Malaysia's Stimulus Package For MM2H Foreign Asset Investments

MM2Hers and expats hail mini-Budget initiatives, but some expect more

The new measures for the Malaysia My Second Home (MM2H) programme as well as expatriate professionals under the RM60 billion mini-Budget have been well received and even spurred them to invest in more properties, according to those contacted by NST Property.

Deputy Prime Minister Datuk Seri Najib Razak recently announced the government will consider issuing work permits to skilled spouses of MM2Hers and offering permanent resident (PR) status to highly skilled foreign professionals as well as high nett worth individuals (HNWIs) who bring in US$2 million (RM7.28 million) for investments or savings in the country.

Stephen Hodgson from the United Kingdom, who has invested here, thinks allowing skilled spouses of MM2Hers to work in the country is great.

“As an equal opportunity employer, we welcome it as many spouses have held key management roles and are invaluable source of the knowledge, experience, training and professionalism,” said the managing director of Asia Move Machine Sdn Bhd, brand-owner of the propertrack.com portal.

“My wife and I would benefit for sure, especially when I’m abroad working offshore for weeks in a row and when our two children are at school,” noted MM2Her Bart Jacob Lunsingh Tonckens, a marine technician working offshore worldwide in the oil and gas industry.

“As a qualified laboratory analyst, my wife would love to do something useful such as working in hospitals or clinic laboratories. Not permitted to work here, she gets bored just sitting at the pool or beach or with shopping.”

Tonckens also thinks it is reasonable for HNWIs to be considered for PR status “as they won’t cost Malaysia any money but it earns money from them instead”.

The Dutchman, staying with his family at a condominium in Penang he bought for RM600,000, said the mini-Budget incentives would encourage him to invest in more properties.

Asia Move Machine’s Hodgson added the initiatives for HNWI’s is excellent as it would attract quality individuals to invest, which would benefit the economy, citing his company has also launched a UK website to promote Malaysian real estate to the British.

On highly skilled workers be considered for PR, Tonckens said he would be grateful with the status.

“I don’t take jobs away working in the type of job that I do. With PR status, it’d be easier for me to accept jobs offshore in Malaysian waters. Now, I work abroad offshore worldwide except in Malaysia.”

MM2Her Mohammed Sabsabi from Australia, who has bought a RM680,000 condo in Mont’ Kiara, Kuala Lumpur said the new initiatives reflect the country’s global insight and will help boost its competitiveness. He and his wife do not have a need to work here and they are in the country three times a year.

Another MM2Her who has been here for over 100 years, Dr Ganapathi Dhiwaghar, management consultant and senior vice president with Trans World Group Ltd of UK looking after the operations in the Middle East and India, suggests that HNWIs bring less than US$500,000, instead of US$2 million, because “Canada and Australia are offering the best investment plans with PR status and citizenship”.

Yet another MM2Her, who wished to be known as PAt, from Taiwan, asked why would people bother to bring in US$2 million for PR, when one could extend one’s stay ever 10 years under MM2H.

“What’re the incentives for being a PR here … free medical care, insured unemployment, or laid-back retirement as in most European countries?” added Pat, who together with her husband, who is working in Vietnam, bought two condos in the KL City Centre area for RM7 million cash.

The mother of two is also curious about how “highly skilled” is defined although she feels the initiative is worth encouraging.

Phan Van Truong, a Vietnam-born French citizen, said allowing skilled spouses of MM2Hers to wrok is “a real improvement” to the programme. Retired to Malaysia since 2004, the MM2Her intend to buy more properties, having purchased two.

Meanwhile, MM2H agent Malvisa (MM2H) Sdn Bhd chairman Datuk Kamaruddin Abu expects Malaysia to gain in status among Asia countries to luring top notch skilled workers with its new incentives for employment and investment.

“Many who make Malaysia their second home are highly knowledgeable and skilled and permitting them to work here will encourage more people to apply for the programme. It’s good for us as they can contribute to economic development”

The new Straits Times 27 March 2009

Malaysia's economic growth to slow down in 2009

PETALING JAYA: The economy is projected to grow between -1% to 1% this year in tandem with the slowdown in the global economy.

Bank Negara said in its 2008 annual report that the global economy is not expected to record any growth in 2009 with synchronised recession in a number of large economies.

It said global trade is expected to contract further this year and would be accompanied by a decline in global foreign direct investments.

“Market conditions in the international financial system will likely remain challenging and are expected to stabilise when the announced policy measures are effectively implemented to restore confidence in the financial sector,” it said.

Bank Negara said the expected loss of US-originated credit assets held by banks and other financial institutions could increase to US$2.2 trillion.

It said domestic demand, expected to grow moderately at 2.9%, would likely be the main support to the economy, anchored by public sector expenditure and private consumption.

