Rehda urging loan financing relaxation

Real Estate and Housing Developers’ Association (Rehda) had recently urged Bank Negara to relax the terms of loan financing for first-time homebuyers and purchasers of affordable houses.

Stating that the difficulty of end-financing and issue of loan rejection were the number one reason that resulted in soft property market, Rehda president Datuk Seri FD Iskandar said that the loan rejection rate of 68%, has for the first time resulted in it being the top reason for unsold units during the second half of 2015, according to a survey done by Rehda.

He said the loan rejection rate increased significantly from 52% during the first half of 2015, when the unreleased bumiputera quota constituted the main reason of unsold units.

He also said that the government should also consider reinstating the Developers Interest Bearing Scheme (DIBS) for the aforementioned group of buyers, stating that 62% respondents of the survey agreed with the sentiment.

Rehda Malaysia revealed the findings of its Rehda Property Industry Survey 2H 2015 at the Rehda Media briefing on Wednesday, March 9. The survey respondents comprised Rehda members from all 12 states across Peninsular Malaysia, and gauged the property market performance for the second half of 2015 and the outlook for 2016 while finding out the challenges faced by members in the current softening market.

While Malaysia personal household debt at 86.8% of gross development product was considered one of the highest in the region, it was important to consider the segmentation of the debt, he said.

He explained that the major component of this household debt included house mortgages (around 30%), car loans (around 20%) and credit card or personal debt. While house properties gained value over the years, the rest of the segments would see a substantial or total loss, and the Bank Negara should encourage the citizens to build a portfolio that builds wealth.

According to the survey, the percentage of respondents with projects and units launched in 2H 2015 has seen a reduction compared to the previous half, although sales performance has seen improvements, with increased number of respondents reporting better sales mainly on the apartment or condominium units.

Residential properties continued to lead newly launched developments, albeit at a reduced numbers, while commercial units recorded a slight increase.

The survey indicated that domestic buyers continued to lead the residential market, while buyers purchasing for investment purposes have decreased from 23% in 1H 2015 to 13% in 2H 2015.

The strata launches has overtaken landed properties by only 1%, most strata properties were based in Selangor and Kuala Lumpur.

According to the survey, cost of business operations increased as 61% respondents has reported increased cost up to 10%, prompting them to implement various cost-cutting measures.

In general, almost 70% of the survey respondents were pessimistic on the 1H 2016 outlook, though it is anticipated that the level of pessimism will reduce to a more neutral sentiment in the following 6 months.

Source: The Star

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Penang mega project to start in June

The RM6.3 billion Penang mega project to build three xpressways and an undersea tunnel linking Penang island to the mainland will kick off in June, with the construction of the Air Itam-Tun Dr Lim Chong Eu Expressway bypass.

Consortium Zenith BUCG Sdn Bhd (CZBUCG) chairman Datuk Zarul Ahmad Mohd Zulkifli said starting mid-way (of the Air Itam-Tun Dr Lim Chong Eu bypass) would be the paired-road from Jalan Tanjung Bungah to Teluk Bahang.

Zarul said construction of the third road from Gurney Drive to Tun Dr Lim Chong Eu would commence after the first two are completed.

He said the road construction from Gurney Drive to Tun Dr Lim Chong Eu is a standalone project and would start later due to the more complex work to be undertaken.

The three roads have a combined length of 21.2km and will cost more than RM2 billion. The amount includes RM500 million that would be reimbursed to the government for land acquisition cost, Zarul said in an interview, here, recently.

CZBUCG is the main contractor for the RM6.3 billion project, which consists of the three roads and a 7.2km undersea tunnel linking Penang island to the mainland.

The company was awarded the project in October 2013. For building the roads and the tunnel, the state government will compensate CZBUCG with 44.5ha of freehold reclaimed land in Tanjung Pinang. CZBUCG is 98.1 per cent owned by Zenith Construction Sdn Bhd. The rest of the company is owned by Juteras Sdn Bhd (1.89 per cent) and Beijing Urban Construction Group Co Ltd (0.01 per cent).

“The Penang mega project is a key impetus to push growth. There will be job creation and business opportunities as well as boom of construction-related industries. This will be the biggest development in Malaysia this year. Under the current economic situation, infrastructure projects such as this, combining three roads and an undersea tunnel, would help spur the economy,” said Zarul.

He said the first road project would start on June 15, subject to CZBUCG getting environmental impact assessment approval, the land to acquire, and the private participation to enable the consortium to start the road building.

