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Thread: Property News

  1. #4341
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    In Johor, Iskandar Malaysia says property glut nothing surprising

    Monday August 29, 2016
    12:08 PM GMT+8

    KUALA LUMPUR, Aug 29 — Iskandar Malaysia, the economic development corridor in southern Johor, says the current property glut in the state only involves certain property segments.

    Although Johor has come out tops in the country with the most number of unsold units of property for the first quarter of 2016, Iskandar Regional Development Authority (IRDA) chief executive Datuk Ismail Ibrahim said such a surplus was only limited to the high-end, high-rise and high-density segments that mainly consist of serviced apartments.

    “There may be a slowdown in demand for the high-end landed segment but the supply is also not as superfluous as that of serviced apartments.

    “Further down the line, the medium, affordable and low-cost segments are where most of the demand is not being fully met,” he told Malay Mail Online.

    Ismail, however, did not provide details of the slowdown for each segments.

    According to the National Property Information Centre (Napic), Johor recorded the most number of units launched as well as the most number of unsold residential units between January and April this year.

    The state recorded 8,605 launches, of which 2,663 units that amount to RM1.7 billion have been left unsold.

    However, Ismail predicts that the country will require an additional of 666,000 units of houses in accordance with the pyramid-shaped demand by 2025.

    “There is a dearth of houses in the price bracket of RM150,000 to RM450,000 which 50 per cent of the population can afford.

    “The issue which should be acknowledged is a mismatch of demand versus supply and pricing versus affordability, purely due to commercial reasons,” he said.

    Moving forward, he said IRDA has activated the Iskandar Malaysia Property Action (IMPACT) programme to discuss ways to tackle problems that shrouded the property market.

    The programme involves stakeholders from the public, and private sectors, professional bodies and academicians.

    This move, Ismail said, will address issues on affordability, property bubble and wealth sharing.

    Ismail added IRDA and the Johor government, in 2014, embarked on an initiative to study what makes for a sustainable property market by evaluating available housing policies.

    “Apart from that, the Iskandar Malaysia Accolades (TIMA) is being organised to recognise projects that contribute towards achieving Iskandar Malaysia’s vision and objectives by encouraging developers to adopt a more balanced and sustainable approach in their developments.

    “A think-tank is also being formed to provide more accurate, transparent and comprehensive data and information on the property market that can help the matching of demand with supply,” he said.

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    A tool for property transaction statistics for specific areas in Malaysia:

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    Penang and Johor Secondary Market Remains Strong
    November 7, 2016

    Despite a dip in overall transactions, the secondary market in Penang and Johor remained strong this year with a steady number of transactions, reported The Star.

    During the first six months of 2016, the secondary market registered 5,658 transactions valued at RM2.17 billion compared with only 1,040 transactions valued at RM478 million in the primary market, said Raine & Horne Malaysia senior partner Michael Geh.

    “This means the secondary market makes up 84 percent of the total transacted units for the first half of this year. When compared to the same period last year, the secondary market saw a drop of about 13 percent in transactions and 15 percent drop in value transacted,” said Geh.

    He underscored that the secondary market sold more than four times in transaction over the primary market.

    In the first six months of 2015, the secondary market registered 6,325 transactions worth RM2.55 billion.

    “The primary market recorded 1,418 transactions valued at RM590 million in the first half of 2015, meaning it also saw a 20 percent drop in transactions and value transacted.”

    Geh revealed that Penang recorded 15,291 residential property transactions worth RM6.17 billion last year.

    “Interestingly, out of the overall transactions recorded last year, 77 percent are for properties priced below RM500,000. Only 16 percent are for properties priced above RM500,000 and seven percent for properties priced above RM1 million,” he said.

    “This shows that Penang still has properties transacted at below RM500,000. Secondly, I would also like to point out that the secondary market has remained bullish despite the dip in overall property transactions.”

    In 1H 2016, Penang’s residential property market fell by around 14 percent to 6,698 transactions valued at RM2.65 billion from 7,743 transactions valued at RM3.14 billion in 1H 2015.

    Looking ahead, Goh expects the local property market to remain flat next year.