Growth in private consumption expenditure is projected at 3.5% with consumer spending largely affected by weaker domestic labour conditions with higher retrenchments and less favourable employment prospects. The central bank said easing of monetary policy and various incentives to boost spending would provide support for household consumption.

Bank Negara has so far lowered its key policy rate, the overnight policy rate by 150 basis points since November to 2.0% while the statutory reserve requirement was cut by 300 basis points to 1.0%.

It added that public expenditure would be boosted by the first stimulus package of RM7 billion and the second package of RM60 billion.

On the supply side, sectors directly exposed to external demand would be the most affected this year.

It said output in the manufacturing sector would be significantly dragged by the contraction in the export-based industries, especially from the electrical and electronics segment, and weaker support from the domestic-oriented businesses.

“The manufacturing sector is projected to tumble by 8% this year,” Bank Negara said.

The services sector, meanwhile, would remain the anchor for the economy with a relatively moderate growth of 4.5% and contributing 2.5% to the overall economic growth.

The agricultural and mining sectors would contract by 2% and 0.4% respectively on lower production of palm oil, rubber and crude oil amidst lower prices.

It said the construction sector is expected to expand by 3% due to implementation of projects under the two economic stimulus packages.

Labour market conditions are anticipated to deteriorate, with the unemployment rate projected to increase to 4.5% in 2009.

Bank Negara said businesses affected by poor external demand would continue to implement cost-cutting measures, including temporary layoffs and retrenchments.

Although the public sector would increase employment, it would not fully offset the weak employment prospects in the private segment.

On the external front, the current account surplus is projected to moderate but remain sizeable at RM80 billion or 11.5% of gross national income in 2009 as export contraction would mainly be offset by import compression.

Bank Negara said the services account would record a deficit in 2009 due to the moderation in the travel account.

On the financial account, gross inflows of foreign direct investment are expected to moderate in 2009 as multinational companies postpone their investment plans until clearer signs of recovery are in sight.

Private investment is projected to decline by 17.7% this year.

The Star 25 March 2009

Economic growth to slow down in 2009

PETALING JAYA: The economy is projected to grow between -1% to 1% this year in tandem with the slowdown in the global economy.

Bank Negara said in its 2008 annual report that the global economy is not expected to record any growth in 2009 with synchronised recession in a number of large economies.

It said global trade is expected to contract further this year and would be accompanied by a decline in global foreign direct investments.

“Market conditions in the international financial system will likely remain challenging and are expected to stabilise when the announced policy measures are effectively implemented to restore confidence in the financial sector,” it said.

Bank Negara said the expected loss of US-originated credit assets held by banks and other financial institutions could increase to US$2.2 trillion.

It said domestic demand, expected to grow moderately at 2.9%, would likely be the main support to the economy, anchored by public sector expenditure and private consumption.

Growth in private consumption expenditure is projected at 3.5% with consumer spending largely affected by weaker domestic labour conditions with higher retrenchments and less favourable employment prospects. The central bank said easing of monetary policy and various incentives to boost spending would provide support for household consumption.

Bank Negara has so far lowered its key policy rate, the overnight policy rate by 150 basis points since November to 2.0% while the statutory reserve requirement was cut by 300 basis points to 1.0%.

It added that public expenditure would be boosted by the first stimulus package of RM7 billion and the second package of RM60 billion.

On the supply side, sectors directly exposed to external demand would be the most affected this year.

It said output in the manufacturing sector would be significantly dragged by the contraction in the export-based industries, especially from the electrical and electronics segment, and weaker support from the domestic-oriented businesses.

“The manufacturing sector is projected to tumble by 8% this year,” Bank Negara said.

The services sector, meanwhile, would remain the anchor for the economy with a relatively moderate growth of 4.5% and contributing 2.5% to the overall economic growth.

The agricultural and mining sectors would contract by 2% and 0.4% respectively on lower production of palm oil, rubber and crude oil amidst lower prices.

It said the construction sector is expected to expand by 3% due to implementation of projects under the two economic stimulus packages.

Labour market conditions are anticipated to deteriorate, with the unemployment rate projected to increase to 4.5% in 2009.

Bank Negara said businesses affected by poor external demand would continue to implement cost-cutting measures, including temporary layoffs and retrenchments.

Although the public sector would increase employment, it would not fully offset the weak employment prospects in the private segment.

On the external front, the current account surplus is projected to moderate but remain sizeable at RM80 billion or 11.5% of gross national income in 2009 as export contraction would mainly be offset by import compression.

Bank Negara said the services account would record a deficit in 2009 due to the moderation in the travel account.

On the financial account, gross inflows of foreign direct investment are expected to moderate in 2009 as multinational companies postpone their investment plans until clearer signs of recovery are in sight.

Private investment is projected to decline by 17.7% this year.

The Star 25 March 2009

Malaysia's TA to delay property arm listing to Q3 this year

Malaysia's stockbroking-to-property group TA Enterprise (TAES.KL) plans to delay the listing of its property arm to the third quarter of this year due to weak market conditions, a company director said on Thursday.

