S P Setia expands overseas to achieve target

THERE are a few blue-chip property developers in the country and S P Setia Bhd certainly is perched high up on that short list. The developer of townships, and high-end condominiums and niche developments has one big edge when compared with the others though.

It has spread its reach well beyond the shores of the country and is now looking to generate at least half of its turnover from developments outside of Malaysia.

The need to venture out of Malaysia seems a natural progression for the property-based company given the size it has already grown to.

Considered the country's largest property developer by sales, it hit a new high in its financial year ended Oct 31, 2012, chalking up sales amounting to RM4.2bil.

For its current financial year, the company announced an ambitious target to grow its sales to RM5.5bil, and by 2017, to achieve a pre-tax profit of RM1bil.

“Achieving a pre-tax profit of RM1bil would be the first for any property developer in Malaysia,” S P Setia president and chief executive officer Tan Sri Liew Kee Sin tells StarBizWeek.

One can't help but ask is it achievable?

Liew recalls S P Setia having an analyst briefing where the company was targeting to achieve sales of over RM4bil for 2012. Many analysts doubted if the company would be able to achieve it.

It went on to hit record-breaking sales of RM4.23bil in 2012.

“But when we did our last analyst briefing where we announced our sales target of RM5.5bil (for 2013), for the first time, no one doubted that we would be able to achieve it,” Liew enthuses.

On its RM1bil pre-tax profit target, despite being confident that it is achievable, Liew admits the company will have to work very hard to make it happen.

Earnings will be through existing and new projects, he says. Currently, S P Setia has ongoing projects, both local and foreign, worth over RM72bil in gross development value (GDV).

“Not all RM5.5bil (of our current financial sales target) will come from new launches. At least 60% of that will come from existing projects, with the remaining 40% from new launches.”

While the bulk of the company's sales are generated through its developments in Malaysia, Liew says S P Setia will not be able to achieve the continuous growth it wants if it were to just focus its efforts in Malaysia.

“The property market in Malaysia is good, but it's challenging in terms of the growth that we want to achieve. We're already in the billions in terms of sales and the challenge is to grow at the same pace.

“For us to maintain a steady growth and sales target, we must operate in a few countries. That's why some time back we decided we needed to go overseas,” he says.

International property player

Over the past six years, S P Setia has been aggressively expanding its presence in several countries. Today, other than Malaysia, it is also in Vietnam, Singapore, Australia, China, Indonesia and more recently UK.

The company's foray overseas began in 2007, when Vietnam's top state-owned conglomerate, Becamex IDC Corp, chose S P Setia as its joint-venture partner to launch its 558-acre, US$880mil (RM2.7bil) GDV township project.

Known as EcoLakes at My Phuoc, the development is located some 30km outside Ho Chi Minh City. S P Setia has also launched a mixed development project called Eco Xuan at Lai Thieu in Tuan An District, Binh Doung Province.

Artist impression of EcoLakes at My Phuoc, 30km outside of Ho Chi Minh City in Vietnam.

In 2009, the company established an office in Singapore and two years later, it acquired a 29,440 sq ft site to develop a high-rise condominium called 18 Woodsville.

The successful launch of this project spurred S P Setia to acquire another parcel of 201,285 sq ft for its Eco Sanctuary condominium in Chestnut Avenue.

In June 2011, S P Setia previewed its first project in Melbourne, a high-rise condominium development called Fulton Lane.

The Autralian project's launch in November 2011 spurred S P Setia to look at more opportunities in Melbourne and it then acquired another piece of land, this time at the upmarket St Kilda Road for its second high-rise project Parque Melbourne.

In April 2012, S P Setia was invited by the Government to jointly develop the China-Malaysia Qinzhou Industrial Park. That same month, S P Setia opened its representative office in Jakarta.

Finally, in September last year, SP Setia acquired the Battersea Power Station in UK via a consortium together with Sime Darby and the Employees Provident Fund.

“With Singapore and Melbourne doing well, and with Battersea under way, we feel confident that S P Setia has become a Malaysian player in a world property market. We're very proud of this. This was not something that was done overnight,” says Liew.

“It's something we've been working on over the past five years. We've mapped out a growth pattern and have consistently been working on it.”

But despite building a strong presence overseas, Liew insists that Malaysia “will always be the base” for the company's operations.

“Up to a certain point, we felt that we could achieve our targets in Malaysia. But if we want to grow, to do RM4bil-RM5bil a year in sales, just for Malaysia alone, would be very difficult.

“That's why we are expanding overseas and we're now confident of achieving our sales target. It's a simple idea, really. S P Setia must have the depth and the breadth not only in Malaysia, but around the world, to year-in, year-out lock in the sales.”

Liew says that by 2017, with its RM1bil pre-tax profit target, he expects about 50% of sales to be generated from overseas projects.

