Floods hit Bujkit Jambul & Hong Seng Estate in Penang


Wet, wet woes: (Above) Bukit Jambul is flooded once again after an evening downpour.

Firemen installing a pump to draw floodwaters from one of the affected houses on a slope in Hong Seng Estate, Mount Erskine.

GEORGE TOWN: A blocked underground drainage saw six houses located on a slope in Hong Seng Estate, Mount Erskine, flooded during an evening downpour.

Firemen and Civil Defence Force personnel had to install a water pump to draw out the rainwater which flooded some of the units to waist-level.

Rojak seller Tan Swee Hoe, 56, said she was shocked to see her kitchen and living room submerged in water at 7pm yesterday.

“I rushed home after receiving a call from a neighbour, saying my house is flooded.

“But I did not expect such a sight. I did not manage to move my furniture and electrical appliances to the upper floor, thus incurring several thousand ringgit in losses.

“I have been staying here for 17 years and this is the first time my house is flooded,” she said at her house.

Pulau Tikus assemblyman Yap Soo Huey said 17 people from five houses were affected while the sixth house was unoccupied.

She said the Fire and Rescue Department and the Civil Defence Force personnel moved in to install a 400m pipe to pump the water out from the house manually.

“The water is channelled to a nearby river and it may take a few hours if the weather is good,” she said, adding that the district office will evaluate the losses.

Late last month, seven houses in the estate were affected by soil erosion. A consultant engineer Datuk Lim Kok Khong had said the soil erosion was due to water seeping under the ground.

Penang Gerakan secretary H’ng Chee Wey urged the state government, with the aid of the experts, to look into the cause of the problems.

“The state government needs to ensure that the existing infrastructure, including the drainage system, can cope with the demand before it approve new development projects.

“We hope the local authorities can be proactive in the matter,” he added.

Rising waters also flooded the Bukit Jambul area, reducing traffic to a crawl.

Bayan Baru MP Sim Tze Tzin said a RM400,000 flood mitigation project started last month.

“The project will create a shortcut for the floodwater to be discharged directly to Sungai Nibong river instead of passing through Jalan Tun Dr Awang,” he said, adding that the project was expected to be completed at the end of next month.

Source: The Star by chong Kah Yuan

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Too good to be true? Think twice


 

HAVE you ever grabbed an offer without any hesitation, simply because the price is too cheap to resist?

Many of us have this experience especially during sales or promotional campaigns. We tend to spend more at the end or buy things which we are uncertain of their quality when the deal seems too good to say no.

It may be harmless if the amount involved is insignificant. However, when we apply the same approach to big ticket items, it can cause vast implications.

Recently, I heard a case which reinforces this belief.

A friend shared that a property project which was selling for RM300,000 a few years ago is now stuck. Although the whole project was sold out, the developer has problem delivering the units on time.

The developer is calling all purchasers to renegotiate the liquidated and ascertained damages (LAD), a compensation for late delivery.

One of the homeowners said he is owed RM50,000 of LAD, which means the project is 1½ years late. When we chatted, we found that he purchased the unit solely due to its cheap pricing without doing much research in the first place.

The incident is a real-life example of paying too low for an item which can leave us as losers, especially when it involves huge sum of investment, such as property.

To many, buying a house maybe a once-in-a-lifetime experience, a decision made can make or break the happiness of a family.

A good decision ensures a roof over the head and a great living environment, while an imprudent move may incur long-term financial woes if the house is left uncompleted.

Nowadays, it is common to see people do research when they plan to buy a phone, household item, or other smaller ticket items.

Looking at the amount involved and implication of buying a house, we should apply the same discretion if not more.

It is always important for house buyers to study the background of a developer and project, consult experienced homeowners regarding the good and bad of a project before committing.

I have seen many people buy a house merely based on price consideration.

In fact, there are more to be deliberated when we commit for a roof over our heads. The location, project type, reputation of a developer, the workmanship, the future maintenance of the property etc, are all important factors for a good decision as they would affect the future value of a project.