    One market observer, however, expressed hope that things may start to pick up in the last quarter of this year.

    “It tends to be a little quiet in the third quarter. Generally things usually pick up in the final quarter, especially the retail sector, given the festive holidays and year-end sales during the period; but it will also depend on other variables such as sentiment, or if the central bank announced something that could affect the local property sector.”

    Notably, Retail Group Malaysia (RGM) in August said the fourth-quarter growth rate of the Malaysian retail industry will remain at 5.5 percent, given the 1.3 percent growth registered over the same period last year.

    Another market observer expects Penang’s rental market to remain competitive over the rest of the year.

    “The investors or so-called speculators that bought properties some four to five years ago, who’s only aim was to flip it (for profit), might have problems selling the properties that are now coming into the market because of the weaker sentiment,” he said.

    “Therefore, they will be eager to at least rent it out – so it’s certainly a rental market at the moment.”

    Meanwhile, with a few exceptions, the property market in Johor has been subdued this year, said Samuel Tan Wee Cheng director at Johor-based KGV International Property Consultants (M) Sdn Bhd.

    “Except for outstanding sales in the primary market like UEM Sunrise Bhd’s Melia Residences and the multi-billion mega development Forest City, other developers have been reporting slower sales within the state.”

    Tan said transactions for projects in good locations remains steady. On the secondary market, he noted that most buyers are taking a ‘wait-and-see’ stance due to the weak economic climate.

    “I think it’s a good time and opportunity for buyers and investors to come into the market. It’s not when to buy – it’s where and what to buy. That’s the maxim to follow. The good news will come,” he said.

    Moving forward, Tan expects the Johor property market to remain flat next year.

    “I think transaction volume and value will go down. Generally, the market has still yet to recover and is likely to remain flat next year.”

    Diane Foo Eu Lynn, Senior Content Specialist at PropertyGuru, edited this story. To contact her about this or other stories email [email protected]

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    $100 billion Chinese-made City Near Singapore 'Scares the Hell out of Everybody'
    November 22, 2016
    by Pooja Thakur Mahrotri and En Han Choong

    The landscaped lawns and flowering shrubs of Country Garden Holdings Co.’s huge property showroom in southern Malaysia end abruptly at a small wire fence. Beyond, a desert of dirt stretches into the distance, filled with cranes and piling towers that the Chinese developer is using to build a $100 billion city in the sea.

    While Chinese home buyers have sent prices soaring from Vancouver to Sydney, in this corner of Southeast Asia it’s China’s developers that are swamping the market, pushing prices lower with a glut of hundreds of thousands of new homes. They’re betting that the city of Johor Bahru, bordering Singapore, will eventually become the next Shenzhen.

    These Chinese players build by the thousands at one go, and they scare the hell out of everybody,” said Siva Shanker, head of investments at Axis-REIT Managers Bhd. and a former president of the Malaysian Institute of Estate Agents. “God only knows who is going to buy all these units, and when it’s completed, the bigger question is, who is going to stay in them?

    The Chinese companies have come to Malaysia as growth in many of their home cities is slowing, forcing some of the world’s biggest builders to look abroad to keep erecting the giant residential complexes that sprouted across China during the boom years. They found a prime spot in this special economic zone, three times the size of Singapore, on the southern tip of the Asian mainland.

    The scale of the projects is dizzying. Country Garden’s Forest City, on four artificial islands, will house 700,000 people on an area four times the size of New York’s Central Park. It will have office towers, parks, hotels, shopping malls and an international school, all draped with greenery. Construction began in February and about 8,000 apartments have been sold, the company said.

    It’s the biggest of about 60 projects in the Iskandar Malaysia zone around Johor Bahru, known as JB, that could add more than half-a-million homes. The influx has contributed to a drop of almost one-third in the value of residential sales in the state last year, with some developers offering discounts of 20 percent or more. Average resale prices per square foot for high-rise flats in JB fell 10 percent last year, according to property consultant CH Williams Talhar & Wong.