“If you think about it, it's difficult to generate a pre-tax profit of RM1bil just from the Malaysian market. There's just no way. A long time ago we realised this already.

“For this year, we're targeting RM5.5bil sales. But to go beyond that, we must have a plan to go overseas. With the proper landbank in these foreign countries, we can ensure that we consistently deliver the sales and profits every year. Only then can we be sustainable.”

But having a presence overseas itself won't be enough, says Liew, adding that the company will need to strive to ensure that it can deliver the same kind of results and assurance that it does for its buyers locally.

“Now that we have gone international, we need to give the same S P Setia comfort to foreign buyers. Otherwise, why would they want to buy from us?

“We need to provide the same customer service to buyers whether it's in Singapore, China, Australia or any other country that we're in. The Malaysian market has also matured. A lot of them today are in the upper income and like to invest overseas. So, I tell them to come with us and we will take care of your loan, sales and purchase agreement and any other queries they may have.”

Consistency the ideal business model

Liew says that with a presence in seven countries already, S P Setia has no immediate plans to enter new markets.

“Now that we are already present in seven countries, we must consolidate and strengthen our base in these countries. Only then will we look into other countries.

“For this year, our focus is to make sure that the investments in the countries that we have gone into can be reaped. We'll be launching a new project in Singapore and Melbourne this year and also we're launching in the UK (Battersea).”

Liew says SP Setia is constantly looking out for more land to ensure that it has ongoing projects it can launch on top of the existing projects that it is working on.

“In Malaysia for example, if the condominium market is good, we launch more high-rise projects. If it's not good, then we switch to township developments. We are a township player, a niche market player, an integrated commercial development player and a commercial retailer. So we have the breadth and the width.

“Now if the Malaysian market is not doing too well, we have other markets to cover us, and vice versa. The issue with a lot of developers today is that one year they do well, then the following year, not so well. But how to be consistent?”

Liew uses English football club Manchester United as a prime example of being “successfully consistently.”

“It's like Manchester United. Year in, year out, if they're not number one, they're at least number two. That's consistency.

“How do you create consistency in a company? The same thing we must consistently deliver results, whether you like it or not.”

Last year saw S P Setia secure a few big property deals in Malaysia. In December, its subsidiary Setia Hicon Sdn Bhd purchased a parcel of land on which the British High Commission was located in Jalan Ampang for RM294.96mil.

The land purchase came on the heels of the conclusion of the company's land swap deal with the Government, where S P Setia's 50%-owned subsidiary Sentosa Jitra Sdn Bhd had signed a privatisation agreement with the Government and Syarikat Tanah and Harta Sdn Bhdto undertake the development on a piece of land in Shah Alam.

In return, the 52.36 acres in Jalan Bangsar would be injected into Sentosa Jitra.

In October, it proposed to acquire 673.3 acres in Rinching worth RM381.2mil, to replicate its successful township development in Setia Alam and Setia Eco Park.

The land in Rinching is situated mid-way between Semenyih and Bangi old town and is forecast to have a GDV of RM4bil.

S P Setia had bought 1,010 acres in Beranang for RM330mil in August.

“Last year, we had a few major deals in Malaysia, namely the Rinching and Beranang estates that we bought. We're opening a new township in the Semenyih area.

“We also secured from the Health Ministry 52 acres in Jalan Bangsar, opposite KL Sentral. That's a major development. Also, before the end of the year, we acquired the British High Commission land in Jalan Ampang. Going forward, we'll still maintain the aggressive landbanking strategies that we've always adopted.”

In capable hands

It's a fact that as far as leadership goes, nothing lasts forever. It's also a fact that via Liew's agreement with institutional shareholder Permodalan Nasional Bhd (PNB), the S P Setia boss will be paring down his stake in the company until his contract expires in March 2015.

PNB, which made a takeover offer for S P Setia last year, holds 51.63% in the company, while Liew holds under 6%.

“It's a fact that my contract will expire in March 2015. Over the next two years, I will be selling down my shares to zero, in accordance with the management agreement so that PNB can take over.

“I'm already 54 years old. I'm not young anymore. One day, I will have to go!”

Despite being considered the “face of S P Setia” by many, Liew assures that the company is in very capable hands.

He says the company has already charted an “internal succession plan” to “move to the next level,” which also includes what needs to be done once Liew leaves.

“The team is prepared to move forward. Whether I stay or not, S P Setia will still be a big property player in this country and internationally.

“The success of a CEO cannot just be measured by what he does during his tenure in a company. It's also what he leaves behind. Look atApple. Steve Jobs is no longer around but the company is still doing well!”

It's what CEOs are about, says Liew.

“That's the hallmark of a great CEO. He will make sure that there is a strong system to back him up and that the same service and quality is maintained even after he leaves.

