Good response to I&P’s landed property project in Temasya Glenmarie

(Published in the Star BizWeek 31st March 2012, page 26)

By THOMAS HUONG 

PROPERTY developer I&P Group Sdn Bhd has recorded strong take-up rates for its recent launch of freehold landed residential homes in Shah Alam, latching on the scarcity of new landed residential properties being brought to the market.

Some observers has described the buying response to the launch as “overwhelming.”

In the last two weeks of March, the group has launched 154 units of Citra double-storey superlink and 60 units of Anggun double-storey semi-detached homes at the 200-acre Temasya Glenmarie mixed development.

About 90% of Citra has been sold, while Anggun recorded 100% take-up rate.

Property consultants tell StarBizWeek that the strong response to the recent Temasya Glenmarie launch was not surprising, in view of the limited supply of new landed-residential units in “hot spots” within the Klang Valley.

Temasya Glenmarie, which has an estimated GDV of RM2.4bil, is located 37km west of Kuala Lumpur and is within close proximity to Petaling Jaya, Kelana Jaya and Subang Jaya.

“Some buyers have bought for their own use, while others would be looking at obtaining decent capital appreciation,” says KGV International Property Consultants director Anthony Chua.

“For the next 12 to 18 months, we still see strong demand for new launches of landed residential units in the Klang Valley, depending on the type of property and location,” says Chua.

A bank-backed property analyst concurs, and points out that Temasya Glenmarie appealed to well-heeled buyers.

“There has been very limited supply of new landed units in that area.”

However, he points out that it was not known as to how many of the sales and purchase agreements (S&Ps) signed would translate into actual sales, as buyers would still need to get approvals for loans.

“In the recent past, about 80% of the S&Ps signed during launches of new properties would be converted into actual sales. But if you look at the national mortgage loan approval data, we undertand that as of end-January, it was a bit weaker.”

The analyst also points out that despite credit-tightening measures as a result of Bank Negara's responsible lending guidelines, there was still a situation of high liquidity in the market.

Effective this year, banks have started using net income instead of gross income to calculate the debt service ratio for loans.

“Interest rates are still low, and qualified property buyers still have relatively easy access to financing. Thus, we have an asset bubble situation, where long queues of buyers are seen at new property launches.”

In his opinion, the current situation was not healthy as the credit-tightening measures might penalise many genuine property buyers who were buying for their own use.

“At this time, well-heeled people do not have many avenues to invest their money. So they keep investing in property.”

The Citra and Anggun units have total gross development values (GDV) of RM215.2mil and RM145mil respectively.

The Citra units come in two types. Type 2A has a built-up ranging from 2,839 sq ft to 4,160 sq ft and priced from RM975,888 to RM1.7mil.

Citra type 2B has a built-up ranging from 4,839 sq ft to 6,220 sq ft and are priced from RM1.6mil to RM2.7mil.

Meanwhile, the Anggun double-storey semi-detached homes have a built-up about 4,000 sq ft and are priced between RM2.34mil and RM3.55mil.

The homes are expected to be completed in March 2014.

I&P Group says that the 200-acre Temasya Glenmarie had a tagline of “Space to Live. Live with Space”, and all units come with large built-up areas.

“The township comes with a standard 100-ft wide road frontage and 60-ft wide beautifully-landscaped back roads,” states I&P Group.

Nearby amenities include the Empire Shopping Gallery, Subang Parade shopping centre, Subang Jaya KTM Komuter station as well as Glenmarie Golf & Country Club, Saujana Golf & Country Club and the Holiday Inn Glenmarie.

Temasya Glenmarie is also accessible via major highways like the Federal Highway, North Klang Valley Expressway, New Pantai Expressway, North-South Central Link and Guthrie Corridor Expressway.

Johor’s own Mid Valley City

(Published in StarBiz 29th March 2012, pg4)

By THOMAS HUONG 

KUALA LUMPUR: The proposed Mid Valley City-type mixed development in Johor Baru, via a joint venture between IGB Corp Bhd and Selia Pantai Sdn Bhd, is expected to take four to five years, and has a tentative gross development value of RM6bil.

“Tentatively, the project will have a gross development cost of RM2bil to RM3bil. It took us 15 years to get Mid Valley City to what it is today. Hopefully, it will take us only half that time with the Johor project,” said IGB Corp group managing director Robert Tan.

IGB Corp, the developer of Mid Valley City in Kuala Lumpur, has entered into a conditional memorandum of understanding (MoU) with Selia Pantai for the joint venture.

