Invest in the future



IT has always interested me to see how the different selection of words sent varied messages to readers and listeners.

Of late, I’m intrigued with the use of oxymorons, a combination of words that have opposite meanings and which usually produces an incongruous, seemingly self-contradictory effect.

Some daily expressions such as “open secret”, “seriously funny”, “deafening silence” and “pretty ugly”, are good examples on how the completely opposite meanings of words create dramatic effect.

Among other oxymorons come an expression often heard among condominium owners to their management corporations (MCs) and management offices: “We want you to lower costs and improve quality.”

Just like any other oxymoron phrases, the statement above makes me puzzle and ponder. It is prudent to manage costs, but unrealistic cost cutting over the long run will lead to decline in the quality of facilities and services.

Based on my experience, quality always comes with cost especially in property management. It is impossible to achieve higher quality standards by reducing expenditure.

I have heard of occasions where homeowners’ representatives in MC set high benchmark for the property management team, but expect them to cut down on the number of workers and cleaners in order to reduce spending. Needless to say, we can imagine what the outcome would be without looking at the property itself.

In reality, MC and homeowners must invest, not spend less for better quality. While developers and property managers play the important role of ensuring the upkeep of properties, the property owners themselves are the main stakeholders in deciding the fate of their properties. They are the party who can approve the budget and usage of their service charge and sinking funds.

In my previous article, I mentioned it is important for homeowners to participate in property management, such as attending AGMs and EGMs to exercise their right to raise concerns and approve the budget during such meetings.

In addition, homeowners and MCs must be bold in making decisions to invest in their properties with the reserved funds they have in their account.

Hence, while it is important to manage cost, it is also important to spend wisely for the future. Inflation is a fact of life, so MCs and homeowners should factor the inflation rate into their service charges, and use the real inflation rate, typically higher than the officially sanctioned rate anywhere in the world.

Typically, service charge is used for the general maintenance of the building. Sinking fund, on the other hand, can be used for the painting and the repainting of the common property, acquisition of movable property, the replacement of any fixture or fitting, the upgrading and refurbishment of the common property, and any other capital expenditure deemed necessary.

Managing a strata property is like maintaining a car. We must service our car regularly and replace its parts when they are due for change according to mileage. If a car is serviced less often, it gets more expensive to fix later when the equipment falls apart, and sometimes it may be too late to change.

Hence, when we reduce spending on maintaining a property, the decline of quality may be slow but sure. It takes time and additional cost when homeowners want to re-invest to restore the property later.

Invest in the future is just like doing exercise. It is hard to do, but if done regularly it will build health, strength and happiness.

To invest in a strata property means to increase, not cut down services such as cleaning, maintenance, security and landscaping. It also means to spend the sinking fund regularly not just on replacements, but also on upgrades, as the world doesn’t stand still. New projects would make existing projects old and even obsolete if we don’t manage our property well.

Investor’s nightmare

How well a property is managed can make or break the value of the property. A quality property management will allow the value to increase; while poor management could translate into an investor’s nightmare.

Active management and upgrading of properties is an important approach to protect our homes and investments. As such, whenever homeowners or property management companies tell me they are able to increase quality and cut cost at the same time, I would wonder whether, “Is this a short-term gain at the detriment of long-term benefits?”

By Alan Tong

Datuk Alan Tong was the world president of FIABCI International for 2005/2006 and awarded the Property Man of the Year 2010 at FIABCI Malaysia Property Award. He is also the group chairman of Bukit Kiara Properties. For feedback, please email feedback@fiabci-asiapacific.com.

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Penang Island City Council, MBPP councilor Dr Lim fed up change not happening in Penang


Stepping down: Dr Lim giving a speech at the council meeting at City Hall, Penang.

Dr. Lim tells why he walked

GEORGE TOWN: The only city councillor here who dared to go against the state government does not want to continue after his term ends on New Year’s Eve because he is disappointed with the Penang Island City Council (MBPP).

Dr Lim Mah Hui (pic) said he no longer wanted to serve because “the change in Penang that we want doesn’t seem to be happening”.

“I will remain active as a Penang Forum committee member. I will still speak up on public issues.

“I believe people in public offices should serve for limited terms. Perhaps it will take a fresher mind with new ideas and approaches to make things happen for the better,” he said.

Dr Lim, who has served as a councillor since 2011, also believed that the council should allow the public to observe council committee meetings.

“The committee meetings are where decisions are made. If people are watching the deliberations, then public scrutiny can help temper political interests,” he added.

The press and the public are allowed to witness full council meetings, but Dr Lim said these were formal meetings to confirm matters that had been decided upon.

Dr Lim is the sole city councillor out of 24 with no political ties. A former professor and international banker, he was nominated to MBPP by Penang Forum, a loose coalition of numerous NGOs in the state.

His appointment stemmed from the current government’s 2008 move to swear in councillors representing NGOs. Four such councillors were initially appointed but since 2012, although the official NGO councillors still stand at four, only Dr Lim is known to come strictly from civil society.

He made his maverick nature clear less than a year after being a councillor when he joined a group of 30 people to publicly protest against his own council outside City Hall months after being appointed.

In March this year, he was involved in a heated exchange with Chief Minister Lim Guan Eng during an NGO dialogue session over parking woes, road-widening projects and the council enforcement’s car-towing figures.

In July, Dr Lim criticised the state’s Penang Transport Master Plan (PTMP) and suggested an alternative better, cheaper, faster transport master plan.

A month before that, he sent a letter to Unesco expressing fears that the PTMP would jeopardise George Town’s World Heritage Site status.

Throughout his tenure in MBPP, Dr Lim has been called a liar, back-stabber and betrayer of the state government by local politicians. NGO members, however, hold him in high regard.

“Nobody can live up to Mah Hui’s standard as an example of integrity and representing public interest without fear or favour.

“He had been talking about stepping down for some time.

“Maybe he needs to take a break and we hope he will accept the post again,” said fellow Penang Forum member Khoo Salma Nasution, whom the group has nominated to take Dr Lim’s place.

Former DAP member Roger Teoh, who was initially at loggerheads with Dr Lim over the PTMP, said it was a shame that local politicians had painted him in a negative light.

“Something was not right about how the state was reacting to Dr Lim’s Unesco letter. I felt he was unfairly labelled as treasonous. If his concerns were heard internally, would he have needed to write to Unesco?” he asked.

Teoh had initially supported the PTMP and openly criticised Dr Lim.

He changed his stand after doing a Masters thesis research on car use in 100 cities around the world, which led him to resign from DAP recently.

Sources: Arnold Loh The Star/Asian News Network

Dr Lim Mah Hui to make way for new blood 

                                                                          GEORGE TOWN: Outspoken Penang Forum member Dr Lim Mah Hui (pic) will not seek another term as a Penang Island City councillor.

“I have declined to be nominated for the reappointment as a councillor next year. I have served six years.

“I think I have served long enough and we need new blood and new people to take up the cause,” he said at the council’s monthly meeting yesterday.

He later told a press conference that Penang Forum suggested Khoo Salma Nasution, the forum’s steering committee member and Penang Heritage Trust vice-president, as his replacement.

“We have nominated Khoo as the representative for Penang Forum and NGOs. We will have to wait for the state executive council to decide on the nominations.

“Nobody told me to step down. It was my own decision. Penang Forum wanted me to continue but I told them I had done more than my share.

“I will remain in the Penang Transport Council,” he said.

Dr Lim, however, said he would continue to be vocal and speak out.

He urged the Penang Island City Council to open its meetings to the public to promote greater transparency and participation.

“Section 23 of the Local Govern-ment Act 1976 gives the local council the power to do so.

“Members of the public can also be invited to sit in, possibly as observers, at the council’s committee and sub-committee meetings where decisions are made.

“This is the challenge I put forward. If they are truly taking about change and a new type of government, then they should do that,” said Dr Lim.

Dr Lim has raised various concerns during his stint as a councillor and forum member on issues related to hill clearing, land reclamation, heritage conservation and the proposed Penang Transport Master Plan. – The Star

Developers unafraid of Penang authorities, says activist group

 

CHANT cited the demolition of the 19th century Khaw Sim Bee Mansion and illegal hilltop clearing of Bukit Relau as examples of the developers’ fearlessness. — File picture by Bernama – See more at: http://www.themalaymailonline.com/malaysia/article/developers-unafraid-of-penang-authorities-says-activist-group#sthash.muMUgaNa.dpuf

GEORGE TOWN, March 16 — Developers in Penang no longer fear flouting the law as the authorities seem to be “toothless” in taking punitive actions, an activist group claimed.