    Country Garden, which has partnered with the investment arm of Johor state, launched another waterfront project down the coast in 2013 called Danga Bay, where it has sold all 9,539 apartments. China state-owned Greenland Group is building office towers, apartments and shops on 128 acres in Tebrau, about 20 minutes from the city center. Guangzhou R&F Properties Co. has begun construction on the first phase of Princess Cove, with about 3,000 homes.

    Country Garden said in an e-mail it was “optimistic on the outlook of Forest City” because of the region’s growing economy and location next to Singapore. R&F didn’t respond to questions about the effects of so many new units and Greenland declined to comment.

    “The Chinese are attracted by lower prices and the proximity to Singapore,” said Alice Tan, Singapore-based head of consultancy and research at real-estate brokers Knight Frank LLP. “It remains to be seen if the upcoming supply of homes can be absorbed in the next five years.”

    The influx of Chinese competition has affected local developers like UEM Sunrise Bhd., Sunway Bhd. and SP Setia Bhd., who have been building projects around JB for years as part of a government plan to promote the area. First-half profit slumped 58 percent at UEM, the largest landowner in JB.

    A decade ago, Malaysia decided to leverage Singapore’s success by building the Iskandar zone across the causeway that connects the two countries. It was modeled on Shenzhen, the neighbor of Hong Kong that grew from a fishing village to a city of 10 million people in three decades. Malaysian sovereign fund Khazanah Nasional Bhd. unveiled a 20-year plan in 2006 that required a total investment of 383 billion ringgit ($87 billion).

    Singapore’s high costs and property prices encouraged some companies to relocate to Iskandar, while JB’s shopping malls and amusement parks have become a favorite for day-tripping Singaporeans. In the old city center, young Malaysians hang out in cafes and ice cream parlors on hipster street Jalan Dhoby, where the inflow of new money is refurbishing the colonial-era shophouses.

    Outside the city, swathes of palm-oil plantations separate isolated gated developments like Horizon Hills, a 1,200-acre township with an 18-hole golf course.

    “The Chinese developers see this as an opportunity. A lot of them say Iskandar is just like Shenzhen was 10 years ago,” said Jonathan Lo, manager of valuations at CH Williams Talhar & Wong, a property broker based in Johor Bahru. “Overseas investors coming to Malaysia is a new phenomenon so it’s hard to predict.”

    Construction soon outpaced demand. To sell the hundreds of new units being built every month, some companies took to flying in planeloads of potential buyers from China, prompting low-cost carrier AirAsia Bhd. to start direct flights in May connecting JB with the southern Chinese city of Guangzhou.

    On the first such flight, 150 of the 180 seats were taken by a subsidized tour group organized by Country Garden. Almost half of them ended up buying a residence, the developer said in an e-mail.

    Buses disgorging Chinese tourists at Forest City in November were met by dozens of sales agents, with the women dressed in traditional Sarong Kebaya outfits similar to those worn by Singapore Airlines Ltd. stewardesses.

    The visitors filed into a vast sales gallery where agents explained the enormity of the project using a replica of the finished town, with model buildings as tall as people. They viewed show flats with marble floors and golden-trimmed furniture, dined on a buffet spread and were encouraged to sign on the spot. A two-bedroom apartment cost as little as 1.25 million yuan ($181,400), about one-fifth of the price of a similar-sized private apartment in central Singapore.

    But JB is not Shenzhen. The billions poured into the economic zone in southern Guangdong in the 1980s and 1990s by Hong Kong and Taiwanese firms was soon dwarfed by Chinese investment as factories sprang up all along China’s coast.

    In Malaysia, investment growth is slowing, slipping to 2 percent year on year in the third quarter, from more than 6 percent in the previous quarter. The value of residential sales in Malaysia fell almost 11 percent last year, while in Johor the drop was 32 percent, according to government data.

    I am very concerned because the market is joined at the hip, if Johor goes down, the rest of Malaysia would follow,” said Shanker, at Axis-REIT Managers, who estimates that about half the units in Iskandar may remain empty. “If the developers stop building today, I think it would take 10 years for the condos to fill up the current supply. But they won’t stop.

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    Anyone with half a brain can see this all along.

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    Top 10 of the Year in Iskandar Malaysia (Year 2016).

    Do you agree for this ranking for the Year 2016 by Southern Corridor Malaysia (SCM) ??