Beware when a discount or a rebate sounds too good to be true, it may be just too good to be true and never materialised. If the collection or revenue of a housing project is not sufficient to fund the building cost, the developer may not be able to complete the project or deliver the house as per promised terms. At the end of the day, the “price” paid by homeowners would be far more expensive.

In general, the same principle applies elsewhere. It is a known fact that when we pay a premium for a quality product from a reliable producer, we have a peace of mind that the product could last longer and end up saving us money. Some lucky ones will end up gaining much more.

For instance, when we purchase a car, we should consider its resale value as some cars hold up well, while others collapse after a short period. Other determining factors include the specifications of the car, the after sales service, and the availability of spare parts.

Quality products always come with a higher price tag due to the research, effort, materials and services involved.

In addition to buying a house or big ticket items, other incidents that can tantamount to losing huge sums are like money games, get-rich-quick scheme, or the purchase of stolen cars or houses with caveats.

When an offer or a rebate sounds dodgy, the “good deal” can be a scam.

Years of experience tells me that when what is too good to be true, we should think twice. I always remind myself with a quote from John Ruskin (1819-1900) who was an art critic, an artist, an architect and a philosopher. “It’s unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money – that’s all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do.

“The common law of business balance prohibits paying a little and getting a lot – it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better.”

Food for thought by Alan Tong

Datuk Alan Tong has over 50 years of experience in property development. He 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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Johor’s biggest corruption cases: land and housing scandal, slapped with 33 counts of graft


TWO IN COURT: Abd Latif (right) being brought to the Johor Baru Sessions Court by anti-graft officers. He is alleged to have abetted property consultant Amir Shariffuddin Abd Raud (left) in the land development scandal.

After weeks of investigation, state executive councillor Datuk Abd Latif Bandi is finally brought to court to face 33 counts of graft. The land and housing scandal – one of Johor’s biggest corruption cases – is however set to widen as graft busters warn of more suspects to be charged soon.


MACC expected to haul up more people in land and housing scandal

JOHOR BARU: One of the state’s largest corruption scandals is about to get bigger as more people are expected to be hauled up to court in the coming weeks.

Malaysian Anti-Corruption Commission (MACC) deputy chief commissioner (operations) Datuk Azam Baki said they might be charged with the case involving Johor executive councillor Datuk Abd Latif Bandi either this month or next.

Among those to be charged, he said, were those who had been arrested previously.

However, he declined to reveal their names so as not to jeopardise MACC’s investigation, saying that no VIPs were involved.

“We are in the midst of completing our probe with the Deputy Public Prosecutor before charging them in court soon,” he told reporters after meeting MACC investigation director Datuk Simi Abd Ghani and Johor MACC director Datuk Azmi Alias here yesterday.

Azam said it was also possible for Abd Latif, who was jointly accused with property consultant Amir Shariffuddin Abd Raud of committing 33 counts of graft yesterday, to face another round of charges then.

It was reported that eight suspects, including Abd Latiff ’s eldest son as well as his special officer, were nabbed by the MACC on Feb 24.

Anti-graft officers detained them after sifting through stacks of documents seized from the state government and developers.

They also seized luxury goods, including 21 cars such as Bentley, Mercedes-Benz and Porsche, five high-powered motorcycles and 150 handbags.

On its probe into the purchase of real estate in Australia by Mara Incorporated Sdn Bhd, Azam said MACC called up 24 witnesses and visited seven premises, including a law firm, the offices of both Mara Inc and an appraiser, and their associates.

“All related documents have also been seized. We have gathered more new information, and it is a continuous investigation from the previous case in 2015,” he said.

“We need more time to complete this case as it involves another country.

“We have put in a request under a mutual legal assistance with the Australian AttorneyGeneral’s office but have yet to receive any response.

“We will also prepare the documents to be sent to Australia,” he said.

MACC had previously recorded the state- ment of suspended Mara chairman Tan Sri Annuar Musa over the same investigation.

Annuar also handed over several documents relevant to the case.

The issue came to light after Australian newspaper The Age claimed that several senior Mara officials and a former politician had spent millions of Malaysian Government funds to buy an apartment block, known as Dudley International House, in Melbourne

Azam said his officers were also in the midst of preparing a report into alleged match fixing by football players from the Malaysian Indian Sports Council-Malaysia Indian Football Association.