Referring to the latest hill-clearing incident on Bukit Gambir and similar past incidents, Penang Citizens Awareness Chant Group (CHANT) coordinator Yan Lee said the developers knew they could easily get away with illegal earthworks or structural demolitions.

This was because the state government and the municipal council were not prepared to take stern punitive action against them, he said in a text message yesterday.

The council has come under fire in the past few days after a developer defied a stop-work order to carry out earthworks on the hill slope of Bukit Gambir in Gelugor.

CHANT cited the demolition of the 19th century Khaw Sim Bee Mansion and illegal hilltop clearing of Bukit Relau, commonly referred to as “Botak Hill”, as examples of the developers’ fearlessness.

Yan Lee claimed that the developers were fearless because they knew a contribution to the state heritage fund (SHF) “can do magic”.

A check by Malay Mail yesterday showed the developer had stopped work for two days on the hill slope, located behind the Gambier Heights apartments.

The council had issued the stop-work order on Thursday.

The hill was cleared to build a temporary 500m-long access road and fencing for a housing project site on the hill slope.

Trees were chopped down to make way for the road, while a lorry and an excavator were parked at the construction site.

According to some residents, the earthworks began early this month.

The residents also complained of pollution caused by dust, and noise caused by the frequent movement of vehicles.

Traffic management and flood mitigation committee chairman Chow Kon Yeow called on the council to take stern action against the developer for “jumping the gun”.

He said the developer should have waited for the council to issue a commencement of work certificate.

Sahabat Alam Malaysia urged the state authorities to stop the developer from clearing the hill, and to implement firm policies to protect the hills and greenery in the state.

It warned against a repeat of the “Botak Hill” incident.

An MPPP councillor also said the developers had no respect for the authorities.

“Even if the council were to haul them up for violating the law, they know they will get away with a token fine,” the councillor, who asked not to be named, said.

He cited a previous case where a developer completed a housing project despite the case for carrying out illegal earthworks pending in court.

Sources: Athi Shanka, MalayMail online

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When will the property market pick up?


Affordable living: The history of Stuyvesant Town, Manhattan New York dates back to 1943. In October 2015, Blackstone Group LP led a deal to buy New York’s Stuyvesant Town-Peter Cooper Village, a transaction that would put Manhattan’s biggest apartment complex in the hands of the world’s largest private equity firm and maintain some affordable housing at the property.

 

Experts predict between 2018 and 2019

AT a recent property seminar organised by Asian Strategy & Leadership Institute, several developers and property consultants had a debate predicting when the property market will pick up.

Real Estate and Housing Developers’ Association Malaysia (Rehda) patron Datuk Jeffrey Ng Tiong Lip reckoned the residential sector should recover next year or in 2018.

Ng was the moderator for the session on The Future Outlook and Challenges of the Housing and Property Sector.

Property consultants Savills Malaysia managing director Allan Soo, who specialises in the retail malls, expects a 2019 recovery.

Office market specialist Jones Lang Wootton executive director Malathi Thevendre declined to make any predictions. “It all depends …,” she says.

Ng says the current slow housing market is actually good over the long term, although it is painful in the short term. It all depends on how we manage “the noise”, he says.

There are lots of noises at present, both on the national and international level.

“If next year is election year, the recovery – if there is one – will be after that because between now and then, there are so many uncertainties.

“There is a lack of clarity at the moment,” says Ng.

His reading of the property crystal ball of a 2017/2018 turnaround is by far the most positive and contrasts with Kenanga Investment Bank Bhd equity research head Sarah Lim Fern Chieh.

Lim expects house prices to be flattish or slightly weak depending on locations “over the next four to five years, if there are no major policy changes”.

Her rationale for a longer down-cycle is simple. If your destination is Genting Highlands, but you are driving in the opposite direction, you will need a longer time to arrive there when you finally realise you are driving in the wrong direction.

Although it is widely accepted that the property cycle is between eight to 10 years, within this cycle are “mini two-year cycles. There were two-year up-cycle in 1999-2000 after the Asian Financial Crisis, and another in 2003-2004 and 2007/2007.

But after the 2008 Global Financial Crisis, Malaysia had an extended five-year up-cycle between 2010 and 2014 with prices peaking in 2013, and this was largely due to quantitative easing (QE).

She is, therefore, expecting a longer consolidation period of between four and five years, starting from 2015, before the next up-cycle, barring any policy changes and the global economic climate.

She is also expecting the property market to experience structural changes due to affordability and liquidity factors, among others.


More realistic pricing

Notwithstanding the fuzzy horizon, there are nevertheless a few certainties which may well put the sector on a better footing.

First, home ownership has become a national issue.

Second, the government, at both federal and state levels being landowners, are stepping up on affordable housing.

Third, prices are expected to be more realistic going forward.

Rehda president Datuk Seri FD Iskandar Mohamed Mansor is seeking government cooperation to reduce or waive development charges and other charges, collectively known as compliance costs, in order to bring down prices as this is “too challenging” for private developers to go it alone, considering today’s high land prices.

“If the Government wants developers to build more affordable housing, give us cheaper premiums or don’t charge at all.

“We will then see more stability in prices, or even a reduction, if development charges and all sorts of other charges imposed on developers come down,” said FD Iskandar at a Rehda first half-year review recently.

He says property development and land matters have been the biggest revenue earner for every state. Both federal and state governments own large tracts of land. Although FD Iskandar had made this call before, he was very passionate and firm this time around. Other developers, previously silent, are also quite vocal about the various land and development charges they have to fork out.

This is probably the first time developers are coming together to make a collective public call to seek a waiver or reduction of development and other aspects of compliance cost. The effectiveness of that call depends on the Government’s will to act.

While developers can clamour for such waivers, what is facing the market today is weak sales and this in turn is forcing developers to tweak pricing and strategy a bit, hence the drop in the number of launches as they try push unsold stock.

Andaman group managing director Datuk Seri Vincent Tiew says developers will be offering “more realistic pricing” from now onwards with location being a paramount factor.

There will be more affordable housing and this can be seen from the various affordable housing projects being planned by both the federal and state government although the end-products are slow in coming.

This, says Tiew, can be seen in the various agencies under the federal and state governments, among them being PR1MA Corp mandated to build 500,000 units of affordable housing units by 2018, as outlined in Budget 2013.

A total of 240,000 houses were due by end-2015, with an annual mandate for 80,000 between 2013 and 2015. The number of completed units was 883 at the end of 2015, says Tiew. By the end of this year, 10,000 units are scheduled to be completed. The number of units approved to date are 232,807 against 1.24 million PR1MA registrants as of February 2016. All eyes will be on the affordable segment in the coming Budget 2017.

Healthy demand

The demand for housing has always been there. The issue is affordability, says Kenanga’s Sarah Lim.

“Of late, developers are beginning to price units at RM500,000 and below,” she says.

The current change in direction is attributed to societal and government pressure. Unsold stock and government pressure forced developers to relook their pricing strategy.If developers keep building RM1mil homes, when the threshold is RM500,000 and less, they will be left holding unsold stock. In order to move stocks, creative marketing/financing strategies are employed to move these stocks.

Lim says if developers were unable to meet at least 40% of their sales target by mid-year, they would be unable to meet this year’s targets.

More than two-thirds missed their sales targets last year.

“Prior to this, what was booked was considered sold. Now, this is no longer true,” Lim says.

Lim says there are two issues here, the pressure on the sector as the rate of aborted sales crept up and the people’s demand for realistic prices.

“What we are seeing today is the government’s influence. It is actually steering the market in the right direction,” she says.

Renting the way forward

The other certainty is observed in the rental market, which is expected to continue to be soft next year.

There will be “low occupancy rate” for projects completed last year (2015) and this year, with rental yield at less than 3% a year, says Andaman group’s Tiew.

It is cheaper to rent than to buy. There is so much supply going around and the purchasing power of the ringgit is shrinking.

Selangor State Development Corp (PKNS) senior manager (corporate planning and transformation) Norita Mohd Sidek advocates renting.

She says if there is a 50% loan rejection rate for affordable housing, and considering the limited supply by private developers, renting may be the only option.

She suggests building affordable housing cities the likes of Stuyvesant Town’s Peter Copper Village, Manhattan New York and counters the argument that there is no money to be made from affordable housing.

In October 2015, Blackstone led a deal that put Manhattan’s biggest apartment complex in the hands of the world’s largest private equity firm and maintain some affordable housing at the property.

