Builder AQRS to launch RM153m project

Property developer AQRS The Building Co Sdn Bhd will launch its residential project, Contours Twin Courtyard Show Villa, at Melawati Heights in Hulu Kelang, Selangor, next Friday.

The project, with a gross development value of RM153 million is located on 3.2 hectares.

The Contours, comprising 41 units, come in four designs. Its sizes range from 4,165 sq ft to 7,738 sq ft.

The units are priced between RM3.2 million and RM4.8 million.

Its senior general manager, Thang Ah Hong, said the company has received a lot of positive response from buyers although the project has not been opened to the public yet.

To date, some 40 per cent of the 41 units available were sold, she said.

"We are confident of selling all the units soon. This is a unique development and totally different from the existing residential projects," she told a media briefing at the preview of the show unit in Kuala Lumpur today.

She said the freehold project, which was expected to be completed by end-2012, would have a clubhouse equipped with gymnasium, children water splash park, convenience store, multi-purpose hall, management office and a playground apart from landscaped jogging tracks.

"The project will also be equipped with quality fittings like the Owens Corning roof shingles, Kohler sanitary fittings, SimonsVoss digital locking system, private home lift, home alarm system, solar water heater and stainless steel piping," she said.

She said AQRS would offer the developer interest bearing scheme on 10:90 basis, whereby interest would be absorbed by the developer during the construction period until notice of vacant possession.

"The package also includes free legal fees and disbursements on sale and purchase agreement and loan documents, free one-year maintenance, free air-conditioning units for all bedrooms (except for maid’s room) and kitchen cabinets too," she said.

AQRS, founded in 2001, is the property development arm of Motibina Group of Companies whose core business is in the building, civil construction and development industries.

Contours is the company’s third development project. Its first and second projects were the development of commercial and residential units in Kota Damansara.

By Bernama

Lake Fields takes YTL to new heights

YTL Land & Development Bhd, the property arm of YTL Corp Bhd, says its priced development in Sg Besi, Kuala Lumpur, called Lake Fields has taken the company to new heights, as it has set a new price standard for properties in the area.

"Lake Fields has demonstrated Sg Besi's potential as Kuala Lumpur's next property hotspot," YTL Land executive director Datuk Yeoh Seok Kian told Business Times.



Lake Fields, a joint-venture by YTL Land via Syarikat Pembinaan Yeoh Tiong Lay and the Employees Provident Fund, spans 74ha and the centrepiece is a 6ha lake.

The first phase, known as Meadows & Glades, launched in 2005, were snapped up overnight.
The three-storey homes were priced from RM380,000 per unit and they are now worth around RM665,000.

YTL Land recently had a preview for the second phase known as Dale, which sold out in four days.

The RM300 million Dale project comprises 343 units of three-storey semi-detached homes and the prices range from RM638,800 to RM1.33 million.

More than half of the units were snapped up on the first day of preview on August 25 by existing buyers of YTL Land's other projects such as Sentul East, Sentul West, Lake Edge and Pantai Hillpark.

Dale saw over 4,000 registrants and the preview was held on a first-come, first-served basis.

The key point for Dale is the double-volume living area with floor-to-ceiling windows. It has five bedrooms including one with an en suite bathroom on the ground floor for the elderly.

YTL Land will launch phase three soon, known as the Groove, worth over RM300 million. The price of the homes here will be higher than Dale.

The three-storey homes feature a built-up of more than 4,000 sq ft and comes with a private lap pool and rooftop garden.

Yeoh said following the completion of Lake Fields, YTL Land will focus on its ongoing Sentul West and Sentul East projects in Kuala Lumpur, its flagship development.

By Business Times

Cooling down the market

Buyers who already own at least one property should have to dig into their own pockets for a higher downpayment for their subsequent purchase.

The issue of whether an asset bubble is forming has become a hot topic in a number of countries in Asia these days.

Hong Kong, China and Singapore have sounded the alarm on skyrocketing property prices and are worried that a bubble could be building up and will lead to a market collapse if the north-bound prices are left unchecked.

When an asset bubble happens, prices for a broad spectrum of properties would have escalated beyond the affordability of many common folks. The price increases are not due to fundamental demand but are being artificially pushed up by speculators.

This is what is happening in the “hot” property markets in the region today, and their governments are scrambling to cool the market down with tightening measures such as stricter mortgage loan policies and higher deposits for purchasers.

While some parts of the world, notably the western countries, are still facing the likelihood of a double dip in their economies, Asia has made a notable recovery in the past one year.

The low interest rate environment, high liquidity and an under performing equity market are fuelling a growing appetite for property investment among Asians who are renowned for their high savings.

The danger is that when interest rates start to rise and affordability is affected, demand may start to shrink. The bubble will then burst and result in falling asset prices and a market collapse.

