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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LRT and highway lines for transport master plan approved

The Penang executive council today gave the green light to Penang Transport Master Plan (PTMP) project delivery partner SRS Consortium Sdn Bhd for the railway and highway schemes that include a rail line from Komtar to the airport and the Pan Island Link.

 

SRS tabled the plans to the state exco this morning.

The railway scheme covers both the island and mainland, with one LRT and two monorail lines on the island, one LRT line across the sea linking both sides of Penang, and a bus rapid transit (BRT) system.

Local government exco member Chow Kon Yeow said the priority for the railway scheme will be the light rail transit (LRT) line linking Komtar in the city centre of George Town and the Penang International Airport in Bayan Lepas.

This project, he said, would be Phase One of the railway scheme and treated as a priority project.

“With the green light given by the state, SRS will proceed to propose the railway scheme to SPAD (Land Public Transport Commission), which is the authority in charge of rail transport.

“SRS will consult with SPAD for its guidance and advice concerning the proposal to build a railway system in Penang,” he told a press conference in Komtar today.

He said the state has also approved the highway scheme proposed by the consortium.

The priority highway project, he said, is the Pan Island Link, which connects Gurney Drive and Bayan Lepas.

“The alignment was also presented to the exco today. The next step by SRS is to conduct the DEIA (detailed environmental impact assessment) for this proposed project,” he said.

Project manager Szeto Wei Loong from SRS said the next stage after securing the state’s approval is to engage the public and inform them of the alignments of the projects.

“We are going to do a preliminary detailed design for the Phase One LRT line, which will be submit to SPAD for the railway scheme approval.

“A condition for approval is giving SPAD the overall masterplan for the railway network, which the state has approved this morning.

“We will liaise with SPAD regarding this masterplan submission, and this will take another six months. Once ready, it will be up for public display.

“At the same time, we will also be submitting the DEIA for the LRT line. We hope by the third quarter of next year all the railway scheme will be approved,” he said.

For the Pan Island Link, Szeto said SRS will submit the DEIA, which will take another six months for studies to be conducted and completed, to the Department of Environment for approval.

Chief Minister Lim Guan Eng said the state have not approved any land reclamation yet or other components of the PTMP, such as water taxis and cable cars.

SRS has proposed to reclaim two or three islands in the south of Penang island to finance the RM27 billion masterplan.

The manmade islands would be auctioned off to pay for the transport projects in the masterplan, if all federal approvals are obtained.

Source: The Edge

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Rising, falling, rising? Market observations for the first half of 2015

PENANG RESIDENTIAL PROPERTY MARKET

In Penang, the residential property market contracted by almost half since the hitting its peak in 2011. The market recorded a total of 9,667 transactions in 4Q2011, its highest in four years, before seeing a drastic drop of about 48.47% in 1Q2012, to just 4,981 transactions. The corresponding value of transactions dropped to RM1.5 billion in 1Q2012, from RM2.27 billion in 4Q2011.

The market saw fluctuations in 2012. In 2Q2012, the number of transactions increased by about 38.68% to 6,908 valued at RM1.92 billion before dropping slightly to 6,398 in 3Q2012. The market plunged again in 4Q2012 by 22.17%, to 4,979 transactions.

The market continued to contract in 1Q2013, when the number of transactions dropped slightly to 4,193 (worth RM1.55 billion) but remained stable with slight increases throughout the next three quarters of the year, bringing the total transactions to 17,700 units (RM7.1 billion).

In 2014, the pattern of transactions was interesting. It dropped slightly by about 8.66% to 4,291 transactions in 1Q2014 from 4,598 transactions in 4Q2013, before increasing by about 10.27% to 4,732 in 2Q2014, valued at RM1.89 billion. By 3Q2014, the number of transactions had dropped to 4,194 (RM1.75 billion), before surging 23.82% to 5,193 transactions (RM2.06 billion) in 4Q2014.

By 1Q2015, the market had plunged again by about 26.17% to 3,834 transactions (RM1.55 billion) compared with 4Q2014. A year-on-year (y-o-y) comparison with 1Q2014 also saw a market contraction of about 10.65%.

In 2Q2015, the market improved slightly on the previous quarter, to 3,909 transactions (RM1.59 billion). However, in a y-o-y comparison with 2Q2014, the market contracted by 17.39% or 823 transactions.

Geh believes the market contraction in Penang could also be due to strict loan approval criteria and fewer loan approvals.

He adds that the long delay in the issuance of the advertising permit and developers licence (APDL) had also taken a toll on the Penang residential property market.

“I believe the demand for projects in the pipeline in Penang is good but the sales process cannot commence due to the delay in the APDL,” he says.

Developers must obtain the APDL from the Housing Ministry before the sale process and the signing of the sales and purchase agreement for any development project.

The issuance of the APDL in Penang for many projects by local developers has been delayed for more than a year.

MALAYSIA: OVERALL RESIDENTIAL PROPERTY MARKET

There was an overall contraction of the Malaysian residential property market in the first half of this year (1Q2015) compared with 1Q2014, according to figures released by the National Property Information Centre (Napic).

The first half of 2014 (1H2014) recorded a total 122,830 transactions in the market worth a total RM40.31 billion. In comparison, 1H2015 recorded 119,599 transactions with a value of RM37.97 billion, or a 2.63% contraction.

If we look at the quarterly comparison, the 1Q2015 saw a slight increase of about 1.46% to 59,626 transactions (RM18.74 billion), from 58,767 transactions (RM19.39 billion) in 1Q2014 .

By 2Q2015, there is a noticeable contraction of 6.38% to 59,973 transactions, from 64,063 transactions in 2Q2014. Over the years, it is normal for the number of transactions to increase from the first to the second quarter, as seen in 2014 (from 58,767 to 64,063, worth RM20.92 billion).

Looking at transaction history, the first quarter of every year usually sees a slight drop before the transactions spike in the second quarter. The residential property market in Malaysia hit its peak in 2Q2011, when transactions spiked to a high of 73,710 (RM16.68 billion) from 60,333 (RM13.52 billion) previously. Similarly, 1Q2012 saw a total of 64,402 transactions (RM15.13 billion), which spiked in 2Q2012 to 71,595 transactions (RM17.48 billion).

After the market hit its peak period between 2011 and 2012, it began to drop in 2013 and reached a four-year, all-time low in 1Q2014. The market picked up in 2Q2014 and 3Q2014 by recording 64,063 transactions (worth RM20.92 billion) and 63,661 transactions (RM21.66 billion), respectively.

By 4Q2014, the market had again dropped, to 60,760 transactions (RM20.09 billion) and continued to drop in 1Q2015 before increasing slightly in 2Q2015.

In summary, the overall residential property market in Malaysia in the last four years up to the first half of this year saw the market spiking in 2011 and 2012 before it contracted in 2013. While picking up slightly in 2014, it again showed a contraction in the first half of this year.

Raine & Horne International Zaki + Partners Sdn Bhd senior partner, Michael Geh, attributes the overall contraction in the market to strict loan requirements.

“The low loan approvals due to stricter loan requirements has taken a toll on the property market,” he says.

Source: The Edge Property

 

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