Blackstone and Canada’s real estate company Ivanhoe Cambridge Inc acquired the 80-acre enclave for about US$5.3bil. Rent is kept below market rates for some 5,000 units. Public transport and other amenities must be part of the development for it to succeed. “Government grants and resources are needed to identify the right location to built more council homes,” she says in her paper.

In today’s low yield environment, pension funds around the world are looking at other ways to generate dividends besides equities and fixed income securities. They are buying into infrastructures and large township developments where there are economies of scale for maintenance.

Malaysia’s national housing dilemma cannot be solved by profit-oriented private developers alone. The golden property years between 2010 and 2014 have been intoxicating, having resulted in expectations of 20% to 30% rise in sales year-on-year, like the manufacturing sector. But the property sector is quite unlike manufacturing. The reflection point was seen in 2014 after the government introduced certain cooling measures and anti-speculation sales gimmick.

Going forward, the emphasis on housing priced RM500,000 and below means developers have to sell more units to make the same sales value as previous years.

“They have to sacrifice some of their margins. Higher profit margins can be had from the mid- to high-end segments,” says Lim. They will have to work harder to help buyers secure loans.

This search for some form of cohesion in the national housing arena has taken a bit of time. Hopefully, the coming Budget 2017 will pave the way for more positive action.

By Thean Lee Cheng The Star/Asia News Network
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High-rise living in below par, need professionalism in managing the property


Only 74 out of 7,325 high-rise residential properties in Peninsular Malaysia earned the top five-star ranking in an evaluation of their property management standards. And more than half are below par, earning only one and two stars.

IT is one thing to be a developed state by 2020. But it is another thing entirely to have a developed state of mind – and Malaysians have a long way to go to achieve that.

Take, for instance, condominium- and apartment-living.

Some of these properties may come with top notch facilities but when it comes to managing their upkeep, there is much to be desired.

Or so says the latest findings on the quality of managing stratified properties from a survey by the Urban Wellbeing, Housing and Local Government Ministry.

Every year, the ministry conducts its Strata Scheme Management Quality Evaluation, or “Star Rating”, which ranks the standards of joint management bodies (JMBs) or management corporations (MCs) of apartments and condominiums.

These bodies are ranked based on how they do in seven areas (see graphic below for details); five stars is the highest rank.

But, as it turns out, more than half – or 69% – of condominiums and apartments nationwide ranked “below par”, scoring only one and two stars in 2015. In 2014, a slightly smaller percentage, 65%, were ranked below par.

Only 1% – or 74 – out of 7,325 strata development schemes surveyed earned five stars in the 2015 ratings, made available to Sunday Star.

If such a trend continues, future residents will inherit poor standards of living amidst modern facilities.

Currently, almost six million Malaysians out of 20 million city folk are living in stratified buildings like apartments and condominiums.

“But this number is expected to rise in future as the country progresses and becomes more urbanised,” says Mohammad Ridzwan Abidin, Urban Wellbeing, Housing and Local Government Ministry urban service division under-secretary.

He says one of the major problems that condo dwellers continue to face is the refusal of other residents to pay maintenance fees. Other problems are building defects and matters involving enforcement.

“For now, about 70% of residents are at a level where they are merely aware of what needs to be done in managing their property. They are not yet at a level to appreciate the benefits of cooperating with each other and creating a better living culture,” he says.

Mohamad Ridzwan says there is a need to change the mindset of people to foster more civic-minded communities in high-rise buildings.

“Future generations will likely live in stratified buildings, so people should try to set a proper precedent for them,” he says.

He points out that there are also more people moving out of landed properties and into high-rise buildings.

“This group of people will have to learn to adapt to the culture of living in stratified buildings as it is different from living in houses.

“They will need to be more inclusive of and cooperative with their neighbours,” he says, adding that they would also have to learn to be more considerate when it comes to using shared facilities.

Stressing that it all boils down to the mindset of residents, Mohamad Ridzwan highlights the case of Rumah Pangsa Orkid, a low-cost flats property in Ulu Tiram, Johor, which made it into the Malaysia Book Of Records in 2014 for obtaining the ISO 9001:2008 standard for exemplary management.

“Until today, they remain the only low cost flat development to have achieved this,” he says, adding that there are yet to be any high-end condominiums accorded the same standard.

Mohamad Ridzwan says the ministry will continue to actively educate dwellers on proper management of their properties.

“We will embark on more education programmes to promote better practices through advertisements in the mass media,” he says.

On the Strata Management Tribunals to hear disputes, Mohamad Ridzwan says four such tribunals have been successfully set up to cover different zones in Peninsular Malaysia.

“Since their formation the tribunals have heard about 200 cases per month,” he says.

In March, Sunday Star reported that residents who do not pay maintenance fees and other charges were set to face the music, with the Government forming a team to strengthen the enforcement of the Strata Management Act.

The Act also enables residents to take their disputes to a Strata Management Tribunal to settle matters.

Building Managers Association of Malaysia committee member Richard Chan agrees that the “biggest and most critical” problem is the collection of fees, saying that it is rare that JMBs or MCs are able to collect payment from 80% of residents.

“It is more common for the collection rate to be at 40% or 50%,” he says.

Chan laments that petty excuses are often given by residents to defend their refusal to pay up.

“Some refuse because they don’t use the facilities.

“When people ask why they don’t want to pay, they simply say they don’t swim or play tennis,” he shares.

Chan adds that many unit owners live elsewhere or are based overseas and so are reluctant to pay.

“Some are not satisfied with services like garbage collection and defy orders to settle the fees,” he says.

He urges future condo owners to refrain from buying properties that come with all sorts of facilities if they are unwilling to pay up.

“Sometimes, it isn’t about whether they can afford the fees or service charges. It is about their attitude and mentality.

“Some don’t pay simply because their neighbours are not paying and are getting away with it,” Chan says, adding that such attitudes have resulted in some apartments owing up to RM200,000 in water and electricity bills.

The lack of money in the sinking fund also hinders JMBs and MCs from paying for major works like repairing lifts.

“It becomes a vicious cycle. Because people are not satisfied with the upkeep of the place, they do not pay the fees.

“But when they do not pay, there isn’t enough funds for upkeep,” he says.

Also, developers must do their part by informing all potential property buyers of the exact amount of all service charges, says Chan.

“Developers will try to promote their projects for more sales but they should also inform buyers of the fees they are expected to pay.

“Owners should also consider that, after a year, the fees may go up as warranty periods for equipment expire,” he says.

Federation of Malaysian Consumers Associations secretary-general Datuk Paul Selvaraj says many complaints against MCs have been made to the federation.

“High-end condominiums are generally better managed. We received a lot of complaints from people in medium cost apartments,” he says.

He says that consumers and the building management should both be more responsible.

“Consumers need to settle payments that they have agreed to. But they should also be receiving good service in return, like efficient rubbish collection,” he says.

Selvaraj highlights that the only way forward is for management bodies and residents to have a good working relationship.

“People should understand that managing their building is a collective responsibility.

“More dialogues should be held on how to improve the community to ensure good quality of life wherever we live,” he adds.

by Yuen Meikeng The Star/Asia News Network

More professionalism needed in managing high-rises

WITH more high-rises mushrooming, a Building Managers Board is urgently needed, according to Tan Sri Teo Chiang Kok, deputy president of the Building Managers Association of Malaysia (BMAM).

BMAM is an umbrella body comprising stakeholder organisations representing management corporations (MCs), joint management bodies (JMBs), chambers of commerce, developers, engineers, architects, shopping and high-rise complex managers, and managing agents.

Appealing to the Urban Wellbeing, Housing and Local Government Ministry to set up the board urgently, Teo says such a body is long overdue.

“Millions of stratified properties are coming up. Building management is becoming a very big industry. We have to start regulating. All building managers must be registered and regulated,” he says.

To date, some 600 building managers have voluntarily registered with the association, he shares, estimating that there are probably tens of thousands more.

Meanwhile, the BMAM is focused on educating its members and interested parties on good management via collaborations with institutions of higher learning.

Describing building management as a multitasking, multi­discipline function that attracts people from various backgrounds and with a variety of skills, Teo says that basic criteria for the role is needed. A Building Managers Board, once set up, will have guidelines and regulations to bring professionalism to the role.

Persons deregistered by the board cannot be hired as property managers, he suggests. This, he feels, will make hiring building managers cheaper while ensuring that they are monitored.

“So long as they fulfil the board’s requirements, anyone can be a building manager. The board will monitor and weed out the errant ones. JMBs and MCs can hire cheaper, smaller companies, even individuals, to manage their buildings if they don’t have the budget.”

Urban Wellbeing, Housing and Local Government Ministry urban service division undersecretary Mohammad Ridzwan Abidin acknowledges the proposal to set up a Building Managers Board.