“We expect this case to be completed within two to three weeks after we hand over the report to the deputy public prosecutor for charging.

Source:The Star headline news

Slapped with 33 counts of graft

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JOHOR BARU: State executive councillor Datuk Abd Latif Bandi has been charged in the Sessions Court here with 33 counts of graft, the earliest of which stretches back to just six months after he assumed office.

TWO IN COURT: Abd Latif (above) being brought to the Johor Baru Sessions Court by anti-graft officers. He is alleged to have abetted property consultant Amir Shariffuddin Abd Raud (below) in the land development scandal.

Abd Latif, 51, was sworn in to his post as Johor Housing and Local Government Committee chairman in 2013 and according to the list of charges, he allegedly abetted property consultant Amir Shariffuddin Abd Raud on Nov 13 that same year to convert bumiputra lots into non-bumiputra lots.

Yesterday, the court interpreter took about 15 minutes to read the list of charges to each of the accused in the case, considered one of the biggest corruption scandals in the state.

In total, Abd Latif is said to have abetted Amir, 44, to convert 1,480 houses.

He is also accused of helping to reduce the quantum of payment that developers had to contribute towards the Johor Housing Fund for converting these lots.

The offences, the last of which supposedly took place on Sept 13, 2016, involved payments of between RM100,000 and RM3.7mil.

Totalling some RM30.3mil, this involved development projects in Kota Masai, Tebrau, Kulai, Kempas, Nusajaya and Johor Baru.

Among the converted lots were apartments, double-storey terrace homes, cluster houses, cluster industrial lots, semi-Ds and bungalows.

Abd Latif was charged under Section 28 (1) (c) of the Malaysian Anti-Corruption Commission (MACC) Act for abetment, which was read together with Section 16 (a)(B) for accepting bribes.

Amir was charged with 33 counts under Section 16 (a)(B) for accepting bribes for himself and Abdul Latif.

Judge Mohd Fauzi Mohd Nasir set bail at RM2mil in one surety for each of the accused and ordered their passports to be surrendered until the trial was over. He also fixed May 23 for mention.

At press time, only Amir posted bail while Abd Latif, who was unable to raise the amount, was sent to the Ulu Choh detention centre.

Earlier, 15 minutes after Abd Latif and Amir were ushered into the packed courtroom, a defence lawyer stood up and asked for their “Lokap SPRM” orange T-shirts to be removed.

Both Abd Latif, who took time to hug and shake the hands of several people, and Amir then changed into long-sleeved shirts.

Abd Latif was represented by a six-man legal team led by Datuk Hasnal Rezua Merican while two lawyers, headed by Azrul Zulkifli Stork, stood for Amir.

The case was prosecuted by MACC director Datuk Masri Mohd Daud, with assistance from Raja Amir Nasruddin.

Source: The Star by Nelson Benjamin and Norbaiti phaharoradzi

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Where does the money go?


RECENTLY I was offered an easy loan with just 5.8% interest rate after activation of my credit card.

There was no pre-qualified questions asked when the sales personnel approached me through the phone. As I had no intention to get funding, I did not take up the offer.

It is understood that the “attractive” rate was offered to attract potential customers. If there is a delay in repayment eventually, the rate would jump up according to the interest incurred on the credit card outstanding balance, which ranges from 15% to 18% per annum.

When I asked around, I found most of my family members had on at least one if not more occasions being offered an easy loan, credit card balance transfer, personal loan, or other credit facilities via phone calls every month.

This contrasts with what I had heard from friends and peers from the property industry regarding housing loan. There have been complaints about stringent requirements for housing loan application and low approval rate. They have this question in mind – where does the money go?

Their concerns are understandable when I see the home loan approval rates was only hovering around 50% for the past few years. In 2013, the approval rate was at 49.2%, it improved slightly to 52.9% in 2014 but went down to 50.2% in 2015.

According to the group president of the Real Estate and Housing Developers Association (Rehda), Datuk Seri FD Iskandar, rejection rate for affordable housing loan applications was more than 50%, and the strict housing/mortgage lending conditions were denying aspiring owners their first homes.