    (1) ASTAKA

    (2) SETIA SKY 88









    Full HD Video:

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    Nope. Don't agree. Top 10 based on what criteria? You see Country Garden and Forest City on the list you gotta laugh.

    Basically they seemed to rank the properties based on how well-known the developers are or how large scale the project is. But that doesn't mean they are good. Nothing special.

    Quote Originally Posted by kong1509 View Post
    Top 10 of the Year in Iskandar Malaysia (Year 2016).

    Do you agree for this ranking for the Year 2016 by Southern Corridor Malaysia (SCM) ??

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    The SCM website's focus (just like SkyscraperCity) is on celebrating iconic projects that impact the urban landscape, so their ranking is based on how significant an impact the project is in changing the urban landscape along the southern corridor (i.e. Johor and Malacca). As u can see, the Sg Segget project which is not a residential/commercial development as such but a public one that has potential to change the environment in the heart of JB city has made the ranking too.

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    For those who don't believe in Iskandar, this news might change your mind!

    Endorsed by Lee Hsien Loong himself!

    Singapore will also prosper if Iskandar Malaysia region succeeds: PM Lee
    Wednesday, Dec 14, 2016

    Singapore will prosper if the neighbouring Iskandar Malaysia region in the state of Johor does well, said Prime Minister Lee Hsien Loong on Tuesday.

    Mr Lee, who was in Putrajaya to attend the annual leaders' retreat with Malaysian Prime Minister Najib Razak, said he congratulated Mr Najib on the tenth anniversary of Iskandar Malaysia this year.

    Since its launch, Iskandar Malaysia has attracted more than RM200 billion (S$64.3 billion) in cumulative committed investments, with a sizeable amount coming from Singapore companies.

    Singapore is currently the second-largest foreign investor in both Iskandar Malaysia and Johor.

    Mr Lee added that both governments continue to work closely together via a joint ministerial committee for Iskandar Malaysia.

    This high-level committee has met a dozen times since it was formed in 2007. The last meeting was held in Singapore in March this year.

    Mr Lee also noted that the various joint-venture projects between Singapore's Temasek Holdings and Malaysia's Khazanah Nasional are making good progress.

    The two investment companies have a couple of joint projects in Iskandar Malaysia, namely Afiniti Medini and Avira Medini.

    These have a strong focus on wellness and have a combined gross development value of some RM3 billion.

    Temasek and Khazanah also have a joint-venture company in Singapore called M+S Pte Ltd, which operates two major mixed-use developments - Marina One in Marina South and Duo in the Ophir-Rochor area.

    "(The joint projects) show visibly that this is a win-win partnership that is progressing well," said Mr Lee at a press conference alongside Mr Najib at the Malaysian Prime Minister's Office.

    The subject of water also came up during the leaders' retreat. Mr Najib said the two countries have agreed to work closely together to ensure that Singapore gets its share of water from Malaysia under the current agreement.

    "There are some challenges, not least some of the effects of climate change that has affected the supply of water," said Mr Najib.

    Mr Lee said that when it comes to water, both Singapore and Malaysia are clear on where they stand on this important issue.

    "We are happy that we've agreed on the importance of ensuring reliable and adequate water supplies from the Johor river as provided for in the 1962 water agreement, and to take the necessary measures in order to make this happen," said the Singapore leader.

    The Johor River Barrage is in the final stages of completion and will be fully operational by March 2017.

    Mr Lee said this barrage has already made a difference to help increase the yield of the river.

    Among the other topics that the two leaders discussed during their retreat were regional and international developments such as the impending change of government in the United States and Brexit in the UK.

    They also talked about the importance of ASEAN integration and cohesion in a highly uncertain global environment.

    Mr Najib said that both countries are "very pleased" with the overall state of bilateral relations between Malaysia and Singapore.

    "There will always be challenges, but given the commitment at the highest levels that this should be an important relationship, one that is predicated on finding solutions, resolving problems and moving forward in a positive way," he said.

    "That's the spirit that reflects the relationship that we've enjoyed between (PM Lee and I) and the two governments."

