Need to reiterate pledge of confidentiality

(Published in the Star Biz 22nd Feb 2012, page 2)

Plain Speaking - By Yap Leng Kuen

THE heat is on from various experiences of consumers, it looks like banks are determined to follow the prudential lending guidelines set about two months ago.

Or rather, they are faithfully following the guidelines that were handed to them after prior consultations.

Consider this experience of applying for a credit card.

Not only was the payslip required, bank and Employees Provident Fund statements were also requested for.

The message is “this (controlling of household debt) is serious business.”

It is not just the new applicants who come under the spotlight. Existing cardholders with cards approved prior to April 1 , 2011 have to submit their latest income documents to help card issuers determine credit limit and permitted number of cards held per customer.

Household debt stands at above 75% of gross domestic product, an issue of concern for many.

Besides a person's affordability, loan and credit card applications are also scrutinised based on the number of loans already taken, tenure of repayment and sources of income.

In cases when the salary falls short of the required amount, other sources of income will be crucial to determine the level of affordability.

Many customers do understand the implication of this high percentage especially in the wake of the 2008 subprime housing loan debacle in the United States.

However, the need for more personal information has brought about a sense of dismay among consumers who are not used to divulging so much information to strangers.

No doubt, looking at the statistics, one can understand why such prudential and pre-emptive measures need to be taken.

On the personal level, one may not relish the idea of parting with so many details of one's finances.

It is timely for some form of reassurance and commitment of confidentiality of customer information.

This pledge of confidentiality is already present in the documents but it is time to reiterate the pledge in a strong and effective manner.

With the high frequency of crank calls relating to one's financial situation, customers have become increasingly wary of parting with personal information.

Consider this real life encounter.

“Hello, this is inspector so-and-so from police headquarters,'' said the caller who didn't seem to know English but had personal details of the recipient of the call.

For instance, he had the correct identity card number and even challenged the recipient to recall who he could have given his details to recently.

Running through the recipient's mind were places that he could have gone and given a lot of information to the bank, retail stores, lifestyle outlets ...

What seems to be the divulging of a simple piece of data, said to be necessary for background and profiling, can turn out to be a nightmare.

Information that falls on the wrong hands can be manipulated!

Associate editor Yap Leng Kuen believes transparency should be tempered with care.

Consultant assessing bid for late Tan Sri Lee Yan Lian’s family assets

(Published in the Star Biz 22nd Feb 2012, page 6)

By ANGIE NG 

PETALING JAYA: The sale by tender of the five parcels of freehold land in the Klang Valley owned by the late Tan Sri Lee Yan Lian's family has attracted strong interest from bidders.

The closing date for the tender was on Jan 30. Colliers International Property Consultants Sdn Bhd is the property agent for the exercise.

Colliers managing director Teh Teik Bin said the consultancy was now assessing the bids and the successful bidders would be finalised next month.

“The bidders are mostly Malaysians and they comprise both companies and individuals,” Teh said.

The five parcels of land are part of the prime land in the Lee family's estate.

A well-known philantrophist and community leader, Lee was a successful housing developer in the 1960s until his demise in 1983.

An industry observer said that in the wake of land scarcity in the Klang Valley, these parcels were among the last sizeable freehold land suitable for redevelopment into mixed property projects.

In the sale tender, a 7,239-sq-ft land in the prime location of Jalan Bukit Bintang, Kuala Lumpur, has a reserve price of RM50mil. The land is now occupied by The Malaysia Hotel.

The second piece, measuring 276,832 sq ft at 4 miles of Old Klang Road (near the Pearl International Hotel), has a reserve price of RM90mil.

The other three parcels are in Petaling Jaya.

A 265,245-sq-ft plot in Jalan SS23/15 in Taman SEA has a reserve price of RM150mil, and another piece of 82,715 sq ft in Jalan SS2/64, which is currently used as a car park, is going for RM100mil.

A vacant 84,315-sq-ft land made up of seven plots with old bungalows on two plots in Taman Tan Sri Lee Yan Lian in Section 16 has a reserve price of RM25mil.

Banks get cautious in lending and pricing

(Published in the Star Biz 20th Feb 2012, Pages 1-2)

By YAP LENG KUEN 

PETALING JAYA: Banks are watching closely the situation in Europe and China while exercising caution in terms of lending and pricing.

“European banks need to shrink their balance sheets and reduce lending to this part of the world,” said CIMB group deputy CEO and head of corporate banking, treasury and markets Datuk Lee Kok Kwan.