Based on Rehda’s survey in the second half of 2015, loan rejection was the number one reason for unsold units, and affordable homes top the list.

For example, an individual or family with a combined household income of between RM2,500 and RM10,000 are eligible to apply for PR1MA homes that cost between RM100,000 and RM400,000. However, with loan eligibility based on net income, many with their existing commitments such as car loan or credit card outstanding payment, are not able to secure a loan for an affordable home. This dampens the effort of helping qualified households in owning their first homes.

Looking at the situation, I am puzzled with different treatments given to loan application. At one end, there is an easy access for personal loan and credit card financing. On the other, stringent requirements are imposed on housing loan. It seems like the priority has been given to spending on liability instead of asset.

If we look at it from the business perspective, credit card, personal loan and easy loan offer higher profit margin to the banks with interest rates ranging from 12% to 18%, compared to housing loan interest which is about 4.5% to 5%. This may explain the shift of focus among the banks.

Central bank concerned

Reports show that our household debt stood at an alarming 87.9% of GDP as at end of 2014 – one of the highest in the region. It is comprehensible that Bank Negara is concerned with the situation, and would like to impose responsible lending with housing loan.

However, when we look at the details, residential housing loans accounted for 45.7% of total debt, hire purchase at 16.6%, personal financing stood at 15.7%, non-residential loan was 7.7%, securities at 6.5%, followed by credit cards and other items at 3.9% respectively.

A recent McKinsey Global Institute Report highlighted that in advanced countries, housing loans comprise 74% of total household debt on average. As a country that aspires to be a developed nation by 2020, our 45.7% housing loan component is considered low.

Looking at the above, it is ironic that our authorities and banks are strict on funding a house which is a basic necessity and asset for people, but lenient on car loan, personal loan, credit card and other easy financing with higher interest rate, that tend to encourage the rakyat to overspend on depreciating items.

It is common nowadays to see young adults paying half of their salary for car loan, and people go on extravagant holidays or purchase luxury items which rack up their credit card balance. As such it is not surprising that the number of counselling cases took on by Credit Counselling and Debt Management Agency has also shown a worrying upward trend, with the number of cases leaping by 20,000 from 2013 to 2014. There was an average of about 35,000 counselling cases annually from 2008 to 2014, but that figure rose to approximately 60,000 in 2014.

It is important for the authorities and banks to encourage prudent lending and spending, re-look into high housing loan rejection rate, and consider to tighten lending conditions of other loans, such as personal loan and credit card. These will encourage the rakyat to channel their money into assets instead of liabilities, and improve the financial position of the people and the nation in the future.

By Alan Tong

Datuk Alan Tong has over 50 years of experience in property development. He is the group chairman of Bukit Kiara Properties. For feedback, please email feedback@fiabci-asiapacific.com.

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Feb 16, 2016 Datuk Alan Tong has over 50 years of experience in property development. He
was the World President of FIABCI International for 2005/2006 .

 

 

 

Penang construction industry in 2016 to stay flat


It is expected to generate RM6.8bil in jobs in 2015

GEORGE TOWN: Penang’s construction industry is expected to stay flat this year with a value of about RM6.8bil, which is almost the same in 2014.

“The RM6.8bil mark is one of the highest in the history of the construction industry in Penang.

“Due to the economic slowdown, it will be difficult to surpass this figure,” said Penang Master Builders and Building Materials Dealers Association president Datuk Lim Kai Seng.

Lim said the bulk of the projects were hotel and mixed development schemes.

PMBBMDA president Datuk Lim Kai Seng: ‘Due to the economic slowdown, it will be difficult to surpass this figure (RM6.8bil).’

“For the first six months of this year, the value of jobs given out reached RM2.68bil for 171 contracts.

“Of that total, some 153 are from the private sector while the remainder are government contracts,” he added.

The value of contracts from the private sector is around RM2.47bil, while government contracts total RM214mil.

The business contracts generated in 2014 was revised to RM6.8bil from RM4.8bil announced previously, after taking into consideration projects tendered out in late 2014.

Lim said that the association was confident that there were at least over RM4bil contracts given out in Penang in the second half of 2015.