“Over the last five years, we've been planning and planning. So, even if Alex Ferguson (manager of Manchester United) is no longer with the team, the club must continue to be successful. Our succession planning was all done long before the PNB takeover,” he says.

Liew says the company's succession planning does not just include paving the way forward once he leaves S P Setia.

“Succession planning would mean strategising who will take over and this won't just include my position in the company. It will include everyone down the line. If you don't train people to become general managers, project managers, planners, sales staff or quality controllers, the company will never grow.

“We have an internal training system whereby we train people to take over positions. For my position alone, there are four guys that can assume my post, who are maybe better than me? There are enough people in our group carry this company forward.”

Liew says that with PNB as a major shareholder, S P Setia is already in good hands.

“Over time, S P Setia will be transformed into an institutionally-owned company. That will give us the firepower and strong base to grow because we have institutional shareholders.

“But with that said, people like me, who have a passion for work, will not just walk away from this company. As long as I am CEO, S P Setia will be at its best. It's our job to deliver and move forward.”

When PNB made the takeover offer for S P Setia last year, many felt that the move was a hostile one.

To this, Liew says: “As far as PNB is concerned, whether the takeover was friendly or unfriendly it's up to interpretation. We were not notified of the takeover until the night before.

“But since the takeover, which was completed in March 2012, PNB has never interfered in management. But more importantly, they have been supportive of everything that we've been doing, whether it involves us buying a project overseas or with regards to our landbanking strategies.”

Liew says that even after the takeover, it was “business as usual” for S P Setia.

“My shareholders have not given me any trouble, why should I give them trouble? So what happens after March 2015? That will be decided then. You can't expect PNB to come and talk to me about it now.

“So the market needs to be fair to PNB and me and not interpret too much. We're still growing by leaps and bounds.” - The Star

Chor: Govt committed to reviving abandoned projects

GEORGE TOWN: Some RM65mil has been spent in three years to revive abandoned housing projects in the country, said Housing and Local Government Minister Datuk Seri Chor Chee Heung.

He said the Government understood the suffering of those who had saved hard to own a home, only to be told that the developer could not complete the project.

“We know how bitter the whole experience can be, especially for low- and low-medium-cost homebuyers. That is why reviving such projects is a priority for the Federal Govern­ment,” he said.

From 2009 to Dec 31 last year, 178 projects comprising 53,058 units were abandoned in the peninsula.

Most of the projects were in Selangor, Johor, the Federal Territory, Negri Sembilan and Penang, Chor said, adding that 35,395 buyers were affected.

“We have revived 66% of the projects while 29% are in various stages of revival. There are only nine projects left which are in the early stages of planning (to be revived),” he said.

He added that since 2009, the percentage of abandoned projects had decreased but “we are not satisfied yet”.

The Federal Government has put in place measures to address the issue of abandoned projects, including requiring developers to pay 3% of the construction cost as deposit, blacklisting errant developers and bringing them to court.

“In addition, the ‘build and sell’ concept will be implemented in 2015,” said Chor at a press conference during a mock key presentation ceremony at Taman Desa Aman in Relau yesterday.

The 20- and 10-storey low-medium-cost flats, comprising 329 units and scheduled for completion in 2003, were abandoned in December 2005 after the developer company wound up.

“More than RM13mil was spent by the Federal Government to revive the project.

“This is the biggest abandoned project we’ve helped revive,” he said.

“Now, the families concerned can celebrate Chinese New Year in their new homes as the certificate of fitness has already been issued.”

He said another two revived projects in the state – Mengkuang Heights in Seberang Prai Tengah and Taman Orkid Indah in Seberang Prai Utara – would be completed by the end of the year.

He said that from 2009 to December last year, 14 projects in the state involving 3,715 purchasers were abandoned.

“Of that number, 10 including Taman Desa Aman have been completed.

“The others are in various stages of revival.

“All are slated for completion by the end of this year or next year,” he said. - The Star

八条路43住户获1赔1 刘敬亿：租户无临时地契另方案

（槟城24日讯）彭加兰哥打区州议员刘敬亿说，八条路网寮一旦重建发展，43户拥有临时地契住户将可获“1间赔1间”，至于租户和没有临时地契者，则有另外的赔偿方案，必须待敲定赔偿方案最好的发展商后，才再做宣布。

刘敬亿周四到八条路网寮，向当地居民做出解释时说，占地4.32依格的八条路网寮共有96户居民（83户有家庭，13户单身），其中43户拥有临时地契，另外6户是租户，剩余的则是没有临时地契房屋。

他指出，州政府对拆屋重建已拟定基本的赔偿方案，拥有临时地契的房屋必须“1间赔1间”，因此，该区43户拥有临时地契的房屋，都可以获得“1间赔1间”。

他说，州政府才刚于本月15日开始征收计划书，截止日期为3月15日，还未收到任何的计划书，对于没有临时地契和租户的赔偿方案，则还未有定案，必须待州政府在这些计划书中，选出最好的计划和赔偿方案后，才再向居民公布消息。- 光华

Property prices won’t fall after the GE, say experts

FOR some, the sooner the general election is done with, the better.