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    Quote Originally Posted by sgcount View Post
    For those who don't believe in Iskandar, this news might change your mind!

    Endorsed by Lee Hsien Loong himself!
    I believe the historical and social links between Malaysia, JB and SG are such that the prosperity of both countries, esp Iskandar, will be quite interlinked and correlated. It is indeed heartening to see some strong signals being sent by the two PMs in such a high level meeting, esp for those of us who have invested or bought into JB. But it is also understandable that some remain rather cynical. Only time will tell if things will pan out or fizzle off.

    And hopefully the 3rd link will materialise soon, especially as it may be at Pasir Gudang where I live. And I really am pathetically hopeful about it!
    Last edited by Frodo; 18-12-2016 at 06:17 AM.

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    Quote Originally Posted by Frodo View Post
    I believe the historical and social links between Malaysia, JB and SG are such that the prosperity of both countries, esp Iskandar, will be quite interlinked and correlated. It is indeed heartening to see some strong signals being sent by the two PMs in such a high level meeting, esp for those of us who have invested or bought into JB. But it is also understandable that some remain rather cynical. Only time will tell if things will pan out or fizzle off.

    And hopefully the 3rd link will materialise soon, especially as it may be at Pasir Gudang where I live. And I really am pathetically hopeful about it!
    Big boys (developers) already land bank there, so you know something is coming but question is when?

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    Property investment sales surge to 3-year high
    Friday, Dec 30, 2016

    SINGAPORE - It's been a banner year for big-ticket property transactions of at least S$10 million each.

    As at Dec 23, the tally stood at S$22.5 billion - up 31 per cent from 2015's S$17.2 billion, going by Savills Singapore's figures.

    CBRE and Cushman & Wakefield have similar numbers.

    This year's tally of property investment sales, as these transactions are also known, is the highest in three years and has been supported by two mega deals - BlackRock's S$3.38 billion sale of Asia Square Tower 1 to Qatar Investment Authority and the government's S$2.57 billion sale of a white site slated for mostly office use along Central Boulevard to a unit of IOI Properties Group.

    CBRE's data points to S$10.1 billion of office investment sales deals this year (up to Dec 20).

    This gave the sector the lion's share or 44 per cent of overall investment sales.

    This was followed by the residential segment, accounting for 33 per cent or S$7.5 billion worth of transactions (supported by the Shunfu Ville and Raintree Gardens collective sales and City Developments' profit participation securities transaction of the completed Nouvel 18 condo).

    "With some key major deals out of the way in 2016, the pipeline for 2017 seems to be a shade lesser," commented CBRE Research's head of Singapore and South-East Asia Desmond Sim.

    Property pundits say next year's pipeline of big transactions includes Jurong Point mall and Asia Square Tower 2, each expected to fetch around S$2 billion.

    The office and residential sectors will remain key drivers and analysts generally expect the overall investment sales next year to remain in the region of 2016's level or to soften, citing the rising interest-rate environment and slowing trade in Asia if incoming US president Donald Trump fulfils his promise of pursuing a protectionist stance.

    However, Colliers International managing director of Asia capital markets and investment services Terence Tang hazards a guess that 2017's investment sales will be similar to 2016's or possibly 10 per cent higher. "Residential will account for a bigger proportion of deals in 2017 than office - the reverse of what we have seen this year - driven by developers' voracious appetite for replenishment land via both state land tenders and private-sector collective sales."

    Moreover, says Savills Singapore's managing director and head of investment and residential services Steven Ming, residential developers that face looming sales deadlines stipulated under the government's Qualifying Certificate conditions will be motivated to divest their unsold inventory through bulk sales of units or structured deals for their projects - to avoid paying hefty penalties to the state.

    "Investing in high-end residential properties remains appealing given the probability of investing at below replacement cost," he noted.

    Meanwhile, Colliers' Mr Tang said the Singapore office sector remains on the maps of global and regional investors because of the high quality of buildings completed over the past decade and the covenant strength of tenants in these developments.

    However, further interest-rate hikes are on the cards while office rents and occupancies will continue to come under pressure next year.

    "So investors will demand higher yields - but owners may not be willing to let go of their assets at lower prices, at least in the near term," said Mr Tang.