These contracts, he said, were for mainly new hotels and mixed integrated developments.

Some of the big projects are from IJM Land Bhd with a gross development value (GDV) of RM486mil, Eco World Development Group Bhd (GDV: RM600mil), Mah Sing Group Bhd (GDV: RM1.005bil), Sunway Bhd (GDV: RM150mil), Ivory Properties Group Bhd (GDV: RM1.156bil) and Ideal Property Group (GDV: RM1.8bil).

Lim pointed out that the construction cost for the projects would come up to about 40% or about RM2bil of the total RM5bil GDV.

“The renovation will cost about 30% or RM600mil of the RM2bil spending for construction works.

“We can expect spending of over RM800mil for construction and renovation works annually for the next three years from these projects alone,” he added.

Lim said the new shopping malls being planned now would also generate about RM3.5bil worth of jobs for the local construction industry over the next five years.

“This means that there will be about RM800mil to RM1bil worth of construction jobs given out in Penang per annum starting from next year,” he said.

These shopping malls include Penang Times Square Phase 3 which will have a net lettable area (NLA) of 230,000 sq ft, City Mall Bayan City (300,000 sq ft), Southbay Plaza (424,000 sq ft), Penang World City (1 million sq ft), Sunshine Tower (2 million sq ft), The Light Waterfront Mall (1 million sq ft), Mall@Southbay City (750,000 sq ft), The Designer Village (400,000 sq ft), Ikea & Ikano Power Centre (NLA not available), and a mall project by Belleview Goup (1.5 million sq ft).

By David Tan The Star

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Save Penang Hill from the greedy


Uphill battle: A hiker passing by a vegetable farm on Penang Hill overlooking Air Itam.

Treasured heritage seems to be losing its charm to illegal farms and development

THE stall at the Air Itam market in Penang is said to offer the best asam laksa in Malaysia.

Rain or shine, it pulls in the crowd.

The ingredients for the dish such as ginger bud (bunga kantan), mint leaves (daun pudina), laksa leaves (daun kesum) and kalamansi limes (limau kasturi) come from Penang Hill, which is less than 200m away.

Farmers who cultivate the land at the hillslope sell their produce at the wet markets on the island.

The fertile hillslope from Air Itam to Paya Terubong is cultivated with vegetables and fruits.

Demand for the produce is so great that farmers are illegally clearing the hillslope to expand their farms.

About 2km from the market along Jalan Paya Terubong, there is a trail leading to a hillslope.

Lately, hikers and mountain bike enthusiasts have been using the trail to reach the 135-year-old Cheng Kon Tse Temple, nestled on the slope of the hill.

Travellers can see vegetable farms and fruit trees on both sides of the trail.

There are nutmeg trees, kalamansi lime trees, papaya and banana trees.

The vegetables include lemon grass, lady fingers and sweet potato.

As one continues walking up, a large swathe of hillslope which had been cleared near the telecommunication towers comes into view.

The bald patch can be seen from the Paya Terubong road below.

The slopes on Penang Hill have been cleared by farmers over the past few decades.

Such illegal hillslope clearing has been raised by environmental groups but there has been no firm action from the authorities.

A former Penang Island City Councillor claimed that he had provided pictures of the clearings to state leaders and that he had also raised the matter with the Consumers Association of Penang and Malaysian Nature Society.

“The press should continue to highlight the issue so that something is done finally,” said the former councillor who did not want to be identified for fear that the farmers might go after him.

“Penang Hill is our heritage. But no one seems to bother,” he said.

Besides Penang Hill, bald patches are also appearing on hills in several parts of the island.

Bukit Relau in Jalan Bukit Gambier has been dubbed “botak hill”.

There is also hill clearance in Bukit Kukus in Paya Terubong and Bukit Laksamana, a water catchment for the Teluk Bahang Dam.

More and more hillslopes are going bald because of developers and contractors who cleared the land without the authorities’ approval.

The clearings are done on weekends and smoke can be seen from far when the trees are burnt.

A large swathe of land has also been cleared at a place referred by hikers as level 45 station.