“We will face a lot of challenges when building the Air Itam-Tun Dr Lim Chong Eu bypass road. We will ensure as little disruption as possible. That is why we won’t construct all three roads simultaneously. We don’t want Penang to become a construction site,” said Zarul.

On the undersea tunnel, he said construction is expected to commence either in 2020 or 2021. CZBUCG’s partner for the undersea tunnel is Beijing-based China Railway Construction Corp Ltd (CRCC).

“We are confident of finishing the tunneling job without hiccups. CRCC has done thousands of kilometres of underwater tunnels, so 7.2km is a walk in the park for them,” said Zarul.

The Chinese firm has built much of the transportation infrastructure in China, including high speed rail, subways and expressways.

Source: NST Online

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Global Property Market Outlook 2016

DEVELOPMENTS in the global economy and currency markets will determine the performance of property markets across developed and emerging markets alike for 2016.

FXTM chief market analyst Jameel Ahmad shared that year 2015 saw emerging currencies challenged by a resurgent US dollar rising alongside the US economic recovery. There were additional concerns over how a slowing China economy would impact general sentiment towards emerging markets. These developments added to challenges faced by emerging economies linked to commodities amid a global slowdown in oil and gold prices.

Ahmad said, “The results were a clear downward trend for emerging currencies and we continued to highlight emerging market currency weakness as a global phenomenon throughout 2015. The emerging market currencies that were the most heavily crushed during the year were those that belonged to economies dependent on commodity exports.”

Ahmad added that concerns surrounding the China economy entering a deep slowdown was another contributor behind losses in emerging market currencies. “A slowing down China economy was not a problem for China itself, but for all those economies reliant on trade with China.”

Knight Frank global head of research Liam Bailey and Knight Frank international residential research Kate Everett-Allen shared that the scale of the slowdown in China and the speed of further US interest rate rises will determine the performance of property markets across developed and emerging markets alike over the next 12-18 months.

They expect the strongest and weakest performing prime markets to be separated by around 20 percentage points by the end of 2015. They expect this figure to slip to 15 points in 2016 as price growth converges.

The pace of price growth in Sydney is expected to slow from 15% year-on-year in 2015 to 10% in 2016. Australia’s economic slowdown, weaker stock market performance in recent months and the introduction of foreign investment fees explain the lower rate of growth in 2016.

 

Hong Kong is forecast to overtake Singapore as the weakest performing luxury residential market in 2016. A number of new developments are due to enter the market in 2016. This new supply, together with a strengthening HK dollar, will see prime property prices soften.

The price decline seen in Singapore’s prime residential market is expected to persist at least until the end of 2016, following the government’s assertion that it has no plans to relax its property market cooling measures.

Ahmad commented that the major turning point for all the emerging currencies will in some ways be in response to higher interest rates from the United States. While falls in emerging market currencies were due to external factors, such factors could transform into internal and domestic pressures, such as reduced spending power and reduced budgets that might lead to jobs being lost.

The continued depression in commodity markets is also going to limit potential for a recovery in fortunes.

Ahmad said, “Slowing growth will continue to occur in China and will likely be a threat to India, although it is possible that the proactive easing of monetary policy from the Reserve Bank of India might encourage borrowing domestically and help drive growth. It is worth remembering that the central banks in China and India have been actively intervening to shore up their own economies through monetary easing. There will be some hope that this could help drive industry growth. As commodity importers, the lower import costs should help create budget for investment elsewhere.”

Colliers International head of UK research and forecasting Mark Charlton, Colliers International senior research analyst EMEA (Europe, Middle East and Africa) and forecasting EMEA Bruno Berretta, and Colliers International director of UK research and forecasting Walter Boettcher cited in Colliers International’s Global Investment Outlook (GIO) that investors, globally, still wish to invest in real estate.

Transaction volumes across regions are expected to increase, with fewer investors expecting to be net buyers. Allocations to direct property by multi-asset funds will continue to increase globally.

The most liquid markets, found in gateway cities such as London, New York and Tokyo, will continue to appeal to cross-border investors. Increasingly, investors are looking to partner with local expertise to provide greater confidence in overseas diversification.

Macroeconomic and political threats, such as further interest rate hikes in the US, or Chinese economic uncertainty, as well as geopolitical risks, will see investors curb their risk appetite in some markets. More investment decisions will be made on a long-term basis. Hence prices for matching assets will rise further, especially in safe haven markets.

