Disconnect in price vs yield

THE rental yield for residential and commercial properties in Penang is expected to decline this year, as property prices are expected to rise by another 7% this year.

Raine & Horne Malaysia director Michael Geh says the problem is that rents and property prices have been increasing disproportionately over the past three years, which influences yield returns.

To calculate the yield per year, rent per month is multiplied by 12 months and divided by the market value of a property.

“In 2010, for example, the rent for a 856sq ft condominium in a prime area like Gurney Drive was around RM1,800 per month, while the market value was RM450,000.

“This would result in the yield per year of 4.8% in 2010.

“Today the rental has increased about 22% to RM2,200, while the market value has increased by about 44% to RM650,000 from RM450,000.

“The yield currently is 4.06%, registering a drop of 15.42%,” he said.

For heritage properties in a prime area of George Town like Muntri Street, the yield per year is currently 2.4%, compared to 2.67% in 2010.

“The rent in 2010 was RM2,000 and the market value of the property RM900,000, generating a yield of approximately 2.67%.

“At present, the rent is RM2,800, while the market value is around RM1.4mil, resulting in a yield of 2.4%.

“We expect property prices to rise about 5% to 7% this year, while rents should increase slightly, causing rental yields to plunge further, as it never keeps pace with rising property prices,” Geh said.

For office properties with built-up areas of 700sq ft to 3,000sq ft, the drop in yield has been slight, as their increase in market value has not been that rapid.

“In 2010, the rent for office properties was around RM2.20 to RM2.90 per sq ft, while the market value then of RM250 per sq ft to RM350 per sq ft generated yield of 6% to 6.5%.

“At present, the rents are still more or less the same as in 2010, while the market value is now RM300 per sq ft to RM450 per sq ft, generating yield per year of 5% to 6%,” Henry Butcher Malaysia (Penang) vice-president Shawn Ong said.

Ong said the market value of modern office properties had increased because of the preference to buy them rather than to rent, because of the attractive selling prices of such properties.

“The market value has also risen due to the limited supply of modern office properties,” he said.

Ong said about 70% of the office space on the island was currently occupied.

“The rents for modern office space will remain stable this year while the rents for older office buildings will decline further to attract new tenants as they are suffering from poor occupancy,” Ong said.

On actual property prices for residential properties in the secondary market, Ong said the transacted prices are usually about 30% more than the initial price tag of the property.

“This means a property bought originally for RM500,000 is likely to be sold for around 30% higher than the original price.

“The asking price is usually around 40% to 50% more than the original price,” Ong added.

Lim Chien Aun, proprietor of registered and chartered valuer C.A. Lim & Co, said rental returns on the island are unattractive because most investors buy properties in Penang for capital appreciation and not for rental returns.

“In other words, they buy for speculative purposes.

“The fact that rents in Penang are not rising as fast as property prices reflect also on the income levels of Penangites.

“The poor demand in Penang for rental properties also explains why rents are unattractive,” he said.

For retail properties, Lim said, generally, the monthly rent in prime shopping malls on the island starts from RM20 per sq ft for retail lots on the ground floor and RM10 per sq ft for the first floor.

“There are instances of shopping malls that have leased out their retail lots on the ground floor for monthly rent of RM35 per sq ft and RM30 per sq ft for the first floor.

“This is normally for a contractual rental period of three years with the option to rent another for three years under more or less the same terms and conditions.

“Every year the rent increases by about 5%,” he said.

Meanwhile Henry Butcher Retail managing director Tan Hai Hsin said, similar to Klang Valley and Johor Bahru, Penang has been facing an oversupply of retail properties for many years.

“Similar to these two cities, the supply situation for retail space is extreme. Popular shopping centres remain popular with car park full on weekends.

“On the other hand, poorly occupied shopping centres continue to suffer due to poor occupancy and shopper traffic.

“The situation has not worsened, because there has been no major retail supply entering the Penang market in the last few years,” Tan said, adding that later this year, the Gurney Paragon shopping mall should be opening up.