As a result, the local currency bank loan and bond markets would have to absorb some of the US dollar loans that are not rolled over or renewed as European banks retreat from the funding market.

However, that is applicable more in the region than in Malaysia which has almost negligible foreign currency debt or loans. Malaysia's ringgit bond market and banking system are more than able to meet the funding needs of corporations and the public sector.

As the Asian financial crisis in 1998 has proven, reliance on foreign currency funding was toxic for both the sovereign and its corporates. This was again vividly demonstrated in 2008 and in 2011. As a result, the country did not have much foreign currency debt.

For CIMB Group, it is business as usual. “Hopefully, it will be an orderly shrinkage in Europe as it brings its fiscal spending back in line,” said Lee.

In the case of China, all eyes are on whether it has achieved its domestic inflationary targets.

“If China starts their bank statutory reserves, currently at 21%, the impact on the rest of Asia's economy can be significant. In view of these uncertainties, the message is to exercise utmost caution.

“We are monitoring the first half which would be driven by global events. The message is be careful, and not be aggressive' especially on pricing, as global market conditions remain uncertain and potentially volatile even though it looks less perilous now compared with the second half of 2011,” said Lee.

Hor Kwok Wai, chief operating officer for global markets, Hong Leong Bank, said the bank's core business was still in foreign exchange.

In the last one year, interest rates had been volatile as the market speculated on whether interest rates would remain or be cut if there was a weakening in growth figures. Volatility gave rise to more hedging opportunities.

“We have not seen any big move in doing things,” he said. “There has been an increase from clients in hedging their interest rate exposure.”

However, in the last few months, there was more activity in the credit space as cash-rich investors bought offshore credit. At the moment, the most liquid offshore credit is the US dollar.

In Malaysia's case, these comprised the Petroliam Nasional Bhd and government dollar bonds sold offshore. “The offshore credit market is outperforming the onshore,” said Hor, adding that another dose of cheap cash was expected from the European Central Bank via a long-term refinancing programme at the end of the month.

This gives European banks long-term credit resulting in more investment activities and paying down of maturing bank debts.

“There is a lot of investment and strategising on our treasury side for clients of non-ringgit credits,” said Hor. “We have put more sales and trading people into the offshore credit market.”

A lot of US dollar liquidity has returned to the Malaysian market compared with the situation in September and October. That was when there were some withdrawals from the onshore market and pricing of foreign currency loans had increased.

However, Malaysian institutions do not have much foreign currency assets onshore and hence would move offshore seeking returns. “We see increased client interest in the offshore business which is experiencing exponential growth,” Hor said.

AmBank group managing director of markets Yvonne Phe said the rates/credit business was still vibrant especially in times of low rates and companies were still looking at infrastructure projects.

Demand for luxury houses seen to be flattish

(Published in the Star Biz 21st Feb 2012, page 3)

By THEAN LEE CHENG 

PETALING JAYA: Demand for houses priced around RM1mil has dropped and is expected to be flattish throughout this year, a reflection of real estate transaction volumes across the Asia-Pacific, an online survey in Malaysia and a Hong Kong-based report show.

External uncertainties, the general election factor on the local front and a general wariness about a possible bubble in the Malaysian market had dampened the market, said iProperty Group chief executive officer Shaun Di Gregoria.

“We are seeing a reduction in volume for the top-end market. Rental is also expected to come off a bit for the top end,” he said after launching the result of an online survey at iproperty.com.my conducted from Dec 5, 2011 to Jan 19, 2012 involving 3,459 respondents.

The findings are supported by telephone interviews with two property agents.

Despite that, Di Gregorio said, Malaysians were expected to continue to be upbeat about the property market, with interest seen mostly in properties priced between RM400,000 and RM500,000.

The survey revealed that 35.7% of the respondents considered themselves property buyers while 26.2% identified themselves as property owners.

This is part of the first cross-market online property survey conducted by the iProperty Group covering Singapore, Indonesia, Hong Kong and Malaysia that attracted about 8,500 respondents.

Di Gregorio said although various measures had been taken by the authorities to discourage speculation, the Malaysian property market continued to be friendly to buyers.

He said Malaysia was the number one destination for Singaporeans as property prices here were still affordable to them.

“Yield in Singapore and Hong Kong is low because of the high capital cost there. The United States and Europe have their own challenges, so South-East Asia will increase in popularity, with Malaysia being a good market to be in throughout this year. There is positive sentiment to invest here,” he said.