It should not be difficult to nab the culprits since there are cemented trails all over the hillslopes in Air Itam and Paya Terubong.

When The Star reported on Feb 14 last year that more bald spots could be seen, a state exco member said they had pictures of the illegal activity and that action would be taken against the culprits but till now, no one knows what the action is.

It is troubling that all this is happening under a state government which emphasises on Competency, Accountability and Transparency.

Penang Hill seems to be losing its charm.

Yet, the state government seems to be focused on mega projects and land reclamation.

At a state assembly sitting last month, Chief Minister Lim Guan Eng said the Penang Island City Council was using drones to check on illegal hill clearing and CCTVs would be installed next year to monitor illegal earthworks.

The spate of hill clearings has prompted the Penang Forum, a coalition of public interest NGOs, to hold a forum on Save the Hills of Penang tomorrow.

Hopefully, the outcome from the event will reach the right ears.

There is a compelling need to save the hills from greedy farmers and developers.

Comment by K. Suthakdar

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Malaysian property market is still ‘sparkling’


Away from the city: Developers are now turning to more affordable areas outside the Klang Valley like Negri Sembilan.

Continuing an examination of the property sector post Budget 2016, Sunday Star discovers that, despite high prices, investors remain upbeat because demand for property continues to outstrip supply many times over.

INVESTOR Ahyat Ishak says for the rakyat, property prices are “beyond annoying”.

They see all these new properties springing up – but, he points out, these are not “rumah mampu milik” (affordable houses) and are only “rumah mampu tengok” (houses you can look at but not own) for most of us because of the high prices.

“Property has become something of a bad taste in the mouth and people have become negative. And the market feels negative even though property prices continue to rise,” he says.

Although there is this “huge disconnect” between what’s being built and what people can buy, many developers continue to “defy gravity”.

“They do business as usual and offer properties beyond afforda­bility,” says Ahyat, who runs workshops for potential property investors and is the author of the 2013 bestseller, The Strategic Property Investor.

Dr Daniele Gambero, a marketing and strategic consultant for developers, says over the past few years developers have been over-delivering high-end, high-cost properties.

Towards the end of last year, however, they started developing more affordable areas further out from Kuala Lumpur, such as south, east and west of the city within the Klang Valley, as well as in places like Semenyih near Selangor’s border with Negri Sembilan and Nilai, Negri Sembilan.

Gambero says most of the big property developers in the country have had launches in these areas, quoting as an example, Malaysian Vision Valley, a 108,000ha development extending from Nilai to Port Dickson in Negri Sembilan.

He notes that developers have been buying up land in these areas at affordable prices like RM15 to RM25 per square foot compared with several hundred, or even several thousand, ringgit they would have to pay for land in the Klang Valley or KL.

At such prices, he points out, developers can actually build affordable houses of say 1,600sq ft to 1,800sq ft, which are reasonable sizes for families, and which are in such high demand.

“But instead of doing that, one of the things I find a bit funny is that developers have been building huge homes of 2,500sq ft to 3,000sq ft.”

Doing the math, Gambero points out that a 1,600sq ft house selling at RM300 per square foot would come up to RM480,000, but a 3,000sq ft house at RM300 per square foot would cost a whopping RM900,000.

“So unfortunately, developers have again brought the end house price to an unaffordable level!” says Gambero who is the CEO of the REI group of companies and who is an Italian expatriate who has been in Malaysia for almost two decades.

He has been doing extensive research on per capita income, household income, and the value of affordable homes in both Selangor and KL, which represents one-third of the country’s population and says that, “If you get it right here, then you can replicate it in other areas”.

He breaks the figures down into categories.

There is this ‘huge disconnect’ between what’s being built and what people can buy, yet developers ‘defy gravity’. – Ahyat Ishak

For Selangor, he estimates the need for low-cost houses is relatively low as only 8.2% households need houses that costs RM120,000 and below, while the figure in KL is 6.2 %.

The majority of households (63.6% in Selangor and 61.6% in KL) can afford houses priced between RM260,000 and RM600,000 (see chart for break down).

Gambero notes that only 15.4% in Selangor and 16.3% in KL can afford houses above RM500,000 up to a maximum of RM700,00.