“Over the next two to four years, several shopping malls should be opening in Penang.

“These include the AEON Mall in Bayan Baru, Penang Times Square Phase 3, the shopping mall by IJM Land planned next to the Penang Bridge, the shopping mall at Southbay Plaza in Batu Maung, The Landmark in Tanjung Tokong, and a 1,000,000 sq ft mega mall in Prai by the Belleview Group,” he said.

According to Tan, the retail market in Penang is already very competitive and rather saturated, .

“New mall developments near the existing bridge and the new bridge will offer more potential as they can draw shoppers from the mainland as well as residents from northern region of Peninsular Malaysia,” Tan added.

Meanwhile Penang Times Square general manager C.C. Yeap said the rents for the shopping mall increased slightly over 2012.

“We are 71% occupied and progressing well. The daily traffic for the mall registered at 6,528 for 2012,” he said. - The Star

Bustling and booming

THE once small town of Bukit Mertajam is thriving with shopping malls and new housing schemes.

Over the years, locals have seen a spate of shopping malls such as Aeon City in Bandar Perda and Tesco hypermarket in Jalan Rozhan, Alma.

Old-world charm: A view of the quaint town of Bukit Mertajam with its pre-war shophouses.

A slew of residential housing pro-jects includes Villa Lagenda and Bayu Mutiara located near the town centre.

Senior citizens caught in the development frenzy are constantly reminiscing the good old days.

The parliamentary constituency covers three state constituencies — Berapit, Machang Bubuk and Padang Lalang.

The town which is also popularly known as Da Shan Jiao in Mandarin is unique because it has a little bit of everything that defines the culturally rich enclave of Penang.

This includes the annual grand candlelight procession during St Anne’s Feast to the biggest Tai Su Yeah (King of Hades) send-off during Hungry Ghost Festival.

Tourists have also come from around the world to experience the laid-back Malay culture at the small village of Mengkuang Titi homestay programme.

However, beneath the small town charm of Bukit Mertajam with a compelling blend of diversity, lies several issues which include traffic conges-tion and poor public transportation system.

The pace of modernisation has resulted in skyrocketing house prices.

The price of semi-detached terrace houses in some of the fastest growing areas in Bukit Mertajam has rocketed up to RM1mil while certain double-storey houses are priced at RM500,000.

A trader who wants to be known only as Lisa, 27, from Kampung Guar Jering, is concerned over the lack of affordable housing in the constituency.

“This has resulted in many people being forced to stay in rented premises.

“Though I have been saving for some years to buy a house, I was disappointed when I last saw a double-storey terrace house in Penanti costing RM280,000,” she said.

Lisa added that the skyrocketing house prices had hit hard those from low-income groups.

Food stall operator Azman Ishak, 52, voiced similar views saying there was a need of more affordable housing.

“Though prices of property are increasing annually, there is a lack of development or upgrading of facilities in Bukit Mertajam,” he said.

“For years, we have only one proper wet market and a hospital within the surrounding area.

“How can they accommodate the growing number of residents who are moving into new housing projects?” he asked.

Having lived in Taman Sejahtera, Alma, for the past seven years, clerk M. Sharas, 50, said there was a need to revamp the public transportation system.

“I rely solely on public buses to get to my workplace in Butterworth and also to go around the Bukit Mertajam town.

“Unfortunately, there is no Rapid Penang bus that passes through my housing area,” she said.

Her elder sister Dewi, 55, said the number of buses in residential areas was not enough to service the needs of the people.

“It is a long two-hour wait for the buses. It is especially troublesome during an emergency when we need to rush someone to hospital,” the factory worker said.

Scrap metal dealer Lee Chien Poay, 53, said the heavy traffic had led to chaos during peak hours.

“It happens mostly during school rush hours in the mornings and afternoons.

“Jit Sin Independent High School, SMK Convent Bukit Mer-tajam and SJK (C) Kim Sen are located just a stone’s throw from one another. The jam is bad there,” he said.

