design.

Last December, Mah Sing Group Bhd acquired 30.9ha in Jawi, comprising 20 pieces of prime freehold contiguous land, for RM400mil. Its group managing director and chief executive Tan Sri Leong Hoy Kum says the group plans to introduce an integrated township called Southbay East.

Leong says the township is currently at the planning stage. He says the freehold township located just 6.6km from the Jawi toll plaza on the North-South Expressway is expected to attract those who work and live in Southbay East’s immediate surroundings. The property developer is proposing linked homes, semi-detached units and town houses. There will also be a club-house.

But land prices may become an issue. Henry Butcher Seberang Prai’s associate director Fook Tone Huat says vacant land prices in the area, especially those in south Seberang Prai where the second bridge is located, are now hovering between RM40 and 50 per sq ft, a huge jump from 2006’s RM8-RM9 per sq ft.

Land prices in Central and North Seberang Prai were then between RM20 to RM40 per sq ft, compared with today’s range of between RM50 and RM100 per sq ft. The increase in land prices has translated into higher property prices.

“New landed properties such as double-storey terraced units in South Seberang Prai are now priced between RM350,000 and RM400,000 compared with between RM150,000 and RM200,000 prior to 2006,” Fook says.

Double-storey terraces in prime locations in Central and Northern Seberang Prai have doubled from RM200,000-RM270,000 range to RM400,000-RM600,000.

“We are also seeing a lot of life-style condominium projects being planned in Bukit Mertajam this year with new units priced at at around RM300 per sq ft,” Fook says.

As for the secondary or sub-sales market, double-storey terraced houses have a wide price range of between RM250,000 and RM500,000, depending on location.

Landed properties in the sub-sales segment command the best pricing in Bukit Mertajam and Butterworth town.

Despite the interest in Seberang Prai, Fook expects the volume of property transactions to soften this year, due largely to the difficulty in obtaining housing loans.

“There will definitely be fewer transactions this year compared with about 12,000 registered for 2013.

“Since January, we have seen fewer enquiries for primary and secondary market properties as the rejection rate of housing loans is currently at about 60%. Property prices are expected to remain more or less the same as last year,” Fook adds.

Real Estate and Housing Developers’ Association (REHDA, Penang) chairman Datuk Jerry Chan says due to the tightening of bank loans, he expects the volume of property transactions to decline by about 30% this year.

“The overall transacted value will also fall by about 20%,” he says. Raine & Horne’s Michael Geh expects properties in the secondary segment to remain stable, while those in the primary market might soften slightly.

“There will definitely be a dip in the volume of transactions, due to the stringent loan conditions,” Geh says.

Despite issues about buyers getting the margin of financing they would like to have, this does not seem to have deterred developers from entering the Seberang Prai market in a fairly big way.

DNP Land, which is part of Singapore’s Wing Tai group, will be developing a RM250mil condomonium project known as Bukit Mertajam Mahkota and the RM550mil Jesselton Hills landed property scheme in Bukit Mertajam, located in Central Seberang Prai. Tambun Indah Land Bhd is also planning RM616mil worth of landed property launches for Bukit Mertajam and Pearl City in Simpang Ampat, south Seberang Prai.

DNP Land (North) general manager K.C. Tan says the Bukit Mertajam Mahkota project will be the town’s first high-end condominium development. As for Jesselton Hills in Alma, it will have 200 units of semi-detached and terraced houses.

“The projects are strategically located between the first and second bridges, and is close to Jalan Song Ban Kheng, a prime residential district. They are also surrounded by the Prai and Bukit Minyak Industrial Parks and Penang Science Park.

“We expect buyers from Kedah, especially from Kulim High Tech Park, as Bukit Mertajam is the main connecting point between Penang and Kedah,” Tan says.

IJM Land, known for its Penang island Light project, is also launching RM236.5mil worth of properties comprising double-storey houses in Jawi, south Seberang Prai, and double-storey linked bungalows in Bukit Mertajam, central Seberang Prai. One of Kuala Lumpur’s heavyweight, Sunway Bhd is also planning to launch some RM150mil worth of residential and commercial projects for the second phase of Sunway Wellesley in Seberang Prai, a mixed-development project in Bukit Mertajam, at the end of this month, while the RM60mil third phase, comprising resort condominiums, will kick off in October.

Sunway Bhd general manager Tan Hun Beng says the group will be launching more properties in Seberang Prai as the lower land prices there has allowed the group to price its properties affordably. In June this year, Sunway will launch the RM80mil Sunway Cassia third phase, double-storey semi-detached and three-storey terraced houses, in Batu Maung, in Seberang Prai.

The focus on Seberang Prai, by no means, mean that there is less interest on the island. In fact, property prices have grown by leaps and bounds the last several years. This year, however, will see less launches of landed units, due largely to land shortage and high prices.