“However, no decision can be made by the ministry yet as this matter is still being discussed,” he says.

He says the ministry issued a directive to Commissioners of Buildings nationwide last month to register all managing agents to protect residents from unscrupulous parties.

The BMAM would also like to see the country’s 150-plus Commissioners of Buildings (COB) given proper funding and staff. The role of the commissioner is mostly undertaken by local council heads or mayors, which isn’t right because they already have so much on their plate, he says.

The Commissioner of Buildings must be a dedicated, full-time position supported by an adequately funded department. Now, it’s mainly a one-man show, he observes.

“The Act is a good tool,” he says, referring to the Strata Management Act 2013, “But it’s for the COB to implement it efficiently. An effective COB can nip many things in the bud – the COB can call a unit owner, find out the grouses and give directives. If the COB can offer easy resolution, a lot of problems will be solved.”

Apart from supporting the position of COB, JMBs and MCs must familiarise themselves with the Strata Management Act, says Richard Chan, a committee member of the Building Managers Association of Malaysia and a past president of the Malaysian Association for Shopping and High-Rise Complex Management.

“For instance, many aren’t aware that money collected should go to JMBs and MCs – not the companies or individuals hired to manage the property. What if these companies don’t pay the service contractors?”

On Tuesday, a full-day strata management seminar will be held at Wisma Rehda in Petaling Jaya, Selangor, to explain the Act, he says, urging stakeholders to attend the event.

Teo feels that the Act is too harsh on JMB volunteers. Calling it a thankless job, he says it’s difficult getting residents to even attend AGMs, what more serve on the JMB.

“Despite not being paid, JMB members risk personal liability actions. It’s too onerous. It’s overkill because there are already laws like the Penal Code which imposes fines and jail terms.”

And he feels that the Act places too many obstacles in front of willing volunteers.

“The JMB chairman and members can only serve for two and three years respectively. Such restrictions will make things worse because as it is, no one wants the job. Our solution is to extend the chairman’s term to three years; but if at the AGM there’s no one else who wants the post, he or she should be allowed to stay on. And members should be permitted to stay on for as long as they want.” –  The Star

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Young adults in developed countries rent, we buy houses for good


While young adults all over the world are renting homes, successful Malaysians and Singaporeans prefer to own homes instead of cars, as soon as they get their first pay cheque.Instead of blowing their cash on pricey gadgets, young Malaysians are saving up for their first home.

While most Gen Y shy away from owning property in developed countries and big cities, demand from millennials here is still holding, especially with parents assisting them with the downpayment, Real Estate and Housing Developers’ Association Malaysia (Rehda) president Datuk Seri F.D. Iskandar said.

(Gen Y, also known as millennials, are commonly referred to those who are born in the early 1980s to 2000s. They are sometimes referred to as the strawberry generation).

Demand from first-time buyers, including the younger generation, remains strong although housing affordability is a challenge, said Bank Negara.

The central bank added that they accounted for 75% of 1.47 million borrowers.

Owning and investing in a house remains a priority for many Malaysians.

This is reflected in the household borrowing trend where the buying of homes continues to be the fastest growing segment of household lending, with annual growth sustained at double-digit levels (11% as at end-March 2016), said Bank Negara in a statement.

Those who cannot afford it themselves, and do not have parents to help, turn to their friends.

In his 30s, Daryl Toh, and two of his college mates own a condominium in Penang; they pooled their resources to purchase the unit five years ago.

“It’s in a premium area and since we couldn’t afford a place on our own – at least not prime property, we became joint owners.”

Financial adviser Yap Ming Hui said it makes perfect sense to own.

“Of course the Gen Y here are still keen on buying. You pay the instalments and eventually own a home. Only those who can’t afford to buy are forced to rent.”

Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector of Malaysia adviser Wong Kok Soo said property prices in Hong Kong have escalated beyond the purchasing power of the Gen Y but the trend hasn’t caught on here – yet.

Wong, who is also a consultant with the National House Buyers Association, however, said there were signs that the Gen Y could no longer afford to live in big cities like Kuala Lumpur, Penang Island, Johor Baru and Sabah.

“Parents are chipping in for the downpayment. And, commuting from the suburbs to the city centre is still an option.

“But when prices get inflated far beyond their means, the same will happen here (as in Hong Kong),” said Wong, who, however, felt that even if demand dropped, it would not be substantial.

Iskandar agreed, saying that although the property market was slow now, the drop was manageable. “Like everything else, it’s cyclical. “The property market goes up for years and after some time, begins falling before rising again.”

He said the market would pick up with the completion of infrastructure development and public transportation facilities.

Rehda, he said, was working closely with the Government to find ways to facilitate home acquisition especially among first-time buyers.

“We proposed a review of the financing guidelines that have negatively impacted buyers’ ability to secure financing,” he said. – The Star/Asia News Network

Demand from first-time buyers still strong despite affordability challenge

PETALING JAYA: Instead of blowing their cash on pricey gadgets, young Malaysians are saving up for their first home.

While most Gen Y shy away from owning property in developed countries and big cities, demand from millennials here is still holding, especially with parents assisting them with the downpayment, Real Estate and Housing Developers’ Association Malaysia (Rehda) president Datuk Seri F.D. Iskandar said.

(Gen Y, also known as millennials, are commonly referred to those who are born in the early 1980s to 2000s. They are sometimes referred to as the strawberry generation).

Demand from first-time buyers, including the younger generation, remains strong although housing affordability is a challenge, said Bank Negara.

The central bank added that they accounted for 75% of 1.47 million borrowers.

Owning and investing in a house remains a priority for many Malay­sians.

This is reflected in the household borrowing trend where the buying of homes continues to be the fastest growing segment of household lending, with annual growth sustained at double-digit levels (11% as at end-March 2016), said Bank Negara in a statement.

Those who cannot afford it themselves, and do not have parents to help, turn to their friends.

In his 30s, Daryl Toh, and two of his college mates own a condominium in Penang; they pooled their resources to purchase the unit five years ago.

“It’s in a premium area and since we couldn’t afford a place on our own – at least not prime property, we became joint owners.”

Financial adviser Yap Ming Hui said it makes perfect sense to own.

“Of course the Gen Y here are still keen on buying. You pay the instalments and eventually own a home. Only those who can’t afford to buy are forced to rent.”

Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector of Malaysia adviser Wong Kok Soo said property prices in Hong Kong have escalated beyond the purchasing power of the Gen Y but the trend hasn’t caught on here – yet.

Wong, who is also a consultant with the National House Buyers Association, however, said there were signs that the Gen Y could no longer afford to live in big cities like Kuala Lumpur, Penang Island, Johor Baru and Sabah.

“Parents are chipping in for the downpayment. And, commuting from the suburbs to the city centre is still an option.

“But when prices get inflated far beyond their means, the same will happen here (as in Hong Kong),” said Wong, who, however, felt that even if demand dropped, it would not be substantial.

Iskandar agreed, saying that although the property market was slow now, the drop was manageable.

“Like everything else, it’s cyclical.

“The property market goes up for years and after some time, begins falling before rising again.”

He said the market would pick up with the completion of infrastructure development and public tran­sportation facilities.

Rehda, he said, was working closely with the Government to find ways to facilitate home acquisition especially among first-time buyers.

“We proposed a review of the financing guidelines that have negatively impacted buyers’ ability to secure financing,” he said. – By Christina Chin The Star

A pricey priority

 

Wary of big, life-changing purchases, the ‘Strawberry Generation’ – those ‘easily bruised’, coddled young people in their 30s – prefers to rent, global reports say. Malaysians, however, are bucking the trend despite steep property prices. Mainly thanks to supportive parents, it seems.

BEST friends Leh Mon Soo, 38, and Brandy Yu, 39, are finally buying their first home.

After months of serious scouting, the two managers found units that matched their budget and needs, coincidentally, in the same condominium in Petaling Jaya. Leh is getting a three-bedroom unit while Yu is happy with a 48sqm studio apartment.

Yu feels that the RM365,000 she’s paying is affordable as she can still save about RM1,700 monthly after paying the loan instalment.

“I’m only paying RM400 more a month than what I’ve been forking out for rent. And unlike the rental, this unit will be mine one day,” she says.

Leh ended up forking out a whopping RM690,000 even though she dreads the long-term commitment. While “not a bargain, and at the upper limit of what I can afford”, she says that it’s still a pretty good price, as other, smaller, units were going for higher prices.