TA, Malaysia's largest retail brokerage, said last September it would spin off its property operations for a separate listing on the local bourse.

The property business will be housed under TA Global, a company set up to facilitate the listing.

TA Properties Executive Director Kimmy Khoo said the company has applied to the Securities Commission (SC) for a revision to TA Global's listing plan.

"We expect to proceed with the listing by the third quarter of this year if SC approves our revised listing scheme," she told Reuters by email.

TA expects the securities watchdog to approve the revised listing plan by May 12.

The company had initially targeted to complete the listing by the first quarter of this year.

"The delay of the listing is unavoidable and accepted as a sequel to the global market sentiment," she said.

But the delay is not expected to have any impact on the company's financial performance, said Khoo.

The company said last year it expected a one-off capital gain of about 925 million ringgit ($255.1 million) from the listing of TA Global.

By 0805 GMT, TA shares were up 0.81 percent at 0.62 ringgit a share. The wider market .KLSE was up 0.72 percent.

TA shares have dropped nearly one-fourth the past six months.

-Reuters 26 March 2009

PKNS New Projects In Kota Damansara

The Selangor Development Corp (PKNS) will launch new housing and commercial projects worth RM300 million collectively in Shah Alam, Kota Puteri, Kota Damansara and Selayang in May.

At the same time, it will relaunch existing stocks valued in total at RM180 million in Bangi, Shah Alam, Kota Damansara, Bandar Sultan Sulaiman, Kota Puteri, Antara Gapi and Bernam Jaya.

Overall, it will launch 3,525 units of medium- to high-end houses, shop offices and factories, said PKNS general manager Othman Omar.

Half of them will be built by June. The rest will be built by early next year.

"We are confident to sell. Our pricing is affordable and not as expensive as private developers. And the impor-tant thing is, we will deliver,"Othman said at a property seminar in Kuala Lumpur yesterday.

PKNS will launch a month-long housing campaign starting May 8 to promote the properties.

Last week, it sold 20 units of semi-detached houses worth RM18.7 million in Bandar Baru Bangi.

Othman said PKNS will continue to launch affordable homes despite the economic slowdown but will focus on developed areas in the Klang Valley.

"We are profit-driven, hence, will focus on locations where there is demand, and the areas are developed. We will fine-tune the progress so there is no oversupply. We plan to maintain the rate of construction," he added.

PKNS will also develop projects jointly with private developers and will award contracts based on open tenders, Othman said.

Bernama March 2009

Property Prices Is Likely Come Down - FIABCI

Property prices in Malaysia are expected to come down this year reflecting the softer market and oversupply as global economic and financial crises dampen demand, said president of International Real Estate Federation (FIABCI), Datuk Richard Fong.

"The transactions have came down. The extent to which the prices will fall will also depend on the availability of financing now when the buyers are faced with financial difficulties due to job losses and uncertainties in the job market," he said at the 8th FIABCI Asia Pacific Regional Secretariat Summit 2009 here today.

Fong said to support the property market, banks should be flexible in restructuring the duration of housing loans to meet the financial requirements of house buyers who were struggling with their commitments.

"While the Malaysian economy is heading towards a pronounced slowdown, the banking sector remains relatively strong as compared to the 1997/98 Asian financial crisis," he said.

He said the financial and property sector would be in better shape when the global economy recovered and the effects of stimulative government policies and spending kicked in in the second half of the year.

Fong said the property market in Malaysia, as compared to Singapore and the rest of the Asean region, was also more stable as most of the property transactions in Malaysia comprised locals.

"In Malaysia, foreigners comprised only a small portion in property purchases. In Singapore, the market experienced a sharp drop in property prices, when foreigners exited the market and sell off their properties when recession hits the country," Fong said.

Earlier, secretary-general of FIABCI Asia Pacific, Kumar Tharmalingam, said while Malaysia offered the most attractive property investment return within South-East Asia, there were not much publicity and promotion and as a result Malaysian properties were not well-recognised among foreigners.

"We offer less restrictions as compared to other countries. Foreigners are able to purchase landed freehold properties while this is not possible among many countries in Asean," he said.

-- BERNAMA 28 March 2009

Takaful disposing KL property to Exim Bank

PETALING JAYA: Islamic insurance company Syarikat Takaful Malaysia Bhd is disposing an 18-storey building in downtown Kuala Lumpur to Export-Import Bank of Malaysia Bhd (Exim Bank) for RM63 million.

In an announcement to Bursa Malaysia Friday, Takaful Malaysia said the sale would unlock gains of RM543,000 and allow the company to focus on its principal activities of managing family and general takaful businesses.

According to details in the announcement, the 20-year old building has a total lettable area of 99,021 sq ft and is almost fully occupied.

The current monthly rental income is RM386,176 or an average rental rate of RM3.92 per sq ft.