“We have been waiting for nearly a year for some projects to come through but it looks like everything has slowed down for the general election,” says a foreign consultant in frustration. His firm has been bidding on a couple of high-profile property projects.

Now expected to happen in March after Chinese New Year and during the school holidays, the suspense will end soon enough. If a repeat of the 2008 results happen, however, the consultant fears that the business he needs may go down the drain.

Several investment analysts also believe that property development has slowed down due to the impending elections.

However, the property market should “come back” after the general elections are over, Hong Leong Investment Bank said in a recent analyst report.

Some even say that the country’s economy will go up or down depending on the outcome.

“A two-thirds majority win by BN would ensure political stability, accelerate private and foreign direct investment and enable the execution of proposed projects announced under the economic transformation programmes,” said JP Morgan’s MorganMarkets Malaysia strategy report. A win by Pakatan Rakyat, however, would lead to policy changes and breed uncertainty for at least nine to 12 months, it stated.

Talk to most key people in the industry, however, and they believe the election has very little impact.

“I’ve not seen any major change in property transactions and prices before and after any side winning,” says former Valuation and Property Services Department director-general Datuk Mani Usilappan.

“If there was any major movement, it was because of the Asian financial crisis in 1997 and 1998, not because it was an election year,” Mani says.

“Residential property is the bread and butter of the industry,” says Real Estate and Housing Developers’ Assocation Malaysia (Rehda) president Datuk Seri Michael Yam.

“It is not proven that political uncertainties will necessarily seriously impact or lead to catastrophic collapse of prices, particularly of residential homes. For the average guy on the street, they still need to eat and clothe themselves, and have a roof over their head,” Yam says.

What really affects the market is pure supply and demand, he insists.

“Based on Government numbers, there were about 200,000 marriages in 2011. However, the completion of houses in 2009, 2010, and 2011 had been about 110,000 each year. There’s not enough houses to meet demand.”

The public should not fear that pre-election goodies such as infrastructure and affordable housing projects will vanish if the government changes hands, suggest industry leaders.

“With regards to the MRT, the government of the day has made contracts with certain entities and any incoming government has to continue with them, they have no choice” says Fiabci (International Real Estate Federation) president Yeow Thit Sang.

“But if the Opposition wins, they may tighten the screws, make sure there are no leaks. Like when they took over Selangor in 2008, they maintained the Alam Flora contract, but scrutinised their work carefully. When it was up, the state government took it back and did it themselves.”

“Any government that comes in will be equally committed to extensive infrastructure development because we need it,” agrees valuer Mani.

“If any party tries to curtail it, they will not be very popular.

“I am quite certain the incumbent will try to increase the amount of expenditure on infrastructure to improve the economy.”

Developments to benefit from proposed MRT 2 and MRT 3 lines and KL-Singapore high-speed railway are KL Metropolis and the ex-Unilever government land project, as well as SP Setia’s KL Eco City and Setia Federal Hill projects, says Maybank IB’s research paper Property Developers: Pain First, Gain Later.

Then there are YTL Land’s Sentul projects, MRCB’s Sentral project, UEM Land’s Mont Kiara projects and Mah Sing’s M City project.

Property companies to benefit from Barisan Nasional doing well would be IJM Land Bhd, and Umno-linked companies like UEM Land Holdings Bhd, MMC Corp Bhd and Malaysian Resources Corp Bhd (MRCB), according to JP Morgan’s report.

Government-linked companies such as MRCB, UEM Land and SP Setia will most likely get plum jobs in government land developments such as the prime Sg Buloh RRIM land, added Maybank IB’s paper.

“However, we believe other developers with strong track records like Mah Sing, Glomac, IJM Land and YTL Land also stand a good chance of securing bids.”

Some projects however, have fallen through because of a regime change. An engineer who worked with a high-end residential project in Langkawi complained that the project stalled after the Kedah state government was taken over by Pakatan Rakyat.

“Some approvals were promised but did not make it before the government changed,” he said. The engineer has now come to Kuala Lumpur to work on another project.

Other projects were resurrected after a change in government. After being “put off” by previous state leadership, Berjaya Land Bhd returned to developing in Penang after the 2008 elections, its group chairman Tan Sri Vincent Tan has said.

Utlimately, the property business is a pragmatic one, suggests a property developer who wishes to remain unnamed.

“Look at Syed Mokhtar’s DRB-Hicom developing all that land in Kedah,” he said (the company may develop Rebak Island, off Langkawi, to become an exclusive Hamptons-like summer retreat, according to a recent report).