“But if you look at what the big property guys are offering, most of the houses are above RM600,000. It doesn’t make sense,” says Gambero.

And, he points out, banks are no longer providing 90% financing for these huge houses because of overpricing.

“Banks are not stupid. They have been doing their homework and they have been coming up with the same conclusion that I have been coming up with, which is that there is going to be an oversupply of big homes and you (developers) are not going to clear your stock.”

Gambero points out that in the last three to four years, more than 60% to 65% of the supply of houses that developers built have been directed toward the top 20% of Malaysians who hold 40% of the country’s wealth.

“These are the people who can afford to buy whatever the market is throwing at them.”

But what about the rest?

You don’t hear of prices dropping. Because demand is 10 to 20 times higher than the supply of homes. – Dr Daniele Gambero

Prices won’t drop

Adrian Un has been involved in a number of property launches.

And he says that it is not true the property sector has been lacklustre.

One has to just look at all the pictures on Facebook and other social media sites to see that there are still a lot of people queuing up to buy properties.

“These are actually people queuing up to buy. I have seen huge numbers placing their cheques to buy. Whether they are first time buyers or not, we don’t know. But the situation is not as bad as being portrayed in the media or as claimed by the developers.

“The buying sentiment for units costing from RM300,000 to RM800,000 is still pretty much positive,” says Un who is the CEO and cofounder of Skybridge International, a property education and investment company.

But with everyone saying property prices are now sky-high, are there still properties out there going for RM300,000 or RM400,000?

Un says developers have been building small shoebox units of about 450sq ft to 600sq ft to entice Gen Y people to enter into the property market. These are priced between RM300,000 and RM500,000 and are often near the LRT and other amenities.

“So even if it is RM700 per square foot, a young graduate earning RM3,000 calculates it based on his affordability to pay the instalment. So he sees it as being quite affordable because the absolute entry level is RM400,000.

“A lot of the Gen Y have been on a learning curve on how to be a millionaire.

The Gen Y see owning a property as an investment. It also gives them bragging rights. – Adrian Un

“They are starting off early to be financially free and see owning a property as an investment. It also gives them bragging rights,” he says.

So these small units are still very much in demand and selling, he says, even though the rental might not be enough to cover the loan instalment.

“It’s already happening now. Demand for these units (to rent) is not big in numbers. Buyers would have to lower their expectation on the rent. So over the next one or two years, it is going to be a renters’ market. And it still boils down to location – if you are within 12km to 15km of the city, and there is a good infrastructure hub with the LRT and amenities like a shopping mall and hospital nearby, I don’t think it will be that bad,” he says.

It is the higher end properties priced at RM1mil and above which are struggling, says Un.

He says sales for these have been slow because many investors have already chalked up a lot of loans over the last four to five years for properties, so it is not as easy to secure more financing to buy another.

For Un, it is the secondary market that is going to struggle next year.

This is because there is a mismatch of perception between owner and buyer: the owner is positive the price of his house, even though it might be old, has climbed substantially but the buyer will not be willing to pay that price because he has an alternative to go to, which is the primary market to buy a new house.

Un agrees that banks are very careful when giving out loans these days. Instead of one valuation quote for the property, he says, most banks now demand for quotes from two valuers.

“Valuers are very cautious. They are professionals, so I don’t think they are willing to give the offered price for a new housing area that has just been completed.

“Once a house is completed and the seller asks for a sky high price, the valuers will not justify his asking price.”

But says Un, even with the mismatch, the price of landed semi-detached properties and bungalows will not drop.

He reckons to have bought a house priced at more than RM1mil, the buyer would need an income of at least RM15,000 a month to qualify for the loan, and logically the buyer would have to be at least 28 years old to earn that kind of money. So at that age, he says, the buyer would probably have understood how borrowing costs work before making the purchase and would have the holding power.

“He will hold it until the market recovers,” he says.

Optimistic about the economy

Two weeks ago, Budget 2016 was tabled in Parliament.

With regards to housing, there was no change in the measures already in place to curb property speculation, such as real property gains tax (RPGT) rates and prohi­biting developers from offering the Developers Interest Bearing Scheme (DIBS).