The Star 28 March 2009

Mutiara Damansara's New 4-Star Hotel

BOUSTEAD Holdings Bhd's (BHB) unit, Boustead Building Materials Sdn Bhd, has been awarded a RM18.9 million deal from from Boustead Hotels and Resorts Sdn Bhd, also a subsidiary.

In a filing to Bursa Malaysia, BHB said the contract involved the construction and completion of earthworks, piling and sub-structure works in relation to the proposed construction of a 12-storey, four-star, 301-room hotel and two levels of basement of car parking in Mutiara Damansara, Selangor.

It said the contract would be funded through bank borrowings and/or internally-generated funds.

Bernama 25 March 2009

M'sia property: Waiting out the crisis

From the Business Times on 28 March 2009...

Malaysia's property players expect the sector to consolidate this year following decent gains in the past few years. 

THE Malaysian property market was relatively bullish at the start of last year, but as economic problems in the United States mounted and spread, interest headed south.

According to property consultants CH Williams Talhar & Wong (WTW), an additional 1,000 new luxury condos and 7,000 serviced apartments (some 10 per cent more) came on-stream last year, when occupancy rates were already inching down to around 80 per cent from 86 per cent in the first half of the year, even before all the new units were delivered.

On average, the developer selling price for units launched last year ranged from RM650 (S$270) per sq ft to RM1,180 psf for luxury condos, and RM800 psf to RM1,300 psf for serviced apartments.

Prices have generally held because they had not run up as much. But poorer sentiment and increasing supply have led to prices dipping in selected areas. In the KLCC area, which saw more feverish building over the past few years, prices have dropped by an estimated 15-20 per cent. In contrast, landed properties are holding firmer given the more limited supply.

But promoters with bigger wallets and risk appetites are taking advantage of lower commodity prices to push ahead. In the Klang Valley, the Four Seasons Place, located within a stone's throw of the Petronas Towers, is scheduled for completion in 2012.

Developed by businessman Syed Yusof Syed Nasir, together with his partners the Sultan of Selangor, Sharafuddin Idris Shah, and Singapore's Ong Beng Seng, piling works have been completed on the 65-storey tower mixed development comprising a hotel, apartments and a mall.

Design changes resulted in some delay but Mr Syed Yusof has said that contractors would proceed in the third quarter.

Property consultants had thought the Four Seasons Place apartments might set a new benchmark of RM3,000 psf for the city. But that was last year. Mr Syed Yusof recently indicated that the estimated 140 apartments would sell for about RM2,500 psf.

Another prestigious project within the KLCC vicinity is gearing up. Ground-breaking has begun on the 450-room Grand Hyatt hotel. The Brunei Investment Agency's 40-storey mixed development includes apartments and commercial offices, and is expected to be completed in three years.

The economic slump aside, property consultants say Malaysians have the buying potential but prefer to wait out the economic and political uncertainties. However, they might be tempted if attractive bargains come along - preferably at fire-sale prices.

According to a recent survey by iProperty.com, two-thirds of 137 respondents surveyed were of the view that there was a high likelihood that property prices would decline over the next six months. Ninety per cent of Singaporeans surveyed were of a similar view while in Hong Kong only 14 per cent agreed, the rest believing prices would not drop much further.

Website activity remains high, iProperty executive chairman Patrick Grove said. 'People are still buying, selling and renting, and are definitely on the lookout for great bargains and opportunities.'

In the main, property players are resigned to the sector consolidating this year following more than decent gains in the past few years - the last more applicable to the Klang Valley and Penang.

Leisure Farm Resort senior sales and marketing manager Koh Boon Teng told BT that the number of inquiries has 'definitely dwindled' but he is counting on the company's established name to continue to pull in buyers, nearly all foreigners, including Singaporeans. The Johor-located resort-style development has not reduced prices - currently about RM50 psf for land -'but if buyers are sincere we can consider giving construction rebates', Mr Koh said. Constructed bungalows start from RM1.5 million.

While Iskandar Malaysia has reportedly attracted RM47 billion in investments - a substantial chunk from Middle East investors - local businessmen complain that there has not been any discernible pick-up in business activity.

Mr Koh concedes the lack of activity, but believes the special economic zone will deliver in the longer term. For now it has rendered a new lease of life to infrastructure projects in Johor, WTW said, pointing to the start last year of infrastructure developments such as the 8.5 km Eastern Dispersal Link joining the Customs, Immigration and Quarantine (CIQ) complex to the North-South Expressway, the 15 km coastal highway linking Johor Baru and Nusajaya, the 9 km Second Pernas Bridge and road to Pasir Gudang, and the Ulu Tiram flyover.

But patience is crucial. Johor recorded the highest percentage change value per transaction last year - likely because of much higher prices obtained for some land transactions in Iskandar, WTW managing partner Goh Tian Sui said. However, he cautioned that the overall data indicated the state 'is not an interesting market at the moment'.

