Efforts to curb property speculation

The government will initiate measures to address various issues gripping the property sector, including curbing rampant speculative activities in the market.

Housing and Local Government Minister Datuk Seri Chor Chee Heung said he would present to the cabinet findings of an industry meeting which could be used to come up with innovative ways to build affordable homes.

"The government has done fairly well in addressing the housing issues of the lower income. However, 40 per cent of the medium-income society still need accommodation.

"My ministry will use some of the findings to improve the sector," Chor told reporters here after opening a roundtable discussion on "Housing Affordability - Issues and Challenges".

The government will put forward recommendations, which will be based on proposals made by Real Estate and Housing Developers Association Malaysia (Rehda) such as on how to curb speculative property prices, financing, abandoned projects and sluggish developments.

Metro Kajang Holdings Bhd group managing director Datuk Eddy Chen Lok Loi said for example, a house built in Perlis cost RM250,000 but the same house using the very same materials but built in KLCC would cost RM1 million.

"This is caused by land cost due to two different locations. Nevertheless, there are some of the issues which Rehda will look into to address this such as materials prices. Working groups and a task force have been set up," said Chen.

Meanwhile, National House Buyers Association secretary general Chang Kim Loong said all parties, including the government and developers, need to launch proactive measures to stop steep price increases in the property market due to false demand and excessive speculation fuelled by easy mortgages and low real property gain tax.

"There is a huge mismatch between what the average household income can afford to buy compared to what is available in the market. A homeless generation will emerge and create various social problems," said Chang.

Chang said the average rakyat in a major urban area was struggling to buy his dream home where the average household with income of RM5,962 in 2009 would not be able to qualify for a 90 per cent loan over a 30-year period.

Assuming the average household income rises 15 per cent this year, the household may still not qualify for a 90 per cent loan in far areas such as Kajang, let alone in hot areas such as Kuala Lumpur.

He added that the government must also fine-tune the Bumiputera quota which has not made any headways.

"Don't get me wrong, we have no qualms over the discount for the first buy. But when you buy properties for the fourth and the fifth time and get up to 15 per cent discount ... that is wrong," said Chang.

By Business Times

Making way for affordable homes

REHDA’S CALL: Government should free up some land for construction of affordable homes to ease pent-up demand

The government must free some of its land to make way for affordable homes to address the current pent-up demand situation.

Real Estate and Housing Developers Association Malaysia (Rehda) president Datuk Seri Michael Yam Kong Choy said it must act now before the situation becomes critical.

"As of now, Malaysia needs 180,000 homes a year but the industry can only supply 100,000 units. One of the many ways to counter this problem is to identify federal or state lands which can be converted into affordable housing schemes," Yam told reporters at Rehda's headquarters here yesterday.

Yam was presenting a paper at the roundtable discussion on "Housing Affordability - Issues and Challenges", launched by Housing and Local Government Minister Datuk Seri Chor Chee Heung.

The land includes sites of government quarters, public golf courses or land after the relocation of residential schools and zoos.

"We need to shift development focus of government-owned land to affordable housing, instead of commercial projects such as the Rubber Research Institute land in Sungai Buloh, Pudu jail and the Sungai Besi airport.

For immediate action plan, focus must be given to build affordable homes, from low cost with prices ranging between RM150,000 and RM350,000.

"There should be no more low cost quota. Government must provide social housing or transit housing for the hardcore and urban poor."

Yam said for planning control, the industry should be allowed higher plot ratio to enable the development of smaller units.

Developers should be given incentives for projects in public transport and transit areas with higher density/plot ratio.

To address issues of increasing cost, the sector must be free of new compliance costs, more certainty in Bumiputera quota release system, faster approvals and freeze imposition of policies or guideline laws that add to the cost of development.

Financing must be cheaper for the first time buyer and more tiered payments where homebuyers can pay less now and gradually pay more later (to be reviewed every five years).

For loan applications, housebuyers must be given more flexible criteria and not merely focus on net income.

Yam said the government should assist buyers with acquisition costs such as lower stamp duty for affordable homes.

As an example, a stamp duty of 0.5 per cent for the first transaction rate of RM300,000 compared with one per cent at the moment for the first RM100,000.

Another action plan is to make connectivity to urban areas more accessible, improve public transportation system and reasonable travelling distance to place of work.

For the medium to long term plan, the government should refurbish existing buildings such as public low cost houses, council homes and government complexes to affordable homes.