“I was only willing to pay RM500,000 initially. Then I saw a two-bedroom in the same condominium going for RM680,000. So I bit the bullet and got this. Property prices won’t be dropping any time soon and our ringgit’s shrinking. It’s now or never. I’ll have to cough up even more later if I don’t get a place now,” she says pragmatically.

The soon-to-be neighbours think property is still in demand, even among Gen Y-ers, aka Millennials (those born in the 1980s and 1990s, typically perceived as brought up and very familiar with digital and electronic technology).

But they’re more privileged because their parents have either already invested in property for them or are helping them buy it, Leh offers. Renting is not for the long-term, she says firmly, and even the younger ones know that.

The Malaysian mindset, Yu quips, is that everyone must own at least one property.

Gym owner Chip Ang, 26, agrees. He got the keys to his new 78sqm unit in Shah Alam last week.

Although it was his parents who suggested he get the RM168,000 place under the Selangor Government’s affordable housing scheme, Ang says property ownership is always a hot topic between him and his friends. Young professionals want to own property. The issue is affordability, he thinks.

“Many are unrealistic. They want their ideal home in the ideal place. Of course that’s unaffordable. Most affordable homes are in up and coming townships, not prime locations.”

The experience of getting his own place was a “blur” because it happened so fast, he says, though he does recall that, “because it’s affordable housing, I had to fulfil a number of requirements including proving that I’m a bachelor”. While the RM700 monthly mortgage payment is doable, he’s still nervous about being “tied down”.

Writer Teddy Gomez, 29, doesn’t think people have given up on owning property but sees a new trend emerging.

“Buying property is still big here but I see more renters because it’s cheaper and more flexible,” says Gomez, who got “a little help” from his dad buying a 83sqm apartment in Kuala Lumpur last year. Although the cosy RM400,000 unit is “not really affordable”, he says it’s time to leave the nest.

Like Gomez, a blogger who only wants to be known as Robyn, 24, thinks it’s nice to have your own space. She’s moving into an apartment in Petaling Jaya soon. The fresh graduate admits being lucky because her dad’s the owner. She’s getting the three-room unit for less than RM140,000 although it’s valued at over RM750,000.

“For the next three years, I’ll pay the RM3,800 monthly loan instalments. Now, I’m only contributing RM2,000 because I just started working. Dad’s helping until I can afford to take on the full amount myself.”

She knows she’s better off than most her age and is thankful for her family’s support – many of her friends are also looking for properties to buy but are resigned to living outside the city in places like Bangi and Kajang in Selangor. Still, with a RM200,000 budget, they’re willing to travel and own property rather than pay rent indefinitely.

Federation of Malaysian Consumers Association (Fomca) secretary-general Datuk Paul Selvaraj says it’s unfair to tell consumers to live on the outskirts of city centres because public transportation is still a problem in the Klang Valley. Unless the homes are accessible, living far away from the workplace isn’t practical.

National House Buyers Association (HBA) honorary secretary-general Chang Kim Loong sees a very strong demand for affordable properties in Malaysia because of our young population and urban migration.

For instance, the Government’s First House Deposit Financing (MyDeposit) scheme that was launched on April 6 received more than 6,000 online registrations within a week, a sure sign that Malaysians are still keen on owning property.

Fomca’s Selvaraj says property is a priority for most Malaysians because it’s a sound investment. They just can’t afford it in most urban areas.

“If you’re living on bread and water after paying your loan, then the house is unaffordable. For most young families, RM300,000-plus is affordable but it’s RM600,000 homes that are being built.”

Property is the best hedge against inflation so demand will always be strong, says HBA’s Chang. But there’s a “serious mismatch” between what’s classified as affordable by developers and the rakyat’s definition. To developers, an affordable property for first-time buyers is RM500,000. For upgraders, it’s up to RM1mil. Definitions on the ground are much lower. First-time buyers deem RM150,000 to RM300,000 affordable while those looking to upgrade can only pay between RM300,000 and RM600,000.

But if you can afford it – with family help, perhaps – M. Rajendran, 53, says invest early. The air traffic controller got his double-storey home in Kajang 21, Selangor, years ago for RM146,000. It’s worth at least RM600,000 now.

“If I hadn’t bought it then, I definitely wouldn’t be able to afford it now with the financial commitments I have. And at my age, no bank is going to give me a loan. Buy when you’re young because it’s cheaper and you can settle your loan faster.”

However, he warns that current economic challenges could result in a rise in the number of abandoned projects, so those looking at new properties should be cautious and do their homework.

“Scout around. Choose locations with infrastructure and amenities so that the potential for property prices to appreciate is higher.” – By Christina Chin The Star

Don’t bank on the banks

 Chang Kim LoongRELAXING lending conditions won’t help more people buy their own homes. It will only worsen the situation as developers increase prices further to match the lending surge, predicts Chang Kim Loong, honorary secretary-general of the National House Buyers Association (HBA).

Datuk Paul Selvaraj also doesn’t think it’s a good idea. The Federation of Malaysian Consumers Association secretary-general says home ownership is a right, and it’s the Government’s responsibility to make it a reality. The Government, he stresses, must either build more affordable housing or force developers to cater to the neglected market. It’s wrong to force banks to take bigger lending risks by calling on them to relax lending conditions, he feels.

“Banks will only lend money if they can get it back. It’s unfair to expect them to do otherwise. Also, if the borrowers cannot pay, they themselves will end up with a big headache.”

Banks are rightly stringent as times are uncertain, says Wong Kok Soo, an adviser to the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector of Malaysia and consultant to the HBA.

Lenient policies encourage purchases that are beyond one’s means and are not a good idea; instead, the margin of financing should be increased or the loan tenure extended, for first home buyers. For existing loans, there should be some flexibility in extending tenures and adjusting debt servicing ratio, he feels.

Last year, housing in Kelantan, Penang, Sabah, Sarawak and Selangor, as well as Kuala Lumpur, were listed as severely unaffordable by market experts. Nationwide, only Malacca made the affordable category with housing in the other states deemed either seriously or moderately unaffordable.

Bank Negara’s “Financial Stability and Payment Systems Report 2015” showed an increasing supply of homes above RM500,000 while those priced below RM250,000 accounted for less than 30% of the total launches in the first nine months of last year.

Deputy Urban Wellbeing, Housing and Local Government Minister Datuk Halimah Mohamed Sadique has since called on developers to build more houses priced at RM300,000 for Malaysians.

The next generation won’t be able to own property without financial help from their parents unless concrete measures are taken to increase the supply of properties costing between RM150,000 and RM300,000 and to stem the steep rise in existing property prices due to excessive speculation, says HBA’s Chang.

A Khazanah Research Institute report reveals that Malaysia’s housing market is considered to be “seriously unaffordable”, with a median house price of more than four times the median annual household income. This problem, Chang notes, surfaced a little under a decade ago but if prices continue to soar, the situation could worsen.

Not that there aren’t affordable schemes and funding plans in place to help – in the last 50 years, scores have been introduced but information on them is scarce, he observes. Details of projects by developers, state agencies and federal bodies must be available in a public database, he suggests. And a single umbrella body under the Federal Government must coordinate the distribution and availability of such units.

Chang stresses also that there’s no place for racial profiling when it comes to housing. Whoever deserves a house must get a house, he insists.

There’s never a wrong time to buy property but one must balance the risk of buying with renting, he advices. Owning a house is riskier as buyers take on enormous debts, sign multi-year loan agreements and become responsible for homeowner costs, he cautions.

“Flip through the newspapers – you’ll see many proclamations of sales of units for public auction that are below RM50,000. Some even dip below RM10,000. On bank websites, you’ll find property foreclosure cases.”

A list of properties put up for auction by CIMB bank showed 35 units in Selangor at reserved prices of less than RM42,000 – that’s the price of a new low-cost unit, notes Chang.

Low-cost units auctioned off for half of the purchase price is an alarming trend, he says. Unfortunately, there aren’t any official statistics on how many low income earners have lost their homes or are struggling with their monthly loan commitment. Where do these homeowners and their families end up living, Chang wonders.

Foreclosures can devastate a family’s economic and social standing, possibly leaving them poorer than before they bought the property. Financiers, local authorities and communities benefit from homeowners being better informed of their rights and responsibilities as borrowers. Ensuring that lower income households have sufficient personal financial management skills and support is crucial.

It’s not enough just to provide homes for the low- and medium-income group. Chang recommends that a homeownership education programme be set up to raise financial literacy and prepare households for the responsibilities of owning a home.

“Manuals, advice or information given via telephone, workshops or counselling to help households maintain their homes and manage their finances must be given before first-time buyers sign the sale and purchase agreement. Public housing schemes are only successful if buyers can hold on to their property.”