One state which did reasonably well last year, recording a 27 per cent increase in value per transaction over the previous year, was Penang. Its residential sector was the dominant driver on the island as well as the mainland.

The electronics slump has hurt industries in Penang and created uncertainty, but the state is one of the more, if not most, creative in Malaysia. A Unesco World Heritage Site listing last year for its capital Georgetown, together with Malacca, gave it a tremendous boost, while the on-going construction of the second Penang bridge will make the state more accessible in the future.

Developers are admittedly more cautious now, but there are pockets of interest. WTW noted that the shophouse and residential property sub-sectors are relatively resilient, sought more for owner occupation as well as for investment.

Green Building Classification In Malaysia To Start Soon?

             Green building: The Zeo Building in Cyberjaya

Good news for enrivonmental conscious people... we hope to see more green buildings in the country soon.  Taken from the Star on 25 March 2009...

IF Kuala Lumpur residents can resolve problems related to the environment now, then there will be changes soon to their quality of life.

This was the message outlined by the speakers at the International Conference on World Class Sustainable Cities 2009 (WCSC 2009) taking place in the city.

In a move to address at least one aspect of the problem in the city, the Kuala Lumpur City Halll (DBKL) and the Malaysian Institute of Architects (PAM) are working together to ensure that buildings in the city are environment- friendly.

PAM president Lee Chor Wah said: “One way of doing that is by introducing Malaysia’s Green Building Index (GBI). This is our first certification tool that will provide guidelines for environment-friendly construction.

“We will be launching GBI with the co-operation of the DBKL next month in a move to lead the Malaysian property industry towards becoming more environment-friendly,’’ said Lee.

GBI is intended to promote sustainability in the built environment and raise awareness among developers, architects, engineers, planners, designers, contractors and the public about environmental issues.

Lee said Kuala Lumpur needed to catch up with the world or else it would lose out to countries like Singapore which had its own GBI rating.

“We realised that many properties in Asia cannot be re-sold or leased out to foreign and multi-national companies because these are not green. It’s part of their social responsibility to preserve the environment,’’ Lee said.

He said even international brands wanted the shopping malls to be green before they decided to take up lots there.

Lee said the number of buildings in Kuala Lumpur with green rating were scarce while some buildings had their own rating system. He said each country had its own GBI rating standard and that it was time that Malaysia had its own.

He said the response had been encouraging as developers wanted to be socially responsible as well as economically sound.

A building with GBI ratings is built using eco-friendly elements and strictly no plastic and paint with toxic elements.

“The air is fresher here, energy- saving lights are used, buildings materials are eco-friendly,” Lee said.

The DBKL, the Petaling Jaya City Council, PWD Building, the Federal Territories Ministries and the Housing and Local Government Ministry are now interested in going green.

A good example of green buildings in the Federal Territory are the Zeo Building in Cyberjaya and the Securities Commission in KL.

Malaysia Property Inc (MPI) to rev up overseas roadshows

From the Star dated 22 March 2009...

MALAYSIA Property Inc (MPI) will be ramping up its overseas roadshows and programmes in the coming months to promote Malaysia as an international real estate destination.

The primary markets targeted include Singapore, Britain, Japan, Hong Kong, Indonesia and the Gulf Cooperation Council countries, while the secondary markets are China, India, Pakistan and Bangladesh.

It will be taking part in the “A Place In The Sun” property exhibition in London from April 3 to 5, followed by a four-day roadshow that covers London and Manchester in July.

Following the success of its first roadshow in Tokyo last December, a second roadshow will be in Osaka on April 17-18, and in Tokyo on April 25-26.
 

Over 1,000 participants turned up for the seminars and talks in Tokyo.

MPI chairman Datuk Richard Fong said the challenge was to convince international investors that Malaysian property offered better value than other subprime properties elsewhere and the country’s economy was expected to remain steady despite the uncertainties in the global economy today.

‘’Malaysia has much to offer real estate investors. Foreigners can buy an unlimited number of properties; register them in their names; and there is no real property gains tax, inheritance and transfer tax, unlike the many restrictions on foreign buyers in the other countries.

“We are going on a two-pronged approach to promote local property as an attractive and high return investment destination and as a value-for-money second home choice,” Fong told StarBiz.

The activities lined up include having continuous introductory and follow-up briefings for the target groups; an online presence via the MPI website with hyperlinks to websites of supporting developers; online property databank; encouraging developers to meet international standards in quality and workmanship; working with the media; and raising awarEness through advertisements, brochures and newsletters.

At MPI’s maiden roadshow in Tokyo, the team realised that not many Japanese knew about Malaysia. Plans are afoot to invite journalists from Japan to visit and write about Malaysia.

Before promoting Malaysia’s properties, MPI would be working with Tourism Malaysia to promote the country first, said MPI director Yeow Thit Sang.

