Malaysian property developers throw in perks

PROPERTY developers are finding new ways to boost sales as they grapple with a slowing economy and fragile consumer confidence.

OSK Research analyst Mervin Chow said more developers will offer incentives, especially for landed properties, to boost sales.

"There is more competition. So developers will have to do something new to survive. They may offer more giveaways or discounts," he said.

SP Setia Bhd yesterday unveiled a scheme that halves the downpayment on a house to five per cent. Rival Mah Sing Group Bhd is set to follow with its own plan this week.

Group managing director and chief executive officer Tan Sri Liew Kee Sin expects a good reaction to its Setia 5/95 Home Loan package, which is available until April 19.



"We had soft launches recently (at Setia Alam) and the responses have been good. People have money but are shaken a bit. So sales have been slow. There are some cases where buyers cannot get loans. This is why we came up with the 5/95 package to assist them to own a home," Liew said.

Liew was speaking to reporters after launching the 5/95 package with Housing and Local Government Minister Datuk Seri Ong Ka Chuan at the Setia Alam township in Shah Alam, Selangor.

The package requires buyers to make a 5 per cent downpayment on a property with no interest payable during construction. The buyer only starts to service the 95 per cent loan when the property is completed.

The campaign is supported by CIMB Direct Access, Maybank, Public Bank and EON Bank and is applicable to all of SP Setia's residential properties in the Klang Valley, Penang and Johor.

As for Mah Sing, it will launch its easy ownership campaign on Thursday.

Under the campaign, buyers can buy completed semi-detached homes or bungalows with a RM1,000 deposit, and thereafter pay a minimum of RM1,200 a month for the next five years.

They will enjoy an attractive loan interest package from the fifth year, Mah Sing senior manager, corporate communications, Lyanna Tew said.

Last year, Sime Darby Property Bhd (SDP) sold 241 properties worth RM141 million in one month, at its 10 ongoing townships.

Sales were boosted by its Guaranteed Buy Back scheme, which is valid until June 15. Under the scheme, buyers can sell back their properties to SDP with "no question asked".

By Business Times (by Sharen Kaur)

SP Setia’s latest 5/95 Home Loan package

Minister of Housing and Local Government Datuk Seri Ong Ka Chuan (left) and SP Setia Bhd group managing director and chief executive officer Tan Sri Liew Kee Sin at the launch of Setia 5/95 Home Loan Package on Monday.

SHAH ALAM: In the current difficult times, SP Setia Bhd has come up with a scheme to make it easier for buyers to own homes.

And four local banks – Malayan Banking Bhd, Public Bank Bhd, CIMB Bank Bhd and EON Bank Bhd – have committed more than RM1bil to provide financing facilities to the company’s new 5/95 Home Loan Package.

Under the package, buyers need only make a downpayment of 5% and the balance is payable upon completion of the property.

Under the 10:90 variant of the build-then-sell system, buyers have to make a downpayment of 10% of the property cost.

SP Setia group managing director and chief executive officer Tan Sri Liew Kee Sin said: “We want to reassure buyers that bankers are not shying away from lending.”

Besides the banks’ support, the group also had RM600mil in cash to fund the campaign, he said after the launch of Setia 5/95 Home Loan Package by Housing and Local Government Minister Datuk Seri Ong Ka Chuan yesterday.

The three-month campaign ends on April 19 and is applicable to all SP Setia’s residential properties in the Klang Valley, Johor and Penang.

SP Setia would also bear other entry costs such as legal fees, stamp duty on the sale and purchase agreement and loan agreement as well as memorandum of transfer for purchases under the campaign.

“We believe Malaysians are still looking to buy and have the purchasing power to do so but got shaken a bit by the current market,” Liew said.

He added that the company had received “very encouraging” response from buyers to the promotion it introduced two weeks ago.

Ong said the Government encouraged developers to embark on build-then-sell system.

“As the country faces pressure from the global financial meltdown, Malaysians have become more cautious in spending. By introducing this 5/95 package, I believe SP Setia has managed to work out the right mechanics to offer prospective homeowners an attractive plan that is difficult to ignore,” he said.