The Malay reserve land or new villages can also be new potential sites for affordable housing as well as building over existing transport infrastructure such as high rise apartments over LRT (light rail transit) stations or over KTM Komuter routes.

By Business Times

Govt aims for affordable housing for middle-income group

PETALING JAYA: Housing and Local Government Minister Datuk Seri Chor Chee Heung said the housing needs of the middle-income group, which formed more than 40% of the community, must be addressed and hoped that the 1Malaysia People's Housing Scheme (Prima) announced last year would progress speedily.

Low cost housing is capped at RM42,000, while affordable housing cost between RM85,000 and RM300,000.

Chor said the Government had been successful in providing low cost housing, but there was a need to look into the grouses of the middle-income group.

Chor said this to reporters after attending a roundtable discussion entitled “Housing Affordability: Issues and Challenges”, jointly organised by the Real Estate Housing Developers Association (Rehda) and the Eastern Regional Organisation for Planning and Human Settlement yesterday.

“The Ministry will consider the views and suggestions by the task force to be formed and we will put forward views and perspectives to the Federal Government.

“Affordable housing has become an important topic, with the greatest need being in urban centres like Kuala Lumpur and Penang and to a certain degree in Johor Baru due to urban migration.

“The Prima scheme is a laudable project...(but) it is moving sluggishly. We hope to see Prima making speedy progress. At the same time, we also hope the developers will play their role,” he said.

He said it might be more efficient to streamline the different agencies which provided housing. Chor said it was not possible to compare Malaysia's housing situation with Singapore because the government there was able to step in quickly to provide both low and middle-cost housing units.

Earlier, at the discussion, Rehda president Datuk Michael Yam listed out the challenges faced by developers when providing social housing including the high cost of land. “Planning requirements need to be reviewed because we are beginning to see a proliferation of small serviced apartments into the market. Developers are resorting to building small units in order to increase the number of units to make the project viable,” Yam said.

He called on the Government to free government and state land for affordable housing and to exempt developers from having to fork out capital for utilities infrastructure like reservoir and sub-stations.

“In developed countries, the government build all these and the developers pay a contribution. When developers have to fork out capital expenditure for the infrastructure, invariably the consumer will have to pay for it. This results in an increase in housing cost,” said Yam.

Secretary-general of the House Buyers Association Chang Kim Loong called on the Government to bring back the real property gains tax in full force to curb speculation.

Effective since Jan 1, this year, the gains from property held for less than two years were subjected to a 10% tax. For properties held between two and five years, a 2% was imposed while those who kept it for more than five years are exempted from tax.

Under the previous ruling, a Malaysian individual who sells his property within the first two years of purchase is taxed 30% of the gains. The rates slide to 20% (third year), 15% (fourth year) and 5% (fifth year). He is not taxed on the sixth and subsequent year.

By The Star

Plans for 'no frills' homes

KELANA JAYA: Malaysia is mulling to build its first affordable "no frills" houses so that the rakyat can own homes of their own.

Mooted by the Real Estate and Housing Developers Association Malaysia and the Housing and Local Government Ministry, the house will be 30 per cent cheaper and will be custom-finished by the owner.

Immediate past president Datuk Ng Seing Liong said the house will be "naked" but equipped with basic amenities such as the kitchen and the toilet but there will be no partitions to segregate the rooms.

"This is to allow owners to choose to have two or three rooms, depending on the owner's marital status or the number of children," Ng told reporters here yesterday at a roundtable on "Housing Affordability - Issues and Challenges".

Ng said the no frills house will be 30 per cent cheaper than the current affordable home price tag of between RM80,000 and RM350,000.

Ng said the concept is not new and has been introduced in China and the Philippines. He said all parties are discussing on it at the moment.

Minister of Housing and Local Government Datuk Seri Chor Chee Heung said the no frills home is one of the sectors innovative ways to build affordable homes.

Housing is a very serious problem worldwide, especially for the middle class. Even ministers in China find it difficult to buy homes despite it being a socialist country.

By Business Times

Sp Setia's Liew, PNB likely to stay out of share placement

PETALING JAYA: SP Setia Bhd president/chief executive officer Tan Sri Liew Kee Sin and Permodalan Nasional Bhd (PNB) are unlikely to be taking up shares in the proposed share placement exercise which the property developer announced on Monday.

An analyst told StarBiz that the proposal would be pointless if PNB and Liew were among those identified to take up the shares since among the stated objectives of the share placement was to increase liquidity of the stock.

“They've to do it