“Our focus is to brand the country as a preferred real estate and second home destination in the international arena. Potentially it will have a significant impact to promote foreign direct investment in real estate,” he added.

MPI expects to spend RM3.5mil to RM4mil a year over the next five years for its brand-building exercise.

Yeow said while Singapore had successfully attracted many high net-worth investors with 25% of its properties sold in the last few years to foreigners, Malaysia’s sales to foreigners only made up 3% of the total RM2.5bil industry sales last year.

“Our target is to attract at least 10,000 foreigners to buy at least RM1mil worth of property each,” he said.

Looking for a bargain?

From the Star on 21 March 2009...

Developers and banks are offering attractive mortgage plans for home buyers.

FOR several months, a friend was checking out old double-storey terraces in Petaling Jaya. With a budget of about RM350,000, it was difficult to make a decision, as she would probably need to incur another RM80,000 for renovation.

She came across Setia Alam in Shah Alam, liked the open space and quiet surroundings, and signed on the dotted line. What made her excited was the 5/95 campaign.

Some of the completed houses at Setia Alam.

“I pay 5% downpayment and will not need to start mortgage payments until the property is completed. The developer will bear all legal fees, stamp duty on the sale and purchase agreement, loan agreement, and memorandum of transfer. They will also service the interest during the construction period,” she says.

Banks and developers today are working very closely to design mortgage plans for home buyers. The leanings seem to be towards developers with large landbanks, offering bread-and-butter housing like double-storey terraces.

There are one or two tie-ups with developers offering high-end condominiums, but generally, these schemes do not come across as attractive as those offering normal housing.

As the year unwinds, more developers are expected to come up with such packages. Probably because of their large landbanks and a wider market audience, developers of bread-and-butter housing are quick to work something out with their bank partners.

SP Setia Bhd tweaked its marketing strategy after the fall of Lehman Brothers in September last year. Its 5/95 payment scheme, to run for three months from January 19, has so far generated about RM300mil sales in Selangor, Penang and Johor just five weeks into the campaign.

The company has a sales target of RM1.1bil. For its 2008 financial year, it had RM1.4bil sales, with progress billings of unbilled sales at RM1.2bil.The company has a land bank of 4,000 acres.

Sime Darby Bhd’s property division, which started its campaign since the middle of last year, is now on its third campaign. The campaign, which ends June 15, has so far generated about RM160mil sales since its launch on March 6.

The campaign includes an interest rate of base lending rate minus 2.3% and the developer absorbs the interest during the construction period. Its first campaign generated RM246mil in nine days, while the second campaign achieved more than RM146mil sales.

The speed at which market surveys were done by developers in the last quarter of 2008 and the strategies put in place in January, underscores the urgency developers view the situation.

Whether it is to clear old stocks or to complement new launches, something has to give to lift the current sentiments.

Says an analyst: “There is no bubble in the mass housing market. It is more a case of job insecurity and buyers holding out for bargains. Capital values are holding quite well, unlike in KLCC and Mont’Kiara. There are genuine buyers of bread-and-butter housing out there and given the current spate of incentives by banks and developers, why not make a decision now?”

He adds that: “Never before have developers absorbed the interest. In the past, developers priced in the interest in the higher selling price, but now it is different. These are the units which could not move, so developers would rather lose out 2% to 3% margin based on the interest cost and stamp duties”.

Whether these incentives are sustainable until year-end depends on how things pan out in the local and global economy, he says. He also cautioned that a lot of sales numbers given by developers may be just bookings, which have yet to convert into sales and purchase agreements.

“We expect demand to remain weak notwithstanding the campaigns. The fact that there are such campaigns show that developers are in jeopardy.

“A condominium developer had virtually no sales in the last quarter of 2008 and a large-scale developer had sales of only RM70mil in the last quarter, compared to RM300mil a year ago. So the incentives to buy must be there,” the analyst says.

Another analyst opines that the larger boys offering mass housing may have a better survival rate. Those offering homes that costs millions may have problems this year. It all depends on their stock of these million ringgit homes.

“(Demand for) luxury condominiums will only come back in 2010. More home buyers will return in the third and fourth quarters. We expect more creative approaches in the second quarter, but these incentives will also cut into the costs,” he says.

The way things have turned out for developers and banks underscore the cooperation needed by both to tie over the period.

A source from Mah Sing Group Bhd says sentiments are indeed very poor.

“Banks have to do a lot of packaging if sales are to continue. If you are buying for own stay, now is the time. The fact that the second stimulus package allows banks to defer mortgage payments for one year indicates how concerned the Government is,” he says.

“When there is job insecurity, people will not buy. Most developers will think twice about increasing prices. But developers in the right market and the right location will hold strong,” he adds.

The company has achieved sales of about RM140mil following its 5/95 sales campaign for all properties. It has a sales target of RM450mil for 2009, a 13% increase over the previous year’s of RM397mil. About 88% of the sales are from the Klang Valley, with nearly half from commercial properties.