“Do you think they care that it’s an Opposition state now?”

“I don’t think it matters who takes over, there will be a couple of months of flux, but I think after a while, it will stabilise,” says Fiabci president Yeow.

Rehda’s Yam agrees: “Penang, Selangor, Kedah and Kelantan after 2008 have not seen prices come down.

“In fact, after the initial settling in, capital values were on an uptrend. Sure, after the formation of the new state governments, developers faced some problems because their normal routines were affected. The new Government wanted to review policies and look at procedures which led to approvals being delayed.

“But in general pragmatism sets in and most states recognise that property contributes a multiplier effect and is an engine of growth. If you look at the accounts of these state government, a substantial amount comes from property related activities. It’s business as usual.”

Whoever wins will have to tackle prices being out of step of incomes.

“There are a lot of people who think that there’s a need to curb speculation with a higher real property gains tax,” adds Mani.

Zerin Properties CEO, Previndran Singhe, hopes that political will, will be maintained for affordable housing on the ex-RRIM land in Sungai Buloh “by going vertical and having three MRT stations on the site”.

“This is perfect for the government to provide affordable housing instead of just using government land for luxury or commercial development.”

At ground level, senior real estate negotiator Lena Ching believes that the most important factor is interest rate.

“But neither party will raise this anytime soon,” she says.

“And if they were to do anything about crime and transportation, that would boost the property market!”

In the long run, Fiabci’s Yeow likens the government to property managers who maintain the common areas of a property.

“If there’s good governance and infrastructure, properties will appreciate,” he said.

Ultimately, while individual players and companies may vanish or suffer throughout the elections, it will hopefully bring about a competition of ideas and abilities which will result in a better environment for us all. In that spirit then, let the games begin. - The Star

Read the full story at www.starproperty.my, a next-generation portal that provides all the necessary information for buyers to find their ideal properties. It is offering free real estate listings until Feb 28.

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Property prices seen to moderate

THE Valuation & Property Services Department (VPSD) of the Finance Ministry had been quoted from a news report that the key takeaways of the VPSD's official view include that the Malaysian property market is expected to be sustained at a lower growth rate in 2013, with growth in the number of transactions to moderate.

According to the VPSD, residential properties in certain locations would still be able to see a price increase, and that overall, it expects property prices to moderate amid more houses up for sale this year.

At the same time, the managing director of CH Williams Talhar & Wong said measures by the government, such as an increase in the level of real property gains tax and a 70% loan-to-value ratio for third residential property, has had a psychological impact on buyers and was putting a brake on transactions.

It is difficult to quantify the financial impact, but the macro scenario is applicable to Malaysian developers across the board, in our view.

We are encouraged to note that the abovementioned points are largely in line with our house view of the key sector trends for 2013, namely moderation of overall launches and sales in 2013, property prices likely to hold steady and intensifying competition as successful developers will need to be more selective of projects where they can compete on affordability and pricing.

We continue to regard landbank location as the key driver. In this regard we favour Glomac Bhd, as it is well positioned for 2013 with its highly-successful flagship Lakeside development at Puchong, whilst offering a rare combination of value (5.6 times financial year 2013 estimated price-earnings ratio), 4.9% dividend yield and growth.

Meanwhile the risks include sharper than expected economic slowdown and sudden loss of holding power by Malaysian home-buyers leading to a spike in non-performing loans (NPL) ratios.

The positives include asset reflation theme remains intact; the affordable segment remains untapped and Johor to start outperforming after years of neglect and under-performance.

However, the negatives include slowdown in demand for mid or high end segment, banks exercising more restraint and prudence in processing applications and granting approvals.

Our top pick is Glomac as it still offers the growth element in addition to an attractive 4.9% dividend yield while trading at a mere 5.5 times financial year 2013 estimated price-earnings ratio, but liquidity remains lacking. We give it a buy call with a RM0.97 target price. - The Star

How to seek compensation for late delivery of your house

AS a victim of an abandoned housing project, I wish to share my experience with people in a similar situation.

If you are fortunate to receive the keys to your house, which is delivered after the agreed date, you can claim for late delivery compensation from the developer by lodging a report with the Housing Ministry in Putrajaya.

Make a phone call to the ministry and bring all the relevant documents needed to register your case.

Upon registering, the ministry will fix a meeting between the developer and yourself, usually in about two months.

During the first meeting, make your claim against the developer by demanding full payment in which case the developer will bargain by proposing a lower compensation figure.

Give valid reasons for your claims.

If both parties cannot agree, the judge will decide.

If you are happy with the amount claimed, then ask for a lump sum payment. If agreeable, your case will be settled in about four months.

Another way is to engage a lawyer to fight your case.

This will take you a year if you are successful in getting a judgment against the developer.