Bridging local needs: A new flyover constructed next to the abandoned Mayang Mall to ease traffic congestion.

Lee said despite the additional flyover linking Jalan Maju-Jalan Song Ban Kheng and Jalan Kulim, traffic was still heavy after school hours.

“There are severe traffic crawls up to Jalan Usahaniaga which links to the Bukit Mertajam town,” he said.

He hoped the construction of a flyover between Jalan Nangka and Jalan Sungai Rambai heading to Juru Auto City, which was expected to be completed next year, would ease traffic congestions.

Coffee shop owner Ang Tat Len, 62, urged the authorities to look into overcoming traffic crawls on weekdays.

Born and bred in Bukit Mertajam, Ang spent his early years working in Singapore and stayed in Johor Baru for several years.

“During the late 1990s, I decided to move back to my hometown to retire here.

“However, this is not the small town I used to live in. I prefer a carefree lifestyle with less traffic and houses sold at affordable prices,” he said. - The Star

Hearing into hillslope project objections to go on next month

The hearing into the local residents’ objections to a hillside development project in Sungai Ara before the Penang Appeals Board will continue next month.

Board chairman Datuk Yeo Yang Poh fixed April 16 and April 17 for the proceedings.

He was presiding over an appeal by several residents who were against the hillslope project because they feared that the project would en-danger their homes and the environment.

Appearing on behalf of the residents was Datuk Lakhbir Singh Chahl while lawyer Christina Siew represented the developer, Sunway City Development.

In an earlier report on Nov 8, Yeo had questioned the definition of ‘special project’ (projek istimewa).

However, Siew said it was not a new terminology although it went undefined in the Penang Structure Plan 2020.

Yeo then proceeded to question what was special about the Sunway City project as to him, it was as common as any other housing project in the state.

On April 8 last year, a group of 200 residents from various housing estates as well as representatives of non-governmental organisation Sahabat Alam Malaysia staged a protest against the project.

The residents had earlier received a notification from the Penang Municipal Council’s Planning Department that the project was approved on Feb 21, last year. - The Star

35木屋居民遭发展商迫迁 郭庭源将代民交涉

（槟城11日讯）东日落洞马德拉沙路（Jalan Madrasah）木屋区35间居民遭逼迁，双溪槟榔区州议员郭庭源已代表其中一个地主和发展商交涉，并欢迎受影响居民向他求助。

郭庭源接受《光华日报》访问时说，发展商相中该区的土地，不过该土地涉及两个地主，即开山王神庙及尤氏卿田堂。“由于我是开山王神庙顾问，在7月已代表他们与发展商开始谈判至今，虽然双方还未完成协议，不过已获初步的口头认同。”

他说，位于马德拉沙路段的土地是属于尤氏卿田堂所拥有，但不曾接到居民的投诉及求助，不过已做好准备为居民与发展商交涉。由于一些居民须在3月18日上庭，所以欢迎居民在近期内赶快前来寻找协助，以便能加紧脚步地与发展商交涉。

将居民控上庭

他透露，这次木屋区迫迁共涉及35个有门牌的住户，而且居民也在2月份接到律师信，基于当地居民占用土地且没有在限期前搬空，所以将当地居民控上法庭。他认为，前提是居民须达到一致协议，不可以有其他不同要求，否则很难与发展商协商。- 光

IOI集团高庭上诉得直 新港争议山坡计划开行

（槟城11日讯）大马富豪丹斯里李深静领导的IOI集团，在槟岛新港的一项遭市政局否决的山坡发展计划峰回路转，发展商将事件带上高庭上诉得直，驳回槟岛市政局的发展禁令，此外面对居民反对的另一项平房计划也在居民撤回上诉后，同样得直发展。

属 IOI集团的发展公司Palmex工业私人有限公司，在新港的山坡发展计划于去年遭市局否决，造成山坡公寓计划面对腰斩。唯发展商较后通过市政局上诉庭上 诉得直，成功驳回发展禁令，然而据了解，在发展工程拟开动时，发展商面对民众再向市局上诉局上诉。发展商为免夜长梦多，将事件直接带进高庭。