Johor Menteri Besar Datuk Abdul Ghani Othman, who witnessed the MoU signing, said the project would complement other developemnts in the Iskandar Malaysia economic growth corridor.

A joint-venture company called Southkey Megamall Sdn Bhd will be set up to acquire three parcels of leasehold land measuring 36 acres for the project within the 300-acre Southkey development in Johor Baru.

Selia Pantai is the Southkey developer and is a public-private partnership between the Selia Group and the Johor government viaKumpulan Prasarana Rakyat Johor Sdn Bhd (KPRJ).

IGB Corp will have a 70% stake in Southkey Megamall, with the balance owned by Selia Pantai.

Southkey is located within the Johor Baru city flagship zone A of Iskandar Malaysia and is accessible via five-minute drive from the Sultan Iskandar Customs, Immigration and Quarantine (CIQ) complex as well as via Jalan Tebrau, Jalan Bakar Batu and the Eastern Dispersal Link.

Tan said it was a great location for the proposed Southkey Megamall.

“It is not easy to find a location like this. We are bullish on the Johor market. There are many things happening in Iskandar Malaysia,” he said.

He said Selia Pantai had approached IGB Corp about six months ago with the proposal for the project, which is planned to have a retail mall as well as hotels, serviced apartments and offices.

The proposed Southkey Megamall will have six million sq ft of space, and will include a net lettable area of 1.5 million sq ft, with about 7,000 carparks and can accomodate two major anchor tenants as well as 400 to 500 retail outlets.

IGB Corp will fund its portion of the project via internal funds and bank borrowings.

According to Tan, another six to nine months will be needed to do studies as well as resolve planning approvals and other issues pertaining to the project.

“We hope to start construction in 2013. This is our first project in Johor. we are always on the lookout for opportunities. We want to look in the north also. Ideally, we want to have Mid Valley City-type developments in the south, central and north (Penang),” he said.

BRDB closer to open tender

(Published in StarBiz 29th March 2012, pg 4)

By CHOONG EN HAN 

It appoints legal and financial advisers

PETALING JAYA: Bandar Raya Development Bhd (BRDB) is one step closer to selling off its four prime assets via an open tender, after the company announced the appointment of its legal and financial advisers to assist in the deal.

In a filing with Bursa Malaysia, the company said it was working with Lee Hishammuddin Allen & Gledhill and CIMB Investment Bank Bhd to assist in the proposed disposal.

It said the board had decided to proceed with the proposed disposal, while noting that Ambang Sehati Sdn Bhd had to-date been unable to confirm its plans to increase its stake in BRDB.

In September 2011, Ambang Sehati proposed to buy BRDB's properties, namely Bangsar Shopping Centre, Menara BRDB, CapSquare Retail Centre and Permas Jusco Mall for RM914mil.

The proposal drew criticism from various parties, who expressed concern over the lack of transparency in the deal and the fairness of the offer price, coupled with the fact that it was a related-party transaction.

Subsequently, the company called off the sale and decided to call for an open tender to take into consideration the interest from credible parties to acquire its assets, and also Ambang Sehati's intention to increase its stake in the company.

Ambang Sehati is the private investment vehicle of Datuk Mohamed Moiz Jabir Mohamed Ali Moiz, BRDB's chairman, who owns 18.88% of BRDB.

“The company had decided to proceed with the disposal exercise. Last year, when the news broke (about the four properties), Ambang Sejati wanted to buy (them). At that point in time, Ambang Sejati was thinking of increasing its stake in the company, that is why the board decided to defer the exercise.

“That was 2011, and now Ambang Sejati is still evaluating its options, but the board can no longer wait for them and this (announcement) is a go-ahead with the tender,” said a source familiar to the matter.

He said the company had not appointed a property consultant yet but the legal adviser appointed was in the midst of finalising the proposal on how to go ahead with the tender.

OSK Research said it was acceptable for BRDB to monetise its assets as long as the company disposed of them at a fair and attractive pricing.

“As we think Ambang Sehati's offer price is unattractive, we see the open tender route as positive as this would enable the group to garner better pricing for its assets via competitive bids from other interested parties,” it said.

It said it was very likely that the company would distribute some of the disposal proceeds as special dividend to its shareholders.

China hails Qinzhou mega park

(Published in the Star newspaper 31st March 2012, Nation section, pg 28)

By CHOW HOW BAN 

BEIJING: The State Council of China has approved the China-Malaysia Qinzhou Industrial Park project and hailed it as a model project that will steer cooperation between the two countries to greater heights.