Raine & Horne Malaysia director Michael Geh says the price of vacant land has increased to around RM250 to RM300 per sq ft in Batu Maung in the southern part of the island, where the second bridge is located, from about RM50 to RM60 per sq ft prior to 2006. This effectively means that in just eight years, land prices have increased by 400%.

However, Geh also says land prices depend on what the land is being zoned for, whether it is agriculture, commercial or residential usage. This increase in land prices coupled with other factors have resulted in higher property prices.

New two- and three-storey terraced houses on Penang island now cost about RM1.2mil in the south of the island, compared with about RM450,000 prior to 2006.

“New condominiums in similar locations are now priced at RM700,000-RM800,000, compared with RM250,000-RM300,000 prior to the second-bridge announcement in 2006. In the prime locations of the north-east districts such as Tanjung Bungah, Tanjung Tokong, and Pulau Tikus, new lifestyle high-rise units start from RM800,000 onwards, doubled what it used to be in 2006,” Geh says.

How sustainable are these prices? The reponse to launches will be an indication.

Eastern & Oriental Bhd will be launching its RM800mil Andaman Edition 18 East condominium scheme on the island in the first half of this year. IJM Land will introduce its RM125mil Trehaus@Bukit Jambul. This comprises condominium villas and semi-detached villas, and a yet-to-be-named medium and low-medium cost project, which has a RM177mil GDV, in the fourth quarter of this year.

S P Setia will launch in the second half the RM300mil Setia Sky Vista, a condominium project, in Relau.

These launches will be keenly watched.

MyHome requests to start on April 1

BY LEE YEN MUN

PUTRAJAYA: The MyHome Scheme, which provides a RM30,000 incentive for each affordable house, will be open for applications starting April 1.

Private sector developers and house buyers interested in the scheme may file their applications online via http://ehome.kpkt.gov.my.

The scheme, announced by Prime Minister Prime Minister Datuk Seri Najib Tun Razak last year, consists of a RM300mil incentive allocation offering 10,000 units of affordable homes nationwide.

“MyHome is part of a continuous effort by the Federal Government to provide affordable homes to the rakyat (people) of all levels,” said Urban Wellbeing, Housing and Local Government Minister Datuk Abdul Rahman Dahlan at the launch of the scheme here yesterday.

Under the scheme, qualified private sector developers will receive an up front incentive of RM30,000 per affordable home sold.

The incentive would cover the 10% deposit required of buyers after the sales and purchase (S&P) agreement is signed.

A 10-year moratorium would apply from the effective date of the S&P agreement, prohibiting a buyer from re-selling or transferring ownership of the home except if the latter is carried out to immediate family members.

The scheme is expected to benefit two categories of households. While MyHome1 is open for households with an income of between RM3,000 and RM4,000, MyHome2 is for those with a household income of between RM4,001 and RM6,000.

Houses under the MyHome1 would cover a minimum of 800 square feet of space with a market price of between RM80,000 and RM120,000 in the peninsula and between RM90,000 and RM120,000 in Sabah and Sarawak.

MyHome2 prices would range between RM120,001 and RM200,000 in the peninsula and between RM120,001 and RM250,000 in Sabah and Sarawak for homes measuring a minimum of 850 square feet.

MyHome2 houses will have three bedrooms and two washrooms as well as basic amenities such as parking spaces, a community hall, a surau and a playground.

Interested buyers must be Malaysians aged 18 years old and above who are buying a property for the first time.

“Qualified buyers will be reviewed by the ministry and a selection will be done through a balloting process,” Abdul Rahman said. - The Star

Consumer groups call for transparent house buyer selection

PETALING JAYA: There must be transparency in the selection of qualified buyers and the final balloting under the MyHome Scheme, said consumer groups.

“We must hold true to the principle that whoever deserves a house (under the scheme) should get it regardless of race,” said National House Buyers Association honourary secretary-general Chang Kim Loong said.

“The Housing and Local Government Ministry should also ensure that buyers meet all the eligibility criteria for the loan before they grant the incentive,” he added.

Fomca secretary-general Datuk Paul Selvaraj stressed the importance of transparency in the selection process.

“We must ensure that those who qualify would be entitled to a house. The process must be transparent so that those who do not get the incentive or house will still feel the selection process was carried out fairly,” he said.

Paul added that the scheme would help more Malaysians, especially the younger generation, to realise their dream of owning their first home.

Chang commended the inclusion of a 10-year moratorium, which prohibits a buyer from re-selling or transferring ownership of the home unless it was transferred to immediate family members.

“This will make sure there will be no flipping of properties,” he said.

Property developer Mah Sing Group Bhd also lauded the scheme.

“We are keen to find out if we meet the conditions (to file an application for the scheme),” said its corporate communications general manager Lyanna Tew. - The Star