The same issue has been raised about the state of the local property market. Will the run-up in the prices of houses in some parts of the Klang Valley, Penang, and Johor, be a prelude for prices to jump in the other broader property sectors and other parts of the country?

Although the current price spike is still quite contained within the higher end landed residential sector in sought after areas, some concerned parties have voiced concerns that it may spell trouble for the local market if the situation persist and a contagion effect takes place.

Those who are pressing the panic button are pointing their fingers at the speculators for the huge price increases through “property flipping” activities. By buying and selling within a short time, the main aim of these speculators is to push prices up and pocket the profits.

They worry that the bubble will burst when it becomes too big and unsustainable.

The bursting of the bubble will send prices tumbling and property values will be washed down the drains, causing much unnecessary losses.

Those who say there is no immediate danger believes the price increases of housing in the country are not across the board but are contained in only the “hot” areas.

To them, some degree of speculation is actually quite healthy and will not harm the market.

Although there is no confirmed figure on the exact percentage of speculative buying in the local market, the prevailing low interest rates and easy financing schemes are indirectly churning out more speculators in the market.

Unlike genuine investors who usually keep their properties to be leased out for long-term rental income, speculators are those who flip (buy and sell) their properties within a short time for quick profits.

It is common knowledge that there is a growing number of people (with extra cash for investment) who are pooling their resources to buy up multiple housing units (both apartments and landed) for profit-making purposes. They are hoping that their “investment ventures” will yield substantial profits for them in the current market run up.

Excessive speculation is unhealthy as it will unnecessarily burden genuine property buyers who find themselves being priced out of the market.

It will be a good time for the respective state housing authorities to churn out more public housing projects to meet the needs of the lower income population.

National House Buyers Association honorary secretary-general Chang Kim Loong laments that with the steep prices, only the rich, especially foreigners, can afford to buy. He urged the Government to introduce some kind of a price-control mechanism for houses – a threshold to help curb speculation.

He also suggests a lower mortgage loan limit (below 90%) for subsequent purchasers.

It is undeniable that some first time house buyers may still need the financing assistance to make it affordable for them to own a property.

To ensure the new measures do not unnecessarily burden genuine buyers, especially first timers, some flexibility like allowing a loan limit of up to 95% should be extended to these buyers who meet the banks’ credit assessment criteria.

Buyers who already own at least one property should have to dig into their own pockets for a higher downpayment for their subsequent purchase.

The easy financing schemes offered by developers and their panel of bankers should be phased out for upper medium to high-end houses.

Those who are taking advantage of the facility to speculate in multiple properties should not be granted “the free hand” to manipulate the market for their own gains.

Deputy news editor Angie Ng believes all stakeholders – from house buyers to developers and the regulatory authorities has a role to play to upkeep the sanctity of the market.

By The Star

Reasons for this perceived bubble

While much of the Western world today continues to suffer the effects of the global financial crisis of 2008/09, Asia has moved on. It is probably in this process of moving on that there is much concern about the property prices today, as seen in several readers writing in calling for curbs to speculation.

RAM Holdings Bhd group chief economist Dr Yeah Kim Leng says prices began to rise during the second half of last year but surge the first half of this year, particularly for landed units.

Although the 1998 Asian Financial Crisis took its toll on the Malaysian property sector, the sector was not affected by the 2008/09 global crisis.

“Our main concern today is the escalation in property prices. We do not see an economy-wide bubble. It is location specific. If the situation persists, it will have a spillover effect on the broader market segment. The effect is more noticeable in Penang, although certain locations in Kuala Lumpur are also affected. The double-digit growth may be sustainable for a year or two, but if it continues, there is the high likelihood that we will experience a bubble,” says Yeah.

Yeah’s views are echoed by property consultancy Khong & Jaafar Sdn Bhd managing director Elvin Fernandez.

“For a number of years after the Asian Financial Crisis, house prices hovered at about four times our annual household income. In some countries, it is three times. When prices increase six to seven times the household income, that is known as a bubble. In the last six months or so, there are a few locations where prices have started to run up. It is still not alarming as it has not yet affected the entire market.”

Both Yeah and Fernandez also concur that there are two key factors which are supporting this sharp run-up on prices – low interest and easy credit financing.

Prior to this sharp run-up on prices, the middle income group could afford a certain type of housing, in a certain location. Of late, the group discovers that this has gone beyond their reach.

At the same time, the number of people in the high-income bracket has also increased and their strong purchasing power has enabled them to snap up properties as an investment asset.

“Both these factors were present last year because of the counter measures taken by the Government to stimulate domestic demand.

“This has resulted in a boost in demand and the rush to buy in anticipation that prices will go up.