Mah Sing’s campaign ends March 31. There may be plans to extend or tweak the current package. Sunway City Bhd had two schemes, one for completed projects and the other for those under construction. Both ended Feb 28 and generated about RM60mil during the schemes’ two-week duration.

SS Facility expects higher demand

From the Star dated 20 march 2009...

PETALING JAYA: ISS Facility Services Sdn Bhd, an integrated office facility maintenance company, sees increased demand for its services amid the economic downturn as it provides cost savings, says managing director Simon Lim.

“Contrary to market expectations, we see a marked increase in customers’ interest in what ISS has to offer,” Lim said.

“I think our customers can no longer afford inefficiencies in their operations and are looking for methods to step up performance without necessarily investing in fixed costs,” he added.

Lim said most companies spent too much money hiring different service providers for the maintenance of company facilities, and that they could save much if they just hired one company to do it.

“What remains to be done is to push for horizontal integration, which is the bundling of multiple services under one provider at multiple sites,” he told StarBiz.

This would mean getting one company to do things such as contract cleaning, pest control, washroom services, office support services as well as mechanical and electrical engineering services.

Another way was to outsource, Lim said.

“Outsourcing allows customers to focus on what they do best and at the same time, allows for flexibility. In times such as this, the ability to re-deploy staff in a productive manner is a key advantage.

“Customers are also wary of vendors (of facilities services) which may not be able to deliver on contracts because they are under-capitalised and cannot ride out the economic crisis,” he said.

Overall occupancy of malls in Kuala Lumpur and the Klang Valley is still high

From the Star dated 21 March 2009...

THE retail and office property market is looking stable at the moment despite some softening in certain locations due to the global economic slowdown.

“The overall occupancy of most malls in Kuala Lumpur and the Klang Valley is still high, suggesting the market at this point is still remarkably resilient, compared with markets in other countries in the region,” says real estate agency Regroup Associates managing director Allan Soo.

Based on the average occupancy tracked by the company for the whole of 2008, which includes 43 shopping centres, he says the overall occupancy for all the malls is holding well at 92.7%.


He says that despite the overwhelmingly negative sentiment in the industry, the retail market displayed mixed results last year, with food and beverage and basic necessities like groceries showing positive growth trends, even in the gloom of the second half of 2008.

However, this year, with the global credit crunch affecting the country, Soo says discretionary spending will be curtailed even more. He expects fashion outlets to be the most affected. Even so, he is still optimistic.

“All the hypermarket chains are still expanding and gaining market share, with a few more outlets slated to open this year. Demand is still strong for traders in the convenience, family, household, and food and beverage categories. Our leasing efforts for our two main shopping centres, CITTA in Saujana and Festival City in Setapak, which are still under construction, have drawn positive response from tenants,” he says.

Strategic locations

Naturally, retailers that are already situated in strategic locations would choose to remain there, while those that are not will want to open shop in such areas.

As such, Soo points out that malls like Suria KLCC and Mid Valley Megamall, which are still attracting strong sales, albeit slightly less than last year’s, will continue to maintain full occupancy in the next couple of years.

Sunway Pyramid Sdn Bhd marketing and leasing general manager Kevin Tan Gar Peng says there is a misconception that malls are performing dismally due to the downturn.


“Every day, we are reading news that say shopping malls are facing gloomy days. Actually, it is not that bad. Sunway Pyramid is doing well and retailers are enjoying good sales,” he says.

The sales during Christmas last year and Chinese New Year this year had in fact fared much better than in 2007.

“We are very optimistic. Our target market is medium to high-end shoppers, who are less affected by the downturn,” he says, adding that for the past six years, Sunway Pyramid has been enjoying full occupancy with an average rental rate of about RM9 per sq ft.

“We are very selective with our tenants. Some retailers may move out due to poor sales, but it may be because their products don’t suit the market and not because the market is bad,” he explains.

Sunway Pyramid has raised its marketing budget by 30% this year to woo more shoppers. And apart from seasonal sales, it will have promotions for certain departments every month.

Oversupply situation?

Kuala Lumpur Pavilion Sdn Bhd leasing and marketing director Joyce Yap says Pavilion’s occupancy rate is 100% and, as tenants have signed a three-year leasing arrangement, it is not likely to change in the near term. Yap says that in this challenging time, malls need to do more promotions to attract shoppers and boost sales.

Hall Chadwick Asia Sdn Bhd chairman Kumar Tharmalingam says the domestic office rental rates will hold as KL is not a financial centre like Singapore.

“International banks (in Malaysia) are smaller and I don’t think they will retrench workers, while the local banks are not in trouble. In the last seven years, not many new office buildings have been erected. During that period, there was only one new building in the golden triangle, Menara Bumiputra-Commerce in Jalan Raja Laut, but businesses have expanded,” he says.

He opines that the office market outside the KLCC vicinity, such as Petaling Jaya and Damansara Heights, are also stable.