Xinhua news agency reported that the council had defined the project as an important cooperation endeavour for both the Chinese and Malaysian governments.

“The industrial park project will help increase the impact of the economic cooperation in Guangxi Zhuang autonomous region and the Beibu Gulf Economic Zone.

“It will also deepen the strategic partnership between China and Malaysia as well as other Asean countries,” it said.

The industrial park will be developed in the Jingu River area near the Qinzhou port in Guangxi.

The first phase of the project covers 15sq km, with future development expanding to about 55sq km.

The Chinese government said the project would enjoy existing preferential policies for the national-level economic and technological development zone, adding that the Commerce Ministry and other departments would also come out with additional policies to provide a boost.

This will be the first government-to-government mega industrial park project between both countries.

In the past, China has only entered into two such development deals with Singapore in the China-Singapore Suzhou Industrial Park and the China-Singapore Tianjin Eco-City.

Prime Minister Datuk Seri Najib Tun Razak will arrive at the Guangxi capital of Nanning at 1am tomorrow and visit the project site.

He and Chinese Premier Wen Jiabao are then expected to attend the ground-breaking ceremony for the project in Qinzhou.

The Arabs are out

(Published in the StarBiz 27th March 2012, pg 1)
Other foreign investors buy 80% of Medini land in Iskandar Malaysia

By B.K. SIDHU 

KUALA LUMPUR: Arab investors who were originally the master developers of 2,230 acres at Iskandar Malaysia known as the Medini development will no longer be involved and about 80% of that land has since been sold to other foreign investors, including those from East Asia.

“If the Arabs are not willing to develop the land, we cannot let the project be left idle, there must be activity on the land. In fact, we had initiated this (to get other investors) who are from China, South Korea and also Japan to invest in the land,” Iskandar Investment Bhd (IIB) president/chief executive officer Datuk Syed Mohamed Ibrahim said in an interview.

He added that the Arabs “will no longer be involved in Medini, but it was good that they came (initially).”

Five years ago, Abu Dhabi's Mubadala Development Co was the leading consortium investing US$720mil (RM2.1bil) in Medini Iskandar Malaysia to jointly develop 2,230 acres. But the global crisis had thrown the Arab property world into disarray and that had somewhat slowed the development of the Medini parcel.

Hence, IIB had to get other investors, including those from Singapore, North Asia and domestic players.

“The interest (from the foreign investors) came to our office and we facilitated the deals with the foreign investors,” he added.

But it cannot be denied that the Arabs did put in the money when Malaysia wanted foreign investors to invest in Iskandar Malaysia, which is the country's first economic corridor.

Since then, Malaysia has had investors from other parts of the world including domestic investors who had bought plots of land to develop. One of the bigger foreign investors thus far that has invested RM2bil in Medini's development is Beijing-based real estate developer, Zhuoda Real Estate Group. The Sunway Group has bought 691 acres to undertake a mixed development.

The 2,230-acre Medini development would house lifestyle and leisure development. IIB's overall land bank in Johor is 8,889 acres, of which 2,230 acres are for Medini and Legoland theme park and hotel. Nearby, there is also a educity, a wellness centre and a creative studio, UK-based Pinewood, that will be housed.

For the educity, nine universities and campuses will be sited and they include Singapore's Raffles University, University of Southampton Malaysia campus, Malborough College Iskandar Malaysia, Newcastle University Medicine Malaysia, University of Reading Malaysia and the Netherlands Maritime Institute.

IIB is 60%-owned by Khazanah Nasional Bhd, 20% each by Employees Provident Fund and Kumpulan Prasarana Rakyat Johor.

Syed Mohamed said parties from China had wanted to buy the entire Medini area, but because it would be developed into a cosmopolitan area, they had to ensure there was a mix of investors from different parts of the world.

“We have got a nice problem as far as genuine interest from potential local and foreign parties for the land is concerned. We have a suite of investors and we have no restrictions to sell the plots of land to foreigners. There is a lot of interest for land and while there is limited land out there, we are not ready to open the over 6,000 acres for sale presently,” he said.

He would rather wait for land prices to appreciate before opening the over 6,000 acres for development.

Turning to Legoland, Syed Mohamed said the theme park, sited on 76 acres, will open its doors in the fourth quarter of this year. At a cost of US$700mil, the company is also getting a water theme park because of its strict procurement process.