而高庭也于今年1月下判，指示市政局批准计划，为计划打通大门。此外，据本报了解，除了上述计划在高庭宣判下，计划即将通行无阻开动外，在原地另一项同样面对居民阻挠的平房计划，也在居民撤销向市政局上诉庭上诉后，使到计划终将在无阻下开行。

据了解，Palmex工业计划也是继双威集团（Sunway Group）在新港“双威城”（Sunway City）计划遭槟州首长林冠英援引槟州策划委员会（SPC）主席权力喊停后，遭市局否决的另一计划。- 光华

林冠英：民联掌中央与否 海底隧道计划不变

（槟城11日讯）在面对争议声下，槟州民联政府宣称即使执政中央，海底隧道计划也照样会开跑，不会取消，不过计划会拖慢。槟州首长林冠英是在槟州政 府联合槟城论坛（Penang Forum）举行的“隧道及大道”论坛后举行的记者会上，如是表示。约有300人出席在市政厅举行的论坛，使会场座无虚席。

会上，先由槟岛市政局公共工程局主任拉贞德兰汇报工程，接着是槟城论坛代表林马惠市议员发表题为“槟城迈向21世纪？还是倒退”的幻灯片讲解，林冠英则发表槟城宏愿，最后进入提问环节。

共有23人分别轮流发表，其中有9人全力支持政府的隧道配套计划，一人全力反对，部分人当众质疑隧道及大道计划，一些更直指为何在大选前匆忙提出隧道计划，现场也有人提出反建议替代隧道等。

尽管非政府组织已公然提出反对，并曾多次与首长会面，然而论坛上却是各说各的，没有交集，最后州政府强调将依计划进行，非政府组织反对无效。林冠英在会后说，不管是否执政中央，计划还是将继续开跑。- 光华

许廷忠：若废中、廉价屋条例 发展商愿建可负担房屋

（槟城12日讯）汇华产业集团执行主席拿督许廷忠个人认为，如果强制兴建廉价屋及中廉价屋条例废除，发展商将愿意一对一的兴建人民可负担房屋。

在受询人民可负担房屋的屋价时，他说，有“生活方式”的人民可负担房屋，屋价应该是介于25万令吉至30万令吉之间。

他透露，在目前，该集团在槟州的柏淡已动工兴建多达300单位的中廉价房屋，而这些房屋预料于今年杪竣工。他也相信在大选过后，政党的之间的斗争平息后，将能吸引更多中国的投资者前来槟城投资，包括投资产业。

他指出，在以往，该集团的锁定的外国市场为印尼及新加坡，但于未来，它锁定的市场却是中国及欧洲。他是于周二在该集团的一项新闻发布会过后，受记者询问时，如此指出。- 光华

As property prices soar M'sians face the dilemma to sell or buy, or is REITs the answer?

RISING property prices has has brought about two mind-boggling questions posed by property investors: Should I sell my property now that prices have risen? Should I wait for prices to fall before I buy another real estate?

These are hard questions to answer. New property owners are waiting for lower prices whilst current owners are raising their prices hoping to cash in on the price frenzy.

The bottom line is, we just don't know when real estate prices will ever stop escalating. Just when we think prices have stabilised, new property developments are launched at even higher levels!

Instead of buying actual bricks and mortar when investing in real estate, there is as an investment vehicle that offers investors a share in the real estate market in a far more liquid form with the potential to reap higher returns − real estate investment trust, or REIT in short.

Joyce Chuah

REIT is an investment vehicle that proposes to invest at least 50% of its total assets in real estate, whether through direct ownership or through a single-purpose company whose principal asset comprises of real estate.

The main investment theme for REITs is to own and invest in income-producing real estate which can include commercial buildings, shopping malls, hotels, resorts, self-storage facilities, warehouses, apartments and even car park spaces.