However, Ong said the Government could not fully implement the build-then-sell system yet as smaller developers might find difficulty in securing loans from financial institutions to start a housing project.

The Government, he added, would provide incentives including fast-track approval for projects of developers who opted for the concept.

By The Star

Building materials prices to remain stable

PETALING JAYA: Prices of most construction building materials are likely to remain stable this year amid slowing demand and lower production costs on falling commodity prices.

Master Builders Association Malaysia (MBAM) president Ng Kee Leen predicted prices of all construction materials would eventually drop closer to the levels before the fuel hike in June last year. He said the current prices should stay stable unless the Government made drastic changes to the base materials prices.


Ng Kee Leen

“Government policies have to be consistent and predictable, as investors dislike uncertainty,” he told StarBiz yesterday.

Ng also said MBAM’s ongoing discussion with cement manufacturers on price reduction was encouraging and the association was confident of a positive outcome.



Meanwhile, National Ready-Mixed Concrete Association of Malaysia on Sunday announced a 5% price reduction for ready-mixed concrete effective Feb 1. It said the new recommended selling prices would be applicable in Kuala Lumpur and Selangor.

Transportation charges and steel bar prices have been revised several times since last year.

Ng said prices of domestic steel bars had declined to about RM1,900 per tonne, which was about RM200 per tonne above the imported steel price. He estimated domestic steel demand at about 2 million tonnes in 2009.

However, since the conditional steel import liberalisation on May 12, the import of other steel products, for both the construction and non-construction industries, had faced new setbacks such as higher import fees, more frequent product testing and longer importation procedures, he said.

“It (import of steel products other than steel bars) has become less efficient and unproductive,” he said.

On the RM7bil stimulus package and the second scheme, Ng hoped the Government would implement them quickly.

“New contracts must start entering the market as many ongoing jobs were awarded in 2007 and will be completed soon.

If not, the construction industry will be affected in 2010,” he said.

He said the impact of the stimulus package would be felt only in the second half of 2009.

An analyst with Maybank Investment Bank Bhd who has an “underweight” on the construction industry this year projected that construction materials, whose prices had fallen since the fourth quarter of 2008, would not revert to an uptrend anytime soon.

She forecast the domestic construction industry would remain quiet this year, while local construction companies with overseas projects such as in the Middle East could risk jobs cancellation and potential delayed payments.

She added that construction material costs in India had not come off as quickly as in Malaysia. She also predicted international steel prices to average US$600 per tonne in 2009 from around US$400 per tonne currently.

By The Star (by K.C.Law)

1Utama owner wants to run own mall

See Hoy Chan Holdings is unlikely to renew a lease that lets Aeon Co (M) Bhd manage the first phase of the 1Utama shopping complex in Bandar Utama, Petaling Jaya.

The 15-year lease between Aeon and See Hoy Chan, which owns the shopping complex, will end sometime next year.

Aeon, operator of the Jusco department stores, manages the first phase, which opened in 1995, handling two million sq ft of gross space and 680,000 sq ft rentable area.

The second phase, with three million sq ft of gross space and 1.2 million net rentable area, is owned and operated by the developer See Hoy Chan. It opened in December 2003.

"We are negotiating a new arrangement with Jusco," See Hoy Chan director Datuk Teo Chiang Kok told Business Times.



"We prefer to run it on our own to present the mall as an integrated and wholesome centre," Teo said.

Nevertheless, See Hoy Chan would like Aeon to continue being its anchor tenant.

Apart from the department store and supermarket, Jusco also operates the Jusco Home Centre and Jeans Studio in 1Utama.

Aeon derives its revenue both from retail sales and mall management.

According to Aeon's website, there are 21 Jusco stores in the country, of which 16 are located in shopping complexes which it also manages.

In the first nine months ended September 30 2008, Aeon posted RM75.77 million profit on RM2.5 billion revenue.

Profits from retail operations (before tax) accounted for RM70.66 million and from property management, RM46.49 million.

By Business Times (by Vasantha Ganesan)