The developer will seek ways to delay the case and you being the plaintiff, will have to go through anxious periods of not knowing whether the developer is going through the process of winding up his company to escape paying compensation.

Remember, speed is the essence here.

Therefore, the fastest way to realise your compensation claim is to register your case with the Housing Ministry because the developer fears the ministry’s summons.

The developer will be present himself because he is afraid the ministry will blacklist and issue a stop-work order against his other ongoing projects. - The Star

VICTIM

Mantin, Negri Sembilan

Property prices to keep rising

PETALING JAYA: High property prices are set to “keep increasing” in certain areas with good fundamentals, said the Association of Valuers, Property Managers, Estate Agents and Property Consultants (AVPEP)president Lim Lian Hong.

“In certain areas, property prices will keep increasing. The property market is backed by the country's economic fundamentals.

“It is better not to try to guess which one will go up and which one will come down. This is because the property market is not (volatile) like the stock market,” Lim said.

He said the prices were also determined by other fundamentals such as population growth, access to highways, and also types of design and finishes that a particular property offered to buyers.

Speaking at a briefing during the Property Market Outlook For 2013 forum organised by AVPEP, Lim said other important factors to include in evaluating a property was its surrounding area such as other upcoming developments.

He also said credit had to be given to certain developers for being able to market and sell their products so well in spite of the high prices.

“They (the developers) have been able to develop properties so well that sees values go up and this is good for everybody,” Lim added.

He said that another factor which influenced property prices was the supply-demand factor.

“If you ask me (specifically) in which areas the prices will go up or down, you will have to look at the supply and demand (equilibrium),” he quipped.

AVPEP honorary secretary Foo Gee Jen said another factor was the property's access to transportation facilities roads, rails or highways.

“In some areas today, even a Chinese school (situated nearby) may be key to an increase in land values. We are starting to see that,” Foo said.

On a related matter, Property Services and Valuation Department deputy director-genaral (technical) Faizal Abdul Rahman said that 2013 might see some “adjustment” in property prices.

“The increase in prices will not be as high as in previous years. Prices this year will moderate, depending on the area.

“Incoming supply in terms of numbers will be more than in previous years but the growth percentage will be less,” Faizal said. - The Star

Tribunal to address strata management disputes

KUALA LUMPUR: A tribunal to address strata management disputes such as the failure to pay management fees in an apartment complex is being set up, said Housing and Local Government Minister Datuk Seri Chor Chee Heung.

This was to enable the tribunal to be up and running once the Strata Management Act 2012 came into force later this year, said Chor, adding that the Act was expected to be enforced bet­ween the middle and third quarter of the year.

“The tribunal will ease the burden of building managers in handling disputes, including cases of apartment unit owners failing to pay management fees and issues on the election of committee members.

“With this tribunal, such disputes need not be taken to court and can be resolved with minimal costs. Complainants can just file a case with the tribunal,” he said after launching the Property Management Time Bomb Seminar “Strata Management – More Solutions or Problems” here yesterday.

The tribunal, said Chor, would handle cases which did not exceed RM250,000.

“Tribunal members will comprise retired judges and lawyers with at least 10 years of experience in the field. They will take turns to sit in the tribunal,” he said.

The tribunal, he added, would also be set up in states with many high-rise buildings, such as Penang.

Among others, the Act allows for the streamlining of management practices of the joint management body and management corporations of stratified properties, such as condominiums and apartments.

The ministry, said Chor, was currently waiting for the royal assent to be granted before the Act could be gazetted.

To further enhance efficiency, he said the Commissioner of Buildings (COB) Department in local councils would have a full-time deputy to address problems concerning high-rise buildings.

“The department will also have an additional four to five employees. This is all at the expense of the Federal Government,” he said.

The move was introduced as some COBs were also local council presidents or mayors who might not be completely available to address issues on high-rise buildings due to their other responsibilities, he said. - The Star

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Credit Suisse: S’pore property prices to stay flattish

PETALING JAYA: Singapore’s residential property prices are likely to remain flattish, supported by low vacancy and strong affordibility in the wake of the city state’s seventh round of cooling measures, a report by Credit Suisse said.

The research house said it expected a further 5%-10% downside risk for the prime (high-end) end due to the vacancy, mitigated by mild increase in the mass and mid-market.

The Singapore government introduced the seventh round of cooling measures about a week ago which takes effect on Jan 12 this year to ensure housing remained affordable to Singaporeans.

The report said that with Singapore’s low interest-rate environment here to stay, a lack of attractive investment and the anticipated growth in household income driven by the tight labour market with unemployment at 1.9%, property could continue to be one of the key investment products.

The report also highlighted that higher construction costs and rising land costs could translate into an upward risk for prices.