“For the price of one we are getting two theme parks. The water theme park will open in 2013 together with the Legoland theme park hotel,” he said.

Thus far, IIB has managed to sell 10,000 of the unlimited one-year theme park entry passes which are being offered at a special price of RM195. He is targeting one million visitors per year but has yet to promote the theme park in Indonesia, which he believes has a huge potential market

Land yourself a good property investment

SHORTER economic cycles coupled with increasingly volatile equity markets have led to a growing desire for safer investment options.

In property investments, homebuyers seek to purchase assets that can weather an economic downturn and provide long-term capital appreciation potential. Landed properties, being limited in supply, have often been regarded as a safer property investment option compared to their non-landed counterparts.

This has been so in the past few years where a significant number of non-landed units were released to the market through the Government Land Sales (GLS) Programme.

In H1 2012, some 7,020 non-landed residential units are expected to be released via the confirmed list while another 7,120 will be supplied through the reserve list.

There are no landed sites.

While non-landed properties across Singapore have seen higher sales volume in recent years, landed properties have seen higher capital appreciation and proved to be more resilient during a downturn.

Should one consider landed homes as an investment option, particularly as the economy becomes more volatile and uncertain?

Different classes of landed properties

In general, there are four main classes of landed properties in Singapore: Good Class Bungalows (GCBs), conventional landed houses, strata landed houses, and Sentosa Cove landed houses. While there are no restrictions on Singaporeans buying landed properties, permanent residents (PRs) and foreigners face restrictions.

GCBs may be regarded as the crème de la crème of landed housing on mainland Singapore. These exclusive bungalows, which are located in Singapore's 39 gazetted GCB Areas, are governed by stringent planning requirements such as a minimum plot size of 1,400 square metres (sq m), maximum site coverage control of 35 per cent and a height restriction of two storeys. GCBs are among the most sought after properties in Singapore and are owned mostly by Singaporean high net worth individuals.

Elsewhere in Singapore, conventional landed homes comprise semi-detached, terrace and detached houses.

Strata-landed homes are low-rise properties that come with strata titles instead of land titles. Introduced in 1993, this housing type caters to homebuyers who desire bigger space with privacy in a secure gated community. Such homes also offer the convenience of communal facilities such as swimming pools and tennis courts.

In the case of strata landed properties within developments with condominium status, foreigners (including PRs) may buy such properties without seeking regulatory approvals.

However, for the purchase of other types of landed housing, non-Singaporeans have to seek permission from the Land Dealings (Approval) Unit (LDAU) . Applicants have to fulfil certain criteria before approval is given, including being a Singapore PR and making significant economic contribution to Singapore.

Sentosa Cove is the only place in Singapore where even non-Singapore PR foreigners may purchase a landed home, although subject to obtaining LDAU approval.

Foreigners granted approval to buy a landed home in Singapore including at Sentosa Cove are required to use the property for their own occupation. They are allowed to own only one landed home in Singapore.

During previous property cycles, prices in the landed segment underperformed the non-landed segment. For example, in the 1996-2000 property cycle, landed properties fell 6.4 per cent, compared with 5.3 per cent for non-landed homes during the market downturn between Q2 1996 and Q4 1998.

When the market recovered, landed properties appreciated less than non-landed homes. The weaker performance was also observed in other earlier property cycles.

However, the pattern has changed since the global financial crisis.

Prices of landed homes have appreciated more than non-landed properties during an upturn and fallen by a smaller magnitude during a market downturn.

Fundamental changes in the investment climate and other factors such as limited supply, changes in regulations and government measures may have indirectly contributed to the shift.

Shift in dynamics

As the government releases more sites for non-landed developments to cope with increasing demand from a rising population, landed homes as a proportion of total housing stock in Singapore has shrunk.

As at end Q4 2011, landed properties accounted for 26.3 per cent of the total housing stock, down from 35.3 per cent in 2000. In absolute numbers, while supply of landed houses has increased, it was at a much slower pace than that for non-landed homes.

Over the past 10 years, the rate of increase for landed stock averaged 0.6 per cent (compounded annual growth rate, or CAGR), significantly lower than that of non-landed houses (4 per cent).

Under the GLS Programme 2011, there were only two sites slated for landed housing development, with a total of 115 units out of the estimated 23,590 total residential units that can potentially be generated from sites under the confirmed and reserve lists. In the first-half 2012 GLS list, there are no landed housing sites.