Specifically, Chang says education should cover:

> Pre-purchase period – understanding the various types of available housing, the process of buying a house, loan process, and financial preparation needed; and evaluating household needs.

> Post-purchase period – budgeting monthly expenses; making payments promptly; avoiding loan defaults; living within a community; social responsibility; property taxes, assessments, insurance, service charges and sinking fund; home maintenance; and handling problems with the property.

Educate yourself and learn from the mistakes of others to avoid being disappointed or, worse, becoming “house poor” (when most of your income goes towards home ownership), Chang advises. Aspiring buyers must get something that’s within their budget. It could be an older or smaller unit but start small and slowly increase your property portfolio, he says.

“Don’t let friends or family influence you into getting something that’s above your budget, as home ownership is a long term investment. You must be able to service the loan while maintaining an acceptable standard of living.”

The majority may prefer to rent while waiting for the market to soften but it’s better to have your own shelter, says HBA consultant Wong.

The average Malaysian, he insists, can still own property. Consider buying at auctions. Research is a must, though, as inspections aren’t allowed at auctions. It’s an “as is, where is” bid, he stresses. Find out about the surrounding units and the neighbourhood, he suggests.

Better to own but…

PROPERTY investment helps maintain our socioeconomic well-being and must be encouraged, says Datuk Seri F.D. Iskandar, president of the Real Estate and Housing Developers Association Malaysia (Rehda).

Property – a wealth-creation instrument without the volatility of stock markets – has consistently out-performed traditional investment options like bonds, he points out.

But to invest, one must study the property and its market potential. With the right location and strategy, property can be a very profitable investment. The value will appreciate over time, he says.

To many, the most important aspect of owning property is to secure a home. In current conditions, most developers are coming up with attractive packages to close the deal, so it’s a good time to buy. Securing a bank loan now, though, is one of the biggest barriers, he says.

Rehda’s recommendations to the Government and Bank Negara are:

> Encourage innovative home financing packages like the developers interest bearing scheme (better known as DIBS).

> Allow flexible or accelerated tiered payments (longer loan tenure so you pay less now but more later when your salary has increased).

> Relax loan approval criteria with higher financing margins (up to 100%).

Also, banks, he says, shouldn’t just focus on a loan applicant’s current net income; future prospects of higher salaries and other incomes and bonuses must be taken into account.

He dismisses talk that the average Malaysian has been priced out of owning his or her first home.

There’s still a range of prices and options in both the primary and secondary property markets, he says.

With new launches, developers usually offer special incentives, rebates or discounts that will help buyers reduce their initial payment. In the secondary market, however, what you see is what you get. Depending on what you’re looking for, factors like location, surroundings, facilities, transportation and infrastructure will help you decide.

“Property prices in city centres are high because of land value but there are many cheaper options in less-urbanised areas. There are many affordable houses, including those by PR1MA (the 1Malaysia People’s Housing Scheme). The average Malaysian can definitely afford these.

“With an improving transportation system and connectivity, these places are now easily accessible from city centres.”

We are paid enough

Property price and value to Income per country in SEA 20014

WAGES are rising in tandem with the country’s consumer price index (CPI), which is a broad measure of inflation and our productivity.

Both criteria are used to determine wages here, says Datuk Shamsuddin Bardan, executive director of the Malaysian Employers Federation.

While Malaysians lament how their salaries aren’t enough to cope with soaring costs of products and services, their grouses aren’t reflected in the low CPI numbers, he says.

“Measured against the CPI, our average salary growth isn’t lagging. In the region, our salaries are second only to Singapore. Of course, you must consider the currency exchange. Singaporeans earn an average of S$3,000 (RM9,000) while Malaysians take home RM2,800 monthly.

“But bear in mind that the productivity of Singaporeans is 3.8 times higher than ours. Their per unit cost of production per employee is lower than us. In the United States, the productivity level is seven times higher than ours. So when you say we aren’t earning enough, you have to consider our productivity level too,” he states, pointing to how in some of our neighbouring countries, the average salary is less than US$100 (RM400).

However, he acknowledges that houses are beyond the reach of most – and fresh graduates in particular – and adds that even when both husband and wife work, they still may not have enough for the down payment and are forced to rent.

It’s tough, he admits, even for those who have already been working for a decade, to own a house now without financial support from parents.

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Penang property prices move sideways in Q1 2016


THE Penang housing market moved sideways on both the primary and secondary markets in the first quarter of the year, says Michael Geh (pictured), director at Raine & Horne International Zaki + Partners.

“I noted active transactions on the secondary market with prices staying flat,” he says in presenting the 1Q2016 Penang Housing Property Monitor.

Banks, he adds, only provide loans of up to 70% to 80% of a property’s value and serious first-time homebuyers have to make up the difference in order to sign the sales and purchase agreement.

Michael Geh“A few primary market projects have obtained the Advertising Permit and Developer Licence (APDL) and moved into the stage of processing loans from commercial banks and signing the S&P.” These projects include I-Santorini, SummerSkye and ForestVille, all under Ideal Group.

Will the prices of Penang houses, considered expensive, drop because of the soft market conditions? Geh says prices have come down to more realistic levels, especially with the government pushing the developers to build properties priced from RM300,000 to RM400,000 in the last two years, specifically for owner-occupiers.

Some of these properties, in areas such as Sungai Ara, Patani Road and Relau, have been taken up and are currently under construction, he adds.

Elsewhere in the country, some developers are pushing sales by providing financial assistance to the purchasers. Will those in Penang follow suit?

Geh says such a practice is not widespread for now. “Besides Sunway Bhd and S P Setia Bhd, I don’t see any other developer providing financial packages at the moment. I believe there are plans for such assistance but so far, nothing has been announced.”

Image result for Penang Transport Master PlanHe believes a catalyst for the state’s housing market would be the much-talked-about RM27 billion Penang Transport Master Plan (TMP). The ambitious plan will not only benefit the people but also bring about a more equitable housing situation and help retain local talent.

The TMP, he feels, will lead to equitable home property prices as areas that are not in prime locations will become more accessible, boosting demand for homes and resulting in higher prices. Properties in prime areas, which normally fetch higher prices, should see some price correction as demand is more evenly distributed across the state.

Image result for Penang Transport Master Plan

Apart from that, Geh opines that the TMP will help retain talent, which will subsequently impact the property market as the pool of workers seek to rent or own residential properties.

Image result for Penang Transport Master Plan“Penang needs the TMP to grow in the next 10 years. We need to stem the migration of youths to the Klang Valley, Iskandar Malaysia and Singapore in search of better job opportunities. We need to create jobs and make conditions more liveable for our youth to prosper,” he says.
Penang LRT map route masterplan

At present, two light rail transit lines have been approved under the TMP — one from Prangin Canal to Penang International Airport in Bayan Lepas and the other from Prangin Canal to Straits Quay.

 As for creating jobs, the state government is making a concerted effort

to develop new business sectors so that Penang can stay relevant to the
global economy.

“An industry that has been highlighted by the state is the knowledge economy, such as apps and animation,” Geh says. This has been identified as a key economic sector for the next decade.

There is a proposal for three reclaimed islands in the southern part of Penang island to locate businesses for this sector, he says, and for the islands to be connected by an LRT line that extends from Penang International Airport.

However, it has not been plain sailing for the TMP because one of its components — the Sky Cab or cable car system — has been rejected by the federal government. The 4.8km cable car system, according to the Penang government’s TMP website, was to have connected Butterworth on the mainland to Jelutong on the island. While this is a blow to the state government’s plans, Geh does not believe it will affect property prices.

“Cable car systems are generally more for tourists and not meant to move high volumes of people. I don’t think there will be a large negative impact on the property market. High-volume, high-frequency vessels that travel on water may be a better solution,” he says.

Another component of the TMP is an undersea tunnel linking the island with the mainland. However, further details are not forthcoming at present.

A development that will have an indirect impact on the Penang housing market is the much-debated Gurney Wharf. This 3km-long reclamation project lies just off the shores of popular tourist spot, Gurney Drive.

Geh believes this project has great potential to benefit the island. “I believe Gurney Wharf is an exciting development because it creates recreational activities for Gurney Drive. I think it is a boost to the area.”

Terraced houses

The prices of landed properties did not rise much compared with those of high rises, the data compiled for the monitor reveals. This is due to “stagnation” as there were very few transactions during the quarter under review, compared with the high-rise sector where there was much more activity, Geh explains.

Nevertheless, property values have increased compared with a year ago.