The report said the government would manage supply “to avoid significant oversupply” as well as price to “balance affordability”. - The Star

Residents upset at being kept in the dark over proposed project

GEORGE TOWN: Residents of Gat Lebuh Sandilands have accused the Penang Government of failing to live up to its Competency, Accountability and Transparency (CAT) policy when planning a housing project in their area.

State Barisan public complaints bureau vice-chairman Lee Hack Teik, who was highlighting their plight, claimed the residents’ views were not consulted on the project.

“They wanted to know how they would be compensated. They also do not know when their houses would be demolished and where they would be staying during the development.

“They are not against the development. They urge the state government to be transparent and provide them with answers to their queries in black and white,” he told reporters at the residents’ houses off Gat Lebuh Cecil yesterday.

He said there were 54 houses — 23 with Temporary Occupation Licence (TOL) and 31 without TOL.

He added that the residents also wanted to know the fate of the temples, small factories and commercial offices in the area.

It was reported on Jan 17 that a request for proposal for an affordable housing project on a 1.7ha plot in Jalan C.Y. Choy had been made.

Penang Local Government and Traffic Management Committee chairman Chow Kon Yeow had said 200 to 300 units of affordable and low medium-cost units would be built as a state government project.

Chief Minister Lim Guan Eng had said bidders must take into account the amount of compensation for those now occupying the land.

A resident, Lim Cheng Hai, 50, said he was shocked to hear about the project which he only knew about from the newspapers.

When asked if he would be willing to move, he said he had been staying there for over 40 years and would still like to stay there if compensated with an affordable unit.

At press time, Chow could not be reached for comment. - The Star

Developer of RM240mil project targeting buyers from Hong Kong and Singapore

MAH Sing Group Bhd is targeting buyers from Hong Kong and Singapore for its RM240mil Emaryl Condo Villas project in Batu Ferringhi, Penang.

Group chief operating officer Teh Hong Chong said the group had received feedback indicating strong interest for the project from investors in both countries.

“It is not surprising the project has drawn interest from these countries as the units are priced from RM1mil onwards, which is very competitive compared with property of similar range found in Hong Kong and Singapore.

“Furthermore the property is located in a renowned resort area, and is a stone’s throw away from well-known resorts such as Rasa Sayang Resort & Spa, Holiday Inn Resort and Hard Rock Hotel,” Teh said.

The project was launched on Saturday at the Mah Sing sales gallery in Batu Maung.

Emaryl Condo Villas is spread into 20 five-storey blocks, with 10 units of condominiums per block.

“There are only two units per floor, each with built-up areas ranging between 1,510sq ft and 1,752sq ft, to ensure exclusivity and privacy.

“We also provide lifts and 479 car parks. The range of recreational facilities include infinity pool, water lounges, lifestyle cafe, gymnasium and cycling path,” Teh added.

On its Southbay Penang project in Batu Maung, he said the linked property there had appreciated significantly since their launch four years ago.

Priced around RM700,000 to RM800,000 four years ago, the linked units are now transacted at RM1.2mil to RM1.3mil at the sub-sales market.

“Also very popular among foreign investors are the bungalow units with built-up areas of 6,000sq ft to 7,000sq ft, priced around RM4mil to RM5mil, as they are very rare on the island nowadays.

“The 76 bungalow units, launched two years ago, are in advance stages of construction,” Teh said.

For Southbay City in Batu Maung, Teh said the group planned to launch a second tower block of 150 condominiums in mid-2013.

“All the condominiums will front the sea and will have built-up areas ranging between 1,000sq ft and 1,800sq ft.

“A shopping mall that will enhance the values of our property in Batu Maung is being a planned for Southbay City next year,” he added. - The Star

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Penang residential prices to rise 8%

RESIDENTIAL property prices in Penang are likely to rise by 7% to 8% by the first half of 2013 due to the steady demand and a stronger gross domestic product (GDP) projection for 2013.

According to the latest Finance Ministry report, the GDP forecast for 2013 is between 4.5% and 5.5%, riding on the growth in the agriculture, construction, mining, manufacturing, and services sectors.

Raine & Horne Malaysia director Michael Geh says new properties launched with a bundled-up financial package would be most popular.

“This is why this segment will perform better than those properties in the sub-sales market, where the buyer and seller have to do more paper work,” he says.

Currently, the price for terraced property in prime locations such as Tanjung Bungah and Tanjung Tokong is around RM1.2mil to RM1.5mil.

The selling price of development land in prime locations ranges between RM450 and RM1,000 per sq ft.

“The stringent guidelines for housing loan, now based on the evaluation of net income rather than on gross income and the difficulty in obtaining the desired valuation report will mean that the sales of condominiums in the secondary market will face more challenges,” he says.

The new guidelines from the Penang government for foreign purchasers to buy only high-rise and landed properties priced from RM1mil and RM2mil respectively will impact adversely on foreign property transactions in Penang, according to Geh.