The stock of GCBs is even more limited with about 2,400 houses in 39 areas, mainly in districts 10, 11, 21 and 23.

On the demand side, landed properties have become more desirable due to strong population growth over the past two decades. In addition to existing high demand from Singaporeans, new citizens who are used to landed living would also seek to own landed properties when settling in Singapore.

Recent government initiatives may have boosted the attractiveness of landed homes, leading to stronger demand. More flexibility has been given in the design of landed housing through the introduction of the Envelop Control Approach in September 2010. Under this pilot scheme, architects gain more leeway in terms of design, allowing landed homes to be built up to four storeys instead of being limited to three storeys previously.

While encouraging creativity and ensuring practical supply of landed houses, the government also monitors closely the quality of landed housing developments, as evident in the implementation of minimum plot size for strata landed developments in February 2009 where a minimum plot size per unit, depending on its housing form, is prescribed for strata landed homes.

Bungalows, semi-detached and terrace houses are required to follow a minimum plot size of 400 sq m, 200 sq m and 150 sq m respectively.

The revised guideline reduces the number of strata houses allowable per development and was implemented to resolve concerns of increasingly congested strata landed developments before the measures. After all, strata-landed buyers especially those with larger families prefer the bigger built-up space typical of landed homes but want the convenience of condominium facilities as well.

Future for landed properties

The looming global crisis and slowdown in the Singapore economy in 2012 will inadvertently dampen buying sentiment in the property market and buyers are likely to stay on the market sidelines over the next 12 months while awaiting a more favourable investment climate. Volumes will fall accordingly.

However, as compared to non-landed properties, prices of all landed housing types may prove to be more resilient. New supply of landed properties remains limited, providing support notwithstanding an expected slowdown in the economy.

The additional buyer's stamp duty is not expected to have a significant impact on the landed housing market as foreigners, who are largely affected by the new measures, make up a low percentage of landed home buyers.

Foreigners (non-PR) accounted for 0.6 per cent of landed property purchases (including Sentosa Cove) in 2010 and 1.8 per cent in 2011. More importantly, the limited supply and prestigious lifestyle offerings continue to back the continuous demand for this evergreen property class.

Png Poh Soon is director, valuation and head of consultancy & research; Joanna Chen Wanzi is senior analyst, consultancy & research; and Le Thi Dan Thuy is analyst, consultancy & research at Knight Frank.

- The Business Times

http://www.malaysia-chronicle.com/index.php?option=com_k2&view=item&id=31136:land-yourself-a-good-property-investment&Itemid=3

M'sia builders say property mart not ready for build-then-sell concept

KUALA LUMPUR-- The Master Builders Association of Malaysia (MBAM) says the Malaysian property market is not ready for the implementation of the build-then-sell (BTS) model on a compulsory basis.

MBAM president Kwan Foh Kwai said property development is a very capital-intensive business with many of the players comprising small-and-medium enterprises.

"I don't object to the model, but until there is a giant property company with the financial capacity to do business using the BTS concept completely, our market is not ready for it," he told Bernama in an interview.

He said the BTS concept would increase the cost as developers would have to bear the interest which is then passed on to buyers.

Likewise, he said, buyers are always looking for developers to produce affordable housing for them.

Kwan, who is also the managing director of the construction division of the Sunway Group, said implementing the BTS model without ample preparation would reduce the property supply in the market.

"Currently, the need for housing is at an average of 150,000 units per year. If we use BTS, I don't think we have the developers able to produce that number of houses per year," he said.

Asked if the Industrialised Building System (IBS) can offset the higher cost of construction with the BTS model, he said it would initially cost more in terms of investment for land, plant and machinery but in the long term, after the producers have reached investment break-even, IBS would be cheaper.

"But not in the immediate term," he said, adding IBS shortens the completion time thus reducing the interest incurred that would have to be borne by the developers.

On Bank Negara Malaysia's new guidelines on loan applications, Kwan said: "The Bank Negara policy for me is correct. Household debt has gone into the high side, and it is better for the government to relook at it and manage it better."

The issue, he said, is about the affordability of owning a house particularly in the Klang Valley.

Kwan said there is a need for better public transport to reduce car ownership and increase disposable income that can then be used towards buying a house.

The new guidelines would take a year after implementation to have an impact on the industry, he said.

"There is always a time lag in our construction industry, so I do not have immediate feedback on the slowdown because our contractors are still building houses that have already been sold," Kwan said.

-- BERNAMA

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