    Cushman & Wakefield Singapore research director Christine Li observes that this mismatch in pricing and yield expectations between buyers and sellers was already evident in office deals this year.

    Private-equity funds, which had been the more active buyers of commercial property in the past, took a backseat as a result. "Instead, non-traditional buyers such as the ultra high net worth families and sovereign wealth funds (SWFs) led the buying this year."

    In a similar vein, Savills's Mr Ming predicts that SWFs and insurance companies are likely to dominate big-ticket office purchases in the next 12 months. "This is because of the expected protracted compressed yield environment which makes them more competitive investors given their lower capital costs, and the continued attraction of Singapore as one of Asia's safe harbour markets to be invested in."

    As office rents generally are expected to continue softening in 2017 as the sector faces the brunt of an oversupply and a weakened economic outlook, this could draw new capital into the sector in anticipation of lower prices.

    "But the resultant intensified buying competition amid a finite saleable inventory will likely keep capital values stable," suggests Mr Ming.

    Both CBRE and Savills expect total investment sales in 2017 to be in the S$18-S$20 billion region - down from this year's high base, marked by mega deals.

    Ms Li of Cushman said the figure could remain in the S$20 billion range.

    Mr Tang highlighted that the Chinese government's general policy to discourage outflow of capital to stem a further fall in the yuan may slow Chinese investment into Singapore real estate.

    Further interest-rate hikes are also seen as a dampener on property deals in 2017, which may result in some investors adopting a wait-and-see position, especially if they wish to first see whether Mr Trump will actually implement the protectionist policies he championed during his election campaign.

    On the flip side, argues Mr Tang, "Mr Trump's policies are also expected to create a more inflationary environment - during which typically, people tend to go into real estate for a hedge".

    A weakening Singapore dollar is also expected to attract foreign investors to Singapore properties.

    CBRE's data compiled on Dec 20 showed that so far this year, investment sales of office properties have more than doubled to S$10.1 billion from S$4.2 billion last year.

    Residential property deals have expanded 42.7 per cent to S$7.5 billion from S$5.2 billion. Investment sales of industrial property have also climbed 42.8 per cent to S$2.7 billion from S$1.9 billion previously.

    On the whole, investment sales that originated from the public sector have dipped 0.7 per cent to S$5.8 billion this year while transactions originating from the private sector have risen 41 per cent to S$17.1 billion, going by CBRE figures.

    As a result, the public sector's share slipped to 25.4 per cent in 2016 from 32.5 per cent last year.

    "This was due to a cutback in Government Land Sales sites," said Mr Sim.

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    Malaysia Property Market Outlook for 2017

    If you’re planning to sell property in Malaysia fast, you will know that things haven’t been great in the Malaysian housing market lately. A number of events came together in 2016, such as the depreciation of the ringgit, tightening of lending standards by banks, efforts taken by the government to curb speculation in property – which have driven down property prices across the country.

    So what’s the outlook for the property market in Malaysia for 2017, which is only a couple of months away at the time of this writing?

    #1: Good news for tenants. Lower rents expected across the country.

    Tenants in Malaysia would be the happiest at how things have turned out in the housing market. With a large number of apartments completed in 2016, there’s a glut of properties for sale, with not as many takers.

    So the frustrated owners have been trying to cover at least a part of their investment by offering these apartments for much lower rents than they would otherwise.

    With the number of rental properties increasing across Malaysia, we expect the rents to decline further in 2017. So tenants will be the biggest beneficiaries of this. They should take full advantage of this opportunity to lock the rental prices at a desirable rate for the long term.

    #2: Cash rich investors to be the biggest beneficiaries.

    The Malaysian government has taken many measures to curb speculative investment in the country. Banks have tightened lending standards. Interest rates are at the highest point that they’ve been for many years in the past. Demand for both old and new properties is a fraction of what it was as recently as in 2013.

    Speculators no longer run the roost in the housing market, as they no longer have the power of leverage to help them with their purchases. What this means is that cash rich investors have all the cards in their favour. So this is a great time to hunt for great bargains as properties for sale in Malaysia are available at rock-bottom prices.