“More foreigners will prefer to rent than to buy, thus one can expect rental yield in the state to increase gradually,” he adds.

According to the latest National Property Information Centre's (Napic) property market report, total transactions for residential properties in Penang hit around 18,316 for the first nine months of 2012, with a transacted value of RM5.2bil.

The whole of 2011 saw the state registering some 30,674 residential property transactions valued at RM7.7bil.

Geh says the total volume of property transacted for 2012 was unlikely to catch up with 2011's.

“That the total value of property transactions has risen although the volume transacted has decreased is not surprising, as this is normally the trend,” he adds.

PPC International Sdn Bhd director Mark Saw says the lower volume of transactions may be because housing loans are harder to obtain nowadays.

“Another reason could be that the preferred choice of properties might not be available,” he says.

Malaysian Institute of Estate Agents deputy president Siva Shanker says Malaysia is unique as property prices have not dropped following the decline in transactions.

“In fact property prices will hold and then shoot up when times are good again,” he says.

Penang Master Builders & Building Materials Dealers Associationpresident Lim Kai Seng says construction cost will likely be maintained in the first quarter of 2013.

“Although sand prices have gone up, the smaller volume of construction jobs available is offseting the impact of rising sand prices.

”Due to the competition for jobs, construction cost will be maintained,” he says.

The price of sand per load of 30 tonnes is around RM1,200, compared to about RM800 in early 2012.

Since the price of cement went up in August, the cost of construction has increased by about 3%, Lim says. - The Star

The need for balance

KHONG & Jaafar group of companies managing director Elvin Fernandez (pic) says the world is more complex and dynamic than people understand it to be with many forces at work, on a regional and global basis.

A long time ago, people do not worry about the housing market. This changed with the collapse of the US housing market in the global 2008 crisis, which wrought damages of considerable global scale.

Economists, thinkers and regulators are beginning to realise that there is a need to control the housing market so that it can contribute to growth and human welfare, rather than become a force that from time to time damage the economic growth and human welfare.

“The question is how? In the past, economists and regulators of the economy use fiscal and monetary measures to guide the economy. When they want to promote growth, they lower interest rates, when it is overheated, they increase interest rates. They did not focus too much attention on the housing market per se because it is was (just) one sector of the economy,” says Elvin.

But this sector stores the wealth of the citizens. It is bigger than their cars and any other single item they are going to buy. So, if the wealth of all their houses are affected, there will be many knock-on effects. They will spend less and hold back on consumption. Post-global financial crisi, governments around the world realised that they need to monitor the sector, he says.

Apart from the property market, there are also concerns about the effects of money flooding the market, known as quantitative easing. When interest rates are reduced, investors go to other areas in search of higher yields.

Money have been flowing into the economies of the emerging markets and East Asia, in particular the residential markets of Sinagapore and Hong Kong.

“Both these countries were the first small economies to rely on monetary and fiscal policies to contain the housing market and to introduce what they coin as macro prudential measures targeted at the housing market so that these markets do not become inflated,” he says.

These economies are the most opened to these kind of forces. Singapore has its seventh round since 2009 and Hong Kong, which pride itself as a free market and do not interfere with market forces, has also taken measures.

Properties in Malaysia are not as high comparatively as these countries in the region, but we are also expanding in many ways, not on the same scale as them.

“The question is: Do we need further measures? We have to have a balance. If you interfere, you may kill the market so you must stike the right balance. My opinion is, because of the vigilance of Bank Negara Malaysia, we generally have a balance. What is the fundamental equilibrium?” he asks.

As a result of some of the cooling measures, the secondary market has cooled more than the primary market. The primary market, when you buy from the developer, has reacted differently because developers are giving incentives in the form of interest bearing schemes, payment of stamp duty, guaranteeed rentals and other things.

Elvin says the relationship between the primary and secondary market (buying from developers versus buying from owners) have changed. Sales used to be 20% from the primary market 10 years ago but suddenly, this is quickly moving towards the 30% mark, boosted by incentives given.

“When every or nearly every developer sell with these incentives, there is a need for monitoring because these can unbalance the market and could have long-term effects. These incentives also distort pricing because you will never know what is the real selling price as not many know how to deduct all these to get to the real price.

“And pricing is a very important factor for any market, whether it is housing or whatever. Loans are also given based on the wrong price and this affects the banking sector and loan securty is affected.

“You can say this is unhealthy. There is a need for regulation so people know what the price is. Developers must be able to declare what the price is without the incentives as we are wary about these incentives taking the market too high,” he says.

As for prices going back to before the hike, this is not a reasonable thing to ask because prices to trend upwards.

“The price of housing will not go down, but pricing must adjust to household income and not the other way around. - The Star