About 40% of the Singaporean respondents said Malaysia was their preferred destination, followed by Australia (19.4%).

Meanwhile, about 40% of Malaysians considered Australia as their preferred overseas property investment destination, 19.8% liked Singapore and 13.7% chose the United Kingdom.

While iProperty Group paints a positive picture of the local property market, 58.6% of those who responded to the survey in Malaysia believed there is a property bubble in this country versus 53.85% of those who responded in Singapore.

On a larger scale, the drop in transaction volume is also reflected in the Asia-Pacific. A quarterly report by the Asia Pacific Real Estate Association (APREA) and Real Capital Analytics said there was a 32% drop in real estate transaction in the Asia-Pacific year-on-year to US$85.3 bil as at Dec 31, 2011.

“It moderated by as much as 18% since the end of the third quarter last year,” APREA said in a statement.

“Concerns over the eurozone debt crisis contributed to the moderation in the fourth quarter. A strong performance by Singapore helped mitigate the declines in other countries,” said APREA chief executive officer Peter Mitchell.

The decline was seen across all industry segments. Transactions in hotels fell 23%, commercial property 20%, land 17%, and apartments 8%. Stripping out land transactions, Japan led in regional sales volume, accounting for 22% of the fourth-quarter sales. This was followed by Australia with 17% and Singapore, 16%.

“Transactions in the region are continuing to be dominated by domestic players,” Mitchell said.

ISKANDAR GLUT WORRY

(Published as headline in the Star Biz 15th Feb 2012)

Johor property market may face oversupply in the longer term

By JOHN LOH 

PETALING JAYA: With the spate of big-ticket projects being launched in and around Johor's Iskandar region, such as Iskandar Waterfront Holdings Bhd's RM80bil transformation of the coastline fronting Singapore, there are concerns that a glut could emerge in the state's property market down the line.

Although an oversupply in the near term was unlikely, valuers and agents said it could materialise in a decade or later as the developments there would have a long gestation period.

“It is a cyclical industry. There could be an oversupply but this will not be for another 10 years,” Zerin Properties chief executive officer Previn Singhe told StarBiz.

Johor Baru-based V. Sivadas, executive director of PA International Property Consultants Sdn Bhd, pointed out that a glut was imminent if buying interest from Singapore, which has thus far led demand, dried up.

“Malaysia's existing population will not be able to absorb all the new properties on their own,” he said.

He noted that if the proposed high-speed rail between the two countries was fast-tracked, it could create an “instant demand” for Johor properties as the two existing highways linking Malaysia to the island state faced heavy congestion.

Another crucial factor, he added, was for the authorities to craft a long-term asset policy that would not dampen interest from foreigners, yet prevent the kind of artificial inflation of prices caused by speculative buying.

Last year, the Singapore government moved to cool its property market by imposing a 10% stamp duty on homes bought by foreigners, effectively raising the purchase price by 10%.

Foreigners, spurred by low interest rates, had snapped up about 9,300 private homes there in 2011, making it a record 31% of all transactions.

While a surfeit in residential properties may not be for some time, CB Richard Ellis (Johor) Sdn Bhd director Wee Soon Chit has some concerns about the service apartments sector.

He said there had been a sudden increase in the supply of service apartments in Johor, which might not be consistent with demand.

Sivadas also observed that service apartments were fetching between RM500 and RM600 psf now, their highest ever.

One thing is for sure the development of Iskandar has led to a marked appreciation in property prices in Malaysia's southernmost state.

UEM Land Holdings Bhd's Imperia@Puteri Harbour, the group's first residential development there, has sold 152 units, or 65%, since its soft launch last September. Singaporeans bought 90 of these units.

CIMB Research said in a report that the original selling price was RM545 psf, but this has risen to between RM700 and RM980 psf, which was a premium over the RM400-RM450 psf price for condominiums in neighbouring Kota Iskandar and Medini.

“One of the semi-detached houses in East Ledang (also by UEM Land) sold for RM1.6mil. This is a new benchmark,” Wee said.

Sivadas explained that all the new properties were priced above the RM400,000 level, and only the older homes could be bought for less than that.

“The prudent investors have mostly purchased completed apartments. It is the speculators who are going after the new launches,” he said.

However, he cautioned that Iskandar as a whole still had a long way to go.

“It will take another 50 years for it to be fully realised. Even though there are lots of plans and it looks good on paper, implementation remains the key.

“Various plans for Johor's development were unveiled years ago, but the Johor Baru skyline has not changed much. What has taken off is just a small percentage of what has been promised,” he said.