For 1-storey terraced houses, some areas surveyed showed activity year on year but little movement quarter on quarter.

On the island, properties in Jelutong showed the highest price growth, rising 5.88% to RM900,000 from a year ago, followed by houses in Tanjung Bungah (up 5.26% to RM800,000). Houses in Sungai Dua, Sungai Ara and Bandar Bayan Baru saw slight price increases of 2.56%, 2.04% and 1.96% respectively while those in Green Lane and on the mainland saw no changes.

For 2-storey terraced houses, there was no activity q-o-q but prices rose y-o-y in some of the areas surveyed.

The prices of houses in Pulau Tikus rose 6.67% to RM1.6 million, followed by those in Sungai Ara (5.26% to RM1 million) and Sungai Nibong (4.55% to RM1.15 million). Prices remained unchanged in Green Lane and the mainland.

Semi-detached and detached houses

The 2-storey semidees in some areas saw more activity in 1Q2016 than in the previous quarter and last year. Prices in Sungai Dua and Minden Heights rose 6.67% to RM1.6 million q-o-q, followed by those in Sungai Nibong (up 5.71% to RM1.85 million) and Island Park (up 2.27% to RM2.25 million). Prices in Sungai Ara remained unchanged.

There was no q-o-q increase for 2-storey detached houses but 50% of the units surveyed in the monitor saw y-o-y activity.

Island Glades bungalows saw a 3.57% increase to RM2.9 million y-o-y , the prices of Green Lane houses rose 2.86% to RM3.6 million and Pulai Tikus houses were up 2% to RM5.1 million. House prices in Tanjung Tokong, Tanjung Bungah and Minden Heights remained unchanged.

Flats and condominiums

Three-bedroom flats in Green Lane and Bandar Baru Air Itam showed price increases q-o-q as well as y-o-y .

In Green Lane, prices rose 5.26% to RM400,000 q-o-q and 17.65% y-o-y. Units in Bandar Baru Air Itam rose 4.35% to RM240,000 q-o-q and 20% y-o-y.

Compared with a year ago, the prices of flats in Paya Terubong were up 12.5% to RM180,000, followed by Sungai Dua and Lip Sin Garden (6.06% to RM350,000) and Relau (3.45% to RM300,000).

Among the 3-bedroom condos, the biggest gainers were properties in Pulau Tikus, which rose 4.62% q-o-q and 9.68% y-o-y to RM680,000.

In Island Park and Island Glades, prices rose 4.17% q-o-q and 6.38% y-o-y to RM500,000 while condos in Batu Ferringhi rose 2.22% to RM460,000 q-o-q and y-o-y.

Batu Uban condos rose 5% to RM420,000 from the previous year but there was no activity q-o-q. The prices of Tanjung Bungah units remained unchanged.

The Edge Property

Soaring house prices worry Penangites below 30

GEORGE TOWN (June 21): Despite the affordable housing programme by the state government, Penangites, especially those below the age of 30, are worried that they are unable to own a house in the future.

This is because housing prices in Penang island have risen by about 50% for the last five years and even for houses that was built under the affordable housing project.

A Bernama survey showed that several affordable housing projects that were completed less than 10 years ago in Bandar Baru Air Itam was originally priced at about RM175,000 but currently being resold at RM300,000 and above.

State Housing, Local and Town and Country Planning Committee chairman Jagdeep Singh Deo, said the state government had no power to control the price of houses being sold by house owners.

At present the state government had set a moratorium of five years for affordable housing and 10 years for low cost housing before it could be sold in the open market.

“There’s nothing that can be done by the state government to control the price but, what we can do is to provide more affordable housing so that the people can buy at a lower price,” he said.

Muhamad Amir Amin, 26, who worked as a graphic designer, said he earned about RM2,300 per month and could not even able to buy a low cost house with that wage.

“A low cost house costs RM42,000, which I cannot even afford to buy and from my observation, there is no low cost housing in Penang any more.

“All are either low medium cost or affordable housing which cost RM75,000 and above,” he said.

Universiti Sains Malaysia (USM) Social Science senior academician, Zainab Wahidin said that building more houses to tackle the increase of property price was not a solution given that Penang’s land was limited, especially on the island.

“If the state keeps building houses as an effort to provide affordable housing there will be more empty houses than those being occupied.

“There must be a regulation to control the housing price as a house is a basic necessity. Everybody needs a house to live in,” she added.

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Penang’s lively market


Many estate agents and developers generating interests in primary and secondary markets

WHILE the property market in Malaysia may be subdued, Penang is still generating interests among buyers and potential investors.

Raine & Horne Malaysia senior partner Michael Geh says: “Although sentiment is generally cautious, both interest and transactions within the Penang property market is ‘still active’.”

“In the primary market, there are still a lot of estate agents and developers generating interests,” he tells StarBizWeek.

Geh says this is especially the case for affordable homes.

“For middle and upper-end properties, there are still a few projects that are generating interests from genuine buyers,” he says.

“The market is still active. There is activity but transactions have slowed down.”

In terms of the secondary market, Geh says properties in “good locations” are still popular.

“Within the secondary market, there are a lot of enquiries for properties in good locations. In the not-so-good locations, there’s stagnation in both price and activity.”

Geh says demand for landed properties in Penang is still strong.

“For the high-rise properties or those that are highly speculated on, there has been stagnation.”

Malaysian Institute of Estate Agents Penang branch state chairman Mark Saw says the property market has been slowing over the past two years due to the cooling measures brought about by the Government.

“Until year-end, things should be slow – assuming that the global economy does not tank. But the market is still active in certain areas.”

He says landed residential properties and the hospitality segment in Penang are “still doing fine”.

“Hotel operators are still looking at Penang as a potential location to set up operations,” Saw says, adding that it is “business as usual” for players within the industrial sector.

“Within the industrial sector, there has been no real slowdown. I mean, we’ve not seen any factory closures.”

For residential properties in Penang, Saw says there had been a “swing towards affordable housing” in the past couple of years.

“In the top end of the market, developers have been more cautious as loans have not been as forthcoming. However, those developers with good stock are still able to continue launching new products.”

Looking ahead, Geh feels the market will “swing” in the final quarter of the year.

“The third quarter tends to be a little bit quiet. It’s in the fourth quarter that I think things will swing, and I believe it can go either way.

“This will depend on various factors, such as sentiment, or if Bank Negara comes out with an announcement that could affect the local property sector. But I think it will swing for the better.”

Saw meanwhile believes that the rental market will remain competitive for the rest of 2016.

“For those speculators and investors who purchased their properties some five years ago, looking to flip (for profit), those properties are coming into the market now and they might have problems selling, especially those having difficulties in servicing their loans.

“So instead, they will try to rent it out. But with a lot of these stocks coming in, it will be more of a tenant’s market than a landlord’s one.”

Penang in 2015

According to the National Property Information Centre, residential property transactions recorded a marked decline in market activity in 2015 by 16.9%.

The state saw a substantial decline in new launches by 47.5% or 2,348 units.

According to Rahim & Co in its Property Market Review 2015/2016, completion of Penang’s second bridge (Sultan Abdul Halim Muad-zam Shah Bridge) in 2013 has spurred growth in Batu Maung, Sg Ara, Teluk Kumbar and Batu Kawan areas.

“A new project to be launched in 2016 is the RM10bil Eco Marina project in Batu Kawan. Eco Marina, by Eco World Development Group Bhd, will include high-rise and landed properties on a 299.64 acres with a golf course adding prestige to the area.

“The development will be gated and guarded. Other projects by the same developer are Eco Terraces in Air Itam, Penang island and Eco Meadows, Bukit Tambun near Juru/Batu Kawan area.”

Other upcoming projects it cited are the Straits Garden Condominium, Platinum III (from RM428,000), D’Zone Condominium and three-storey detached houses in Baymont Residences (RM3.18mil) in Teluk Kumbar.

“There are also The Tamarind@Seri Tanjung Pinang, Raintree Park 2 comprise of two-storey terraced, two-storey semi-detached houses and Avenue Garden, a 17-storey serviced apartment by Tambun Indah and several others.

“An international school has recently been completed at Simpang Ampat within Pearl City development by Tambun Indah Land Bhd.”

According to CH Williams Talhar & Wong (WTW) in its Property Market Report 2016, 287 units of landed properties came into the market in 2015 in Penang Island alone.

<< Saw: ‘Hotel operators are still looking to set up operations in Penang.
It said prices of newly-launched houses continued to increase, reaching a new benchmark in their respective locations.

WTW added that terraced and semi-detached houses in established neighbourhoods such as Seri Tanjung Pinang in Tanjung Tokong and Island Park & Island Glades in Greenlane, still command strong demand in the secondary market despite the increasing prices.