REITs are similar to unit trust funds that are professionally managed by an appointed management team to manage the underlying REITed' assets.

The benefit of owning a REIT is that an investor shares in the rental incomes of the real estate owned by the REIT without having to buy these assets directly.

Since it is a traded equity, an investor can profit from capital appreciation of its price as well and it is easily converted into cash by selling it.

Tenant management, maintenance fees, real property gains tax and other payments would usually be taken care of by the managers of the REIT, unlike owning a property directly.

In Malaysia, investors are also given a special withholding tax of 10% on the dividends received from REITs. First introduced in 2006, this is valid until Dec 31, 2016. - The Star

80,000 PR1MA homes for Klang Valley

KUALA LUMPUR: A total of 80,000 affordable homes will be built in the Klang Valley and Federal Territory, as part of the Govern-ment's wealth creation programme for the people.

Prime Minister Datuk Seri Najib Tun Razak said 1Malaysia People's Housing (PR1MA) homebuyers would be able to make immediate profits, as the houses would be sold for at least 20% below market value.

“Such wealth creation is rare. Prices of vehicles depreciate immediately after purchase, but PR1MA homebuyers can expect to make immediate profit, on paper, of between 20% and 30%,” he said when launching the PR1MA Alam Damai project in Bandar Tun Razak.

The project, by Transgreen Structure Sdn Bhd, in collaboration with PR1MA, comprises four types of 2,078 affordable homes on a 6ha parcel of land.

It is strategically located with access to the Middle Ring Road 2 (MRR2) and three MRT (Mass Rail Transit) stations proposed in Cheras.

Najib said the price of the units in Alam Damai would be announced after the local authority had issued the development order.

“But I guarantee that the prices will be at least 20% lower than market rates. If possible, we want it to be even lower than that,” he added.

The Government has so far announced 20,000 PR1MA homes in Kuala Lumpur, 8,000 in Putrajaya, and 2,000 in Labuan.

Najib waving from a show unit during the launch of PR1MA Alam Damai Cheras and PR1MA Homes Klang Valley in Kuala Lumpur. With him are PR1MA Berhad CEO Datuk Abdul Mutalib Alias (left) and Nong Chik (second from left) and PR1MA chairman Datuk Seri Jamaluddin Jarjis (right).

“In view of the high demand and high cost of living, we plan to build another 50,000 PR1MA units in the Klang Valley, bringing the total to 80,000 units,” he told the cheering crowd.

The Alam Damai project is the first development to take place from PR1MA's plans to build 50,000 homes across strategic locations in the Klang Valley, including Cheras, Bukit Jalil, Sungai Besi, Brickfields, Jelatek, Glenmarie, Putra Heights, Cyberjaya and Setapak.

Titijaya, Glomac, Ekovest and Cyberview are among the developers that had pledged support to PR1MA to build affordable homes in these areas.

Malaysians aged above 21, earning between RM2,500 and RM7,000 a month and do not own not more than one home can apply for PR1MA units.

Earlier, Najib also hinted that the general election was drawing near.

Stressing that the Barisan Nasio-nal government took pride in delivering promises, Najib said the time to show appreciation would be arriving soon. - The Star

纳吉：让中阶人民购“一马房屋” 巴生谷将建8万房子

（吉隆坡10日讯）首相拿督斯里纳吉宣布，将在“一个马来西亚房屋计划”下，在巴生谷地区兴建8万间，以让巴生谷及吉隆坡地区的中阶收入的人民拥有第一所房子。

纳吉也表示，参与“一个马来西亚房屋计划”的发展公司在获得发展令（Development Order）后，政府将会公布，在该计划下兴建的房屋价格。

他补充，即使这些房屋价格还未获得公布，但是他保证在该计划下兴建的房屋价格将会比市价低20%，以确保价格是在人民所负担得起的范围。

他指出，这项计划不止是让月收入介于2500令吉至7000令吉的中阶收入人民拥有人生第一家房屋，也让他们在未来能够有更好的生活品质，及可从购买的房屋中赚取利益。