    #3: The return of the foreign investor?

    The fall in value of the Ringgit means that properties in Malaysia are cheaper today than they’ve been for years. Many real estate experts predicted that foreign investors would take advantage of this and buy lots of properties in Malaysia. However, that did not happen in 2016 as foreign investors are still waiting for property prices to bottom out.

    The government hasn’t helped matters by imposing stricter controls on foreign investment in the residential property market in Malaysia. However, this is expected to change in 2017, as a lot of foreign investors, especially those based in Singapore, are waiting to pounce on some great bargains in Kuala Lumpur.

    #4: Affordable housing is the new trend.

    The craze for luxury homes in Malaysia is expected to meet a natural death in 2017. We expect the demand for affordable housing to pick up as people are becoming more realistic about their expectations. Many Malaysians complain about how they cannot afford to own a house in their own country. That is going to change in 2017.

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    When will the property market pick up?
    Saturday, 1 October 2016

    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.

  15. #4355
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    Malaysia House Price Index

    Housing Index in Malaysia remained unchanged at 5.30 percent in the third quarter of 2016 from 5.30 percent in the second quarter of 2016. Housing Index in Malaysia averaged 4.05 percent from 1997 until 2016, reaching an all time high of 44.50 percent in the first quarter of 2000 and a record low of -39.20 percent in the third quarter of 1998.

  16. #4356
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    Both good and bad news for Iskandar Malaysia
    By Al Gerard de la Cruz on January 20, 2017

    At least it’s not boring

    Landed residences could offer a sliver of hope to the embattled property market in Iskandar Malaysia, the vast economic growth corridor in the state of Johor with thousands of condominiums under development.

    Although there was a 5 to 10 percent downward adjustment in landed home prices last year, “the worst is over” for this segment, according to Tan Ka Leong, a director at CBRE-WTW in Johor Bahru. “I believe we will not see much further downward adjustment this year.”

    On the flipside, demand in the high-rise residential segment will be diluted by an incoming supply of 19,000 units this year, the consultancy warned. The existing supply in Iskandar Malaysia stood at 43,898 units last year or a 16 percent increase from 2015.

    Absorption of the resulting oversupply in the region could take around five to six years, leading to an adjustment of as much as 30 percent in high-rise home values. “That’s assuming there is zero additional supply going forward — so high-rise segment would not stabilise so soon,” Tan said. The glut in the supply of high-rise apartments may eventually reach 30,000 units.

    Total transaction value for Iskandar Malaysia properties reached MYR10.57 billion (USD2.4 billion) in the first nine months of 2016, a 5.3 percent year-on-year drop, according to CBRE WTW, citing data from the state-run National Property Information Centre. This represents 15,119 units in transaction volume or a 20.1 percent decrease over the same period.

    “The overall soft market is the result of the general economic conditions and cooling measures,” CBRE WTW researchers stated in its 2017 outlook report. “Whilst general slowdown in terms of transaction activities and take-up within new development are observed, especially for higher-end product, particularly in residential sub-sectors, developers have diversified their plans to offer more affordable products to meet the present market needs.”

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  18. #4358
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    Bloomberg 27 Jan 2017:

    China homebuyers suddenly short on cash.
    Don't buy the house. Buy the neighborhood.

  19. #4359
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    A sample of the many newly completed or about to be completed condo units are now up for auction in the following projects :

    Imperia at Puteri Harbour
    Impiana at East Ledang
    Raffles Suite near Sutera Mall
    D'inspire Residence at Nusa Bestari
    D'Pristine at Medini
    Tropaz Residence at Danga Bay
    WaterEdge at Senibong Cove.........

    It shows that units for auction are not restricted to certain area but all over JB.
    Later, when more and more got foreclosed, the reserved price will also get lower and lower.

  20. #4360
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    With so many up and coming brand new launches c/w generous perks thrown in by developer, why would anyone even consider the above foreclosed unit?

    I will be very interested to attend the next Malaysia Property Fair to listen first hand how the panel of invited speakers brain wash potential buyers.
    Last edited by enjoylife77; 01-02-2017 at 06:20 PM.

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