“Transacted prices of 2½-storey terraced houses and three-storey semi-detached houses in Seri Tanjung Pinang have surpassed RM2mil and RM3mil per unit, respectively.

“However, the hike in prices is expected to taper off in the near future with more new houses entering into the market.”

On the mainland, WTW said demand of landed residential developments remained strong in 2015 underpinned by the improved infrastructure.

“A number of major property players venturing into Seberang Perai for the first time has excited the local market with new housing products. For instance, Ecoworld, positioned as a pioneer in sustainable and green developments launched its maiden residential project known as EcoMeadows in Bukit Tambun.

“With its lush green landscape, gated and guarded concept as well as proximity to the expressway, a typical terraced unit was priced at RM700,000 per unit, a new price benchmark to the market.”

As for high-rise residential properties, WTW said a number of projects were completed in first half of 2015. These included The Address at Bukit Jambul (124 units), Vertiq at Gelugor (318 units), Sierra Residences at Sungai Ara (300 units), Gardens Ville at Sungai Ara (476 units) and The Latitude at Tanjung Bungah (218 units).

Luxurious condos

“A newly completed luxury condominium development located at Batu Ferringhi, known as By The Sea, was developed by Selangor Dredging Bhd.

“It comprises 138 units with floor areas ranging from 1,037 sq ft to 3,012 sq ft.

For new projects launched in 2015, one luxury condominium project that was launched was Shorefront Residence by YTL Land.

“Situated along Lebuh Farquhar which is within the city of George Town, the luxurious condominiums offered 115 units with floor areas ranging from 1,400 sq ft to 3,400 sq ft.”

It said average transacted prices of condominiums in the sub-sale market increased marginally in 2015.

“Moving into 2016, the market is likely to experience slower growth with transaction activities expected to slow down.

“With more affordable flats and apartments being launched and under construction, a spike in the existing supply of high-rise residential units is expected within the next three to five years.”

WTW notes that high-rise residential developments make a strong inroad in Seberang Prai over recent years, with the majority being in the town area especially Butterworth in Seberang Prai Utara.

“Existing condominiums developments that are actively transacted in the secondary market in the past five years included Habour Place and Casia Condominiums.

“Bukit Mertajam is emerging as the next hotspot for high-rise residential developments with a majority of projects in the pipeline and due for completion.”

Condominiums developments remained as the main development trend in Seberang Prai, says WTW, with a number of serviced residences and Soho (small office home office) projects being proposed that are pending approval.

“Prices of a typical condominiums unit have increased around 9% since 2014 to RM370 per sq ft on average.

“The coming few years will see the mushrooming of skycrapers in Butterworth and Bukit Mertajam as several property players plan to develop integrated developments comprising condominiums, serviced residences or Soho together with shopoffices and hotel in these locations given their robust and established business sentiment.” – By Eugene Mahalinggam The Star

It says take-up rates of newly-launched projects are likely to taper off as the rental market in Seberang Prai is less demanding in comparison with the island.

KL firms bullish on Penang sales

 

Goh: ‘The City Residence and City Mall is expected to contribute RM40mil while The Wave will contribute RM90mil GDV.

Kuala Lumpur-based property development companies in Penang are expecting sales contributions from the state to increase significantly for their upcoming financial year amid a tough property market environment.

Eco World Development Group Bhd, Eastern & Oriental Bhd (E&O), IJM Land Bhd and Mah Sing Group Bhd are some of the Kuala Lumpur-based property companies expecting strong contributions from the state.

Mah Sing, for example, is projecting for Penang to contribute 9% of its revenue for the fiscal year ending Dec 31, 2016 compared to 1% for the previous financial year.

Says group managing director Tan Sri Leong Hoy Kum: “With no project launches in 2015, our properties in Penang contributed 1% or RM26mil to our total sales of RM2.3bil last year, leveraging on the take-up for projects launched before 2015.

“The group has set a target of RM2.3bil for 2016 for all our properties (throughout the country) and Penang is expected to contribute 9% of the revenue for the (current financial) year.

“With the value of the ringgit at an attractive level, we foresee strong buyer interest, particularly from foreigners, who represent 30% of our purchasers in Penang, as well as locals,” says Leong, who is also the CEO of the group.

Ferringhi Residence in Batu Ferringhi and Southbay Plaza in Batu Maung, both on the island, performed well in 2015, says Leong, with take-up rates of 92% and 96%.

Mah Sing plans to launch Ferringhi Residence 2, a high-end condominium project in Batu Ferringhi, in the second half of 2016, while the Southbay Plaza, a mixed-development project, will be completed this year.

Toh: ‘The group is targeting RM240mil sales this year in Penang.>>

Eco World expects its projects in Penang to generate about RM600mil this financial year ending Oct 31, 2016, compared to RM200mil in the previous year.

Its general manager Khoo Teck Chong says the targeted revenue for the 2016 financial year is RM4bil, compared to RM3bil in 2015.

“The contribution in Penang would come from Eco Terraces in Paya Terubong, which is 40% sold, Eco Bloom, scheduled to be launched in June, and the first phase of Eco Marina, scheduled for launching in October 2016.

“The Eco Terraces and Eco Bloom are priced respectively at over RM850,000 and below RM400,000, which are still considered as affordable by the locals, given the strategic locations of the projects,” he says.

IJM Land is expecting its projects in Penang to generate RM240mil to the revenue for the current financial year ending March 2017, compared to RM168mil in the last financial year.

Its senior general manager Datuk Toh Chin Leong says the projects planned for launch this year are The Trehaus (with a gross development value or GDV of RM64.7mil) in Bukit Jambul, The Senjayu (RM69mil GDV) in Jawi, South Seberang Prai, and The Waterside Residence (RM260mil GDV) for the second phase of The Light Waterfront.

“These projects should help the group realise the targeted RM240mil sales,” Toh says.

E&O also expects the contribution from Penang to improve significantly this year compared to a year ago.

Its marketing and sales general manager (Penang) Christina Lau says that given the strong sales of the last financial year in excess of RM1bil, the group believes that there will be sustained interest in its Penang projects comprising existing launches such as 18 East at Andaman, The Tamarind, and its landed super-luxe terraces Amaris and Andorra, which collectively tally an estimated GDV of RM1bil.

“The sale of these properties coupled with upcoming launches on the remaining plots within Seri Tanjung Pinang Phase 1 (STP1) will keep us busy, as STP1 approaches its maturity, evolving since the maiden launch of the Ariza courtyard terrace homes in 2005. “Now in its eleventh year, STP1 has developed into one of Penang’s most preferred addresses with a vibrant community of more than 20 nationalities,” she adds.

Ivory Properties Group Bhd is carrying out RM1.8bil worth of projects on the island this year.

These are the first phase of Penang WorldCity called Tropicana Bay Residences with a GDV of RM933mil, The Wave with a GDV of RM494mil, and The City Residence and City Mall with a GDV of RM313mil.

Group chief operating officer Goh Chin Heng says The City Residence and City Mall and The Wave will be the main contributors to the group’s current fiscal year revenue ending next March 31.

“The City Residence and City Mall is expected to contribute RM40mil, while The Wave, RM90mil.

“Both projects have done very well and should enable the group to achieve better results for the current fiscal year.

“There are only a handful of units left for both projects,” he adds.

Ideal Property Development Sdn Bhd plans to undertake RM2.723bil worth of condominium projects on the island this year.

Of the amount, the group has already launched the RM378mil Summerskye Residences in Bayan Lepas in January 2016.

The upcoming projects, comprising 3,648 units to be launched between May and November 2016, are strategically located in Bayan Lepas in the south-west district, which is close to the Penang International Airport and the first and second bridges.

The projects are Forest Ville (RM495mil GDV) in May, Bukit Ayun Development (RM1bil GDV) in August, Queens Residences (RM550mil GDV) and Amarene (RM300mil GDV) in August.

Besides the Queens Residences and Bukit Ayun Development projects, which will be priced between RM600,000 and RM900,000, the rest of the schemes are priced between RM450,000 and RM600,000.

“Some of these projects are among those that will be injected into Ideal United Bintang Bhd (IdealUBB) this year,” says Ideal Property executive chairman Datuk Alex Ooi. Ideal Property is the parent company of IdealUBB.

Ooi said that while most developers were holding back launches, the group has decided to go ahead with a variety of property products priced between the RM450,000 and RM900,000 range.

According to Ooi, properties within such a price range are still the most marketable, especially if the location is very strategic. – By David Tan The Star

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