Property prices spike in Shah Alam

PROPERTY prices in Shah Alam have climbed steadily over the last five years due to a combination of factors, including highway accessibility, said a real estate expert.

Azmi & Co director T Nagalingam said Shah Alam is experiencing spillover effects from the rise of property prices in areas like Subang Jaya, Glenmarie, Bukit Jelutong and Kota Kemuning.

He told Business Times that prices for double-storey terraced houses and condominiums have increased by 50 per cent and about 20-30 per cent respectively, in the last five to six years.

"Traditionally, Shah Alam was occupied by PKNS townships. Now, more players have emerged in Shah Alam such as Glomac Bhd, Naza and I-Berhad lifting up the area," he said.

Nagalingam said the New Klang Valley Expressway, Guthrie Corridor Expressway and the widening of roads have contributed to population growth and the price increases.

I-Berhad is developing i-City in Section 7, Shah Alam, sprawled over 30 hectares.

The 10-year development will feature some 12 million sq ft of gross lettable area for a total gross development value of RM4.5 billion.

Some 35 per cent of i-City will comprise residences. The rest will be offices, commercial and retail space, hotel, convention centre and a technology hub.

Since the project started about four years ago, some 500,000 sq ft, or 366 offices suites, and a 70,000 sq ft data centre have been completed.

To date, 20 per cent of the land area has been developed and it has been successful being an MSC Cybercity with complete information communications technology infrastructure.

The development is provided with dual source power supply, multi-telco environment and super broadband accessibility of 200mbps.

-Business Times

http://www.malaysia-chronicle.com/index.php?option=com_k2&view=item&id=28160:property-prices-spike-in-shah-alam&Itemid=3

Brunsfield joins IWH to develop Johor project

(Published in 1st page of Star Biz 14th Feb 2012)

By RISEN JAYASEELAN 

PETALING JAYA: The Brunsfield Group is the latest property developer to have inked a deal with Iskandar Waterfront Holdings Bhd (IWH) to develop a parcel of land close to the waterfront area in Johor Baru, industry sources said.

The source added that the development to be undertaken by Brunsfield and IWH would have a gross development value of around RM3bil.

“There are other major developers also firming up joint ventures with IWH. The growing interest in IWH is phenomenal,” said the source.

Brunsfield is known for a number of high-end development projects including building 20 exclusively designed bungalows in Damansara with price tags of RM3,000 per sq ft or more than RM30mil a unit and the 93 exclusive low-rise luxurious condo villas named Brunsfield Residence @ U Thant. It is also well-known for its joint ventures with Sime Darby Bhd, involving projects such as the RM250mil Subang Avenue, the RM550mil Oasis Damansara and the redevelopment of Oyster Cove, one of the most exclusive waterfront resorts on Australia's Gold Coast.

In an interview with StarBiz last week businessman Datuk Lim Kang Hoo, major shareholder and who helms IWH, said that IWH would be the master developer of the area and it aimed to attract established world class developers to undertake different parcels. These parties are also expected to part fund the entire development, bringing in the much needed foreign direct investment.

He declined to comment on the Brunsfield deal when contacted yesterday.

But Lim had said the project had received enquiries almost on a daily basis from both local and foreign developers.

So far, IWH has attracted local investor Dijaya CorpBhd, which is investing RM3.8bil in a high-end mixed development project over 15ha.

Singapore's Azea Residences will work on four blocks of high-end apartments at a cost of over RM500mil. Australia's Walker Group has also partnered with IWH to develop Senibong Cove into a high-end residential development modelled after the Hope Island project in Australia's Gold Coast.

Stretching 25km to the east and west of the Johor Causeway, the newly-launched Iskandar Integrated Waterfront City (IIWC) project in Danga Bay is the result of an integrated master plan that would see the complete makeover of Johor Baru and seafront sites facing Singapore.

The development, to be launched in phases over 25 years with a gross development value of RM80bil, would be a public-private partnership involving the Government and IWH.

IWH is a special purpose vehicle created to become the master developer and planner of a 1,200ha site within Flagship “A” (in Johor Baru city centre) of Iskandar Malaysia. IWH shareholders are Kumpulan Prasarana Rakyat Johor and Credence Resources Sdn Bhd, whose majority shareholder is Lim. Khazanah Nasional Bhd and the Employees Provident Fund, via their holdings in Iskandar Investment Bhd, are also shareholders of subsidiaries and associate companies of IWH.