For Un, there was not a single exciting thing for the housing industry in the budget. But this is not unexpected, he says, because the industry was not anticipating any freebies or goodies anyway.

He says the measures implemented over the last two years have “somewhat worked” to cool down property prices “a bit”.

“For the government to do away with the RPGT or actually come back to DIBS now will create some kind of uproar among the public.

“I don’t think they want to be in the bad books of the public,” he says.

So naturally, he says, “affordable housing” was the main property sector element in the budget, devised to please the people.

Ahyat, however, has a more upbeat take on Budget 2016 for the housing sector.

He says while there was nothing big for the housing sector itself, there are huge plans for development and infrastructure.

He loves that RM5bil has been allocated to develop Malaysian Vision Valley and that RM7bil has been earmarked for developing a KL International Airport “Aeropolis”.

He feels “vindicated” that RM11bil is being pumped into Cybercity Centre in Cyberjaya because, while other investors shy away from Cyberjaya, he is one of the few who see potential there.

For him, the MRT II Sungai Buloh-Serdang-Putrajaya line coming up, which will be completed in 2022; the LRT 3 line from Bandar Utama to Johan Setia, Klang, which will be ready in 2020; and the KL-Klang Bus Rapid Transit (BRT) are exciting. There are also plans to build new hospitals and upgrade airports, he points out.

He says these are clever ways to spur growth, although it does not solve the massive problem of spiralling house prices and income levels that do not rise as fast to keep up.

“The budget is not a magic tool to fix problems. It is the Government’s forecasted expenditure,” he says.

Ahyat says he likes to “sniff” at the direction of development.

“I follow the infrastructure and investment. The moment they talk about billions in development, I stop, take a look and follow the money (to invest).”

Gambero’s first impression when reading Budget 2016 was that it was like an “economic crisis budget” where “you keep low, try to find shelter, stay put and wait for the next year to pass”.

But after reading through it for the third time, he finds it a “pretty decent” populist budget.

It is good, he says, that Sabah and Sarawak are getting funds to complete their long-awaited Pan Borneo highway, and that there are incentives, subsidies, and tax exemptions in the budget that will put more money in the pockets of the people.

“Increasing the welfare of the bottom 60% of the rakyat will definitely spur, in the medium term, the housing market. They might find enough money to buy a long-awaited home.”

Gambero sees the Malaysian Vision Valley development as “just the opening chapter of a totally new history of infrastructure for the southern corridor” and he loves the BRT because, unlike trains, buses are flexible and can go anywhere.

For him, Malaysia’s economic fundamentals are in the right place.

He says the GDP is quite steady although this has decreased a bit, the unemployment rate is still very much under control, foreign reserves are still very high, the economy is still developing, and the current account balance is still positive even though crude oil prices have dropped.

He says most international agencies have given Malaysia a positive outlook even though Malaysians themselves like to “cry and look down on the country”.

“The worst thing right now is the political instability. That is not a small joke.

“We have this political uncertainty about the future. A lot of laymen are asking ‘what if’ and ‘what comes next’ and saying that ‘if the Opposition takes over, the country will be a mess’, and ‘if Umno keeps ruling the country there is a big question mark about the future’, and ‘who is going to rule Umno? Do you choose someone based on loyalty or capability?

Despite all this uncertainty, Gambero remains optimistic about the economy.

“We have to take shelter for the next three to six months, but some shy signs of recovery are already visible.

“It will be more visible after Chinese New Year. The general feeling is that after the Chinese New Year, consumer confidence will begin rising and the housing sector will start moving ahead again.”

He says Malaysia’s under-supply of houses is still high compared with general demand.

He points out that even though developers have been experien­cing negative sales in the last few months and that there are a number of uncompleted sales with buyers pulling out because of uncertainty and perception, developers are still not dropping prices.

“There has been a big fall in the number of transactions in property this year but prices are still stable. You don’t hear of prices dropping. Because demand is 10 to 20 times higher than the supply of homes.”

He reckons Malaysia has at least another seven to eight years of a “sparkling” property market.

By Shahanaaz Habid, The Star/|Asia News Network

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