They concluded, “While the next 12 months will pose macro challenges for investors, the overall positive mood shown by most respondents offers a compelling case for supporting direct real estate investment’s continued growth.”

Source: The Star

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Hunza puts in motion plans to develop mega project

The slow property market has not stopped developers from planning projects ahead.

One of them is Hunza Properties Bhd that is ready to implement the first phase of its RM10bil mixed-development project in Bayan Baru in 2017.

This follows the issuance of completion and compliance certificate for its 690 units of low-cost housing to relocate the squatters.

Group managing director Khor Siang Gin (pic) told StarBiz that the group had already submitted the rezoning plans to the local authorities.

He said Hunza was now working on the plans related to technical aspect, which will be submitted in the second half of 2016.

“The proposed name of the project is Penang International Commercial City, which we expect to commence work in mid-2017.

“There will be serviced apartment and apartment towers, two hotels, a business-process outsourcing (BPO) tower, a medical centre, shopping mall, and 15,000 sheltered car-parking bays.

“There will be three phases for the project, which is being planned for completion in 2026,” Khor said.

He said the first phase was expected to have a gross development value of RM5bil, comprising a shopping mall, medical centre, a BPO tower, a hotel, and serviced apartments and apartments.

“We plan to sell only the serviced apartments and apartments but not the medical centre, BPO tower and the hotel. The commercial portion, which will have a gross floor area of 3.36 million sq ft, will be kept by the group to generate long-term recurring income.

“There are 1,792 units of serviced apartments and apartments. The first phase is scheduled for completion in 2021, while the second and third phases over the next seven years,” he said.

He added that the second and third phases would see the development of more apartments, a hotel and a college. The project is located on a 43.36 acre land. It will have a gross floor area of 9.4 million sq ft.

Hunza, which is in the process of being delisted, has started its overseas roadshows to market its luxurious low-density RM600mil Alila 2 condominium project in Tanjung Bungah.

“In January, we were in Hong Kong to promote the 9.8-acre project, which has received encouraging response. We have sold some units and received registrations for some. Most of them are investing in the properties as a second home,” he said.

The group will go to Indonesia and Singapore next, according to Khor.

“The key attractions are the size of the 270 units, which have built up of between 1,900 sq ft and 3,200 sq ft at a starting price of RM790 per sq ft.

“There are also three acres of untouched hill land, which have allocated as open space for recreational activities within the development. We also spent RM12mil to landscape the project,” he added.

Khor said the group had submitted Alila 2 for the Green Building Index certification.

So far, 30% of Alila 2 has been sold.

In Bertam, Kepala Batas, the group planned to launch 250 semi-detached houses and zero-lot bungalows for the first phase on 80 acres in May.

“We will launch 786 units of zero-lot bungalows, terraced properties and low-cost high rises in the second and third phases.

“After the implementation of these projects, the group will have a further 270 acres of undeveloped land bank in Bertam.

“We have recently sold 37% of the 232 terraced units launched in October,” he said.

Hunza is in the process of being delisted from Bursa Malaysia following a corporate exercise proposed by its major shareholders.

Source: The Star

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MRCB: Revised Budget 2016 benefits housing sector

KUALA LUMPUR, Jan 28 — The provisions in the revised Budget 2016 for affordable homes will boost the housing sector, property company Malaysian Resources Corporation Berhad (MRCB) said today.

Tan Sri Mohamad Salim Fateh Din, group managing director of the government-linked corporation (GLC), also welcomed the RM2,000 tax relief for those earning below RM8,000 a month, saying it would increase private consumption and stimulate investment in the property market.

“The revised budget has addressed the needs of businesses, employees and the rakyat through various incentives for growth,” Mohamad Salim said in a statement.

“As a property and construction company, MRCB welcomes the stimulus for affordable homes which will help to steer the housing sector to be more robust and vibrant.

“Additionally, the implementation and continued commitment for major projects such as the LRT and MRT projects will further enhance public mobility and ease road congestion,” he added.

Prime Minister Datuk Seri Najib Razak announced earlier today in the Budget 2016 revision that the sale of houses priced below RM300,000 will be limited to first-time house buyers.

For the public housing project involving houses that cost RM35,000, the government will offer, through Bank Simpanan Negara and Bank Rakyat, a financing package at a rate of 4 per cent for more than 10,000 homeowners starting March 1.

The prime minister also said more than 100,000 housing units will be offered in the government’s integrated house ownership programme.

Source: The Malay Mail Online

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