On a report that an additional eight million sq ft of office space will hit the KL market in three years, he says developers are more likely to defer the projects, which means there will unlikely be a scenario of oversupply.

On average, he says, the take-up rate for new tenancy office space in KL is about 1.5 million sq ft per year. Among all the segments of the commercial property market, he says the office rental market is the most stable at this point.

Old tenants, new tenants

Regroup Associates Sdn Bhd executive director Paul Khong says the office market is still fairly strong, as renewal of existing leases are on the rise. However, he says new tenants may resist paying premium rates, or commit to new spaces, until economic conditions improve.

As such, he expects office rental yields for buildings in secondary locations, or newly-completed office space that are struggling to draw tenants, to taper off by 5%-15%.

“Unless they see a bargain, they won’t be willing to part with their cash yet. There may be one or two desperate sellers, but it should not bring down the entire market substantially,” he says.

“As part of cost-cutting measures for back-end offices or data centres, there could be demand for office space from multinational corporations looking to relocate from more expensive countries like Singapore or Hong Kong to Malaysia,” he says, adding that the general occupancy rates for grade A offices are above 90% and about 40% of the new supply of office space coming in are already pre-let.

Dubai developer slashes prices by up to 30% and offers refunds

Dubai'S SECOND LARGEST LISTED DEVELOPER USING CREATIVE MEANS TO STAY AFLOAT SUCH AS: 1) slashing the price of units by up to 30% 2) softening payment plans for cash strapped property investors and 3) giving 100% refunds on some postponed projects  taken from property wire on 21 march 2009 link http://www.propertywire.com/news/middle-east/dubai-developer-refunds-200903212823.html

Markus Giebel, CEO, Deyaar Cash flow problems have led to a major Dubai developer slashing property prices by up to 30% and introducing refunds and easier payment plans for real estate investors. In what some analysts might describe as a sensible move and others a sign of desperation, Dubai's second largest listed developer Deyaar has unveiled a string of drastic measures to help the company ride out the property downturn in the Emirate. Measures announced by the firm include slashing the price of units by up to 30%, softening payment plans for cash strapped property investors and giving 100% refunds on some postponed projects such as Deyaar Enclave. Property investors struggling to meet repayments will also be able to downsize their units by 50% and exchange a larger property for smaller one. Customers can also swap in their unit at another Deyaar development in a more central location such as Business Bay. Other projects have been put on hold. They include Deyaar Park and Mirar Residences, the company confirmed in a statement. It also said that help customers to avoid defaulting on properties are seen as a priority. 'A financial strategy has been developed to safeguard our customers by stabilising their cash flows and helping secure easier access to finance,' said chief executive Markus Giebel. 'This will result in a lower of risk of defaults and lower receivables risk for Deyaar, maintaining the company's cash flow,' he added. He expects the company to remain profitable throughout the difficult times ahead in 2009. 'Profits and revenue are not a problem, it's just cash flow,' said Giebel. Properties handed back to the developer by distressed real estate investors are to be put into a fund and after three to five years when the market has recovered the assets in the fund will be sold. This move is aimed at avoiding accusations of deliberately driving down property prices, Giebel explained. 'Deyaar cannot be seen to be pushing down prices by selling these properties off cheaply. This is bad for the market and bad for Dubai,' he said. It is hoped that the measures will enable the business to reduce the percentage of defaults on its properties to single digits.

New budget airline boost for Malaysian property

Extracted from the Homes Overseas Magazine dated 20 March 2009...

The Malaysia property market, named as the number on place to invest in property this year byHomes Overseas magazine, has been boosted by the launch of a new budget airline service.

Air Asia X has started a new service offering flights five times a week from London Stansted to the Malaysian capital, Kuala Lumpur. The company has already sold 50,000 tickets priced between £149 and £199 one way, compared to typical prices of £300 charged by other airlines.

John Scott, director of Southeast Asian property specialist, Asset Property Brokers, said: “This is good news for those thinking about investing in property or seeking a property in Malaysia.

“Although property price rises have slowed inline with the global downturn, Malaysia’s property market has been more robust than most.

“The launch of this new airline service will add a further boost to Malaysia¹s booming tourist industry, driving up occupancy rates and yields of well located and managed hotel property projects.”

A record 22m people visited the country in 2008, up 5% compared with the previous year, making it Southeast Asia’s top tourist destination.

Asset Property Brokers is currently marketing villas for sale at Golden Palm Tree Resort, an iconic luxury hotel development forming the shape of a palm tree that will stretch out almost a mile into the Straits of Malacca, near Kuala Lumpur.

Investors are provided with a 15-year rental package starting at a net 8% per annum, good potential for capital growth and zero capital gains tax.

The scheme, which is located just 75 minutes from Kuala Lumpur¹s central business district, is scheduled for completion in 2010.

Property prices start from £190,337.