“Fundamentally, one may think it is not affordable but the expectation of higher prices stays with speculators. And the market becomes frothy,” says Yeah.

When prices go beyond fundamentals – an overshot in prices – rental yield is affected. If this situation is confided to selected schemes, the negative impact is limited. It is the high income bracket that will be affected.

A reasonable rental return is 3% to 5% nett depending on the type of house. But with various new areas coming up, yield has gone to 2% or below.

“These are dangerous levels from the household income perspective and also from the rental perspective,” says Fernandez.

Added to that is speculation, with some people buying five to 10 houses in one go, says Fernandez. The 5/95 schemes and other variants of it, where you pay RM2,000 to RM3,000 and need not pay anything until the property is completed, is an invitation to speculate.

Speculation, says Yeah, is another of RAM’s other concern as this is likely to affect non-performing loans (NPLs).

“At this point in time, the latest figures show that NPLs have not increased. That is one of the arguments that there is no bubble. What banks need to do is to ensure that lending is not generating speculation,” says Yeah.

The total exposure of banks to the property sector is about 40% in terms of mortgages and lending for construction loans.

By The Star

A leaf from history

The world we live in has become very interconnected. Within an economy, what happens in one sector affects another. There is much correlation, for example, between the property and the banking sector.

But the fusion does not occur at just sectoral levels. It has gone global. During the euphoric bull run of the 1990s, Malaysia enjoyed tremendous growth for a good part of that decade with gross domestic product (GDP) hitting 10% in 1996. Much of Asia was caught up in an era of contagious exuberance.

During those pre-Asian Financial Crisis years, property prices grew, supported by stock market gains in Asia. The fall of the baht in late-1997 heralded the Asian Financial Crisis. It was a financial and banking crisis which affected the housing sector, says RAM Holdings Bhd group chief economist Dr Yeah Kim Leng .

When housing becomes out of reach, or when incomes do not keep pace with the price rise, and prices continue to climb, there will come a time when demand will shrink. An oversupply occurs. If this oversupply persists and prices become unsustainable, the property market collapses.

“Anything can trigger a collapse. An economic slowdown, for example. The trigger need not necessarily be property-related. The bursting of the bubble occurs when the housing market collapses. Prices fall and demand dries up. The next thing is, we enter a property recession, which we experienced in 1998,” says Yeah.

In that year of negative growth, property transactions also went into negative mode. The market bounced back quickly however. With the return of confidence, 1999 saw a surge in transactions both in terms of volume and value. Analysts call this a pent-up demand.

From double-digit negative territory, property transactions entered positive territory with double-digit growth. But the effects of the Asian Financial Crisis remained for subsequent years.

In 2004, the Kuala Lumpur City Centre (KLCC) and the Petronas Twin Towers became an address. Since then, high-end condominiums in the KLCC area have experienced phenomenal growth in prices of 60% to 100% between 2003 and 2008.

Henry Butcher Marketing Sdn Bhd chief executive officer Tang Chee Meng attributes the strong growth of prices in KLCC condominiums to the influx of foreign investors to the market after the Government announced the exemption of real property gains tax in April 2007.

Says Tang: “The state of the property market is very much dependent on the state of the country’s economy.”

“This can be seen in the strong correlation between GDP growth and the volume and value of property transactions during this 15-year period. The volume and value of residential transactions drop whenever the country experiences negative economic growth or a deceleration in growth. Each property cycle lasts between six and 10 years,” explains Tang.

However, this year has seen a negative in terms of both volume and value of transactions due to a lag time (see tables). The first quarter of 2010 will be transactions of quarter 3 and 4 of 2009, he says.

While analysts may attribute the escalation in property prices to demographics and the growing desire for lifestyle housing, Tang considers inflationary pressure as a major factor.

“The significant rise in building material costs in recent years has led to property developers raising prices. In some instances, softer market conditions result in the developers absorbing the costs instead of being faced with unsold stocks,” he says.

But inflation is not the only factor. The rise in incomes of the middle class has resulted in purchasers demanding better designed and higher quality homes. Social ills like rising crime creates a demand for security.

“So developers came out with gated and guarded communities and larger houses. Even the humble link houses have morphed into prestigious supersized homes selling for well above the RM1mil mark. The strong take-up rates of these types of homes have led to developers pricing their products at ever higher prices,” says Tang.

Based on NAPIC’s house price index, it can be seen that landed properties have enjoyed higher rates of capital appreciation compared to condominiums/apartments .

The supply of landed residential properties in Kuala Lumpur and, to a certain extent, in Selangor is quite limited due to high land costs which result in developers going for higher density development. As Malaysians generally prefer landed property if they can afford it, this has led to prices of landed residences being chased upwards especially in the current low interest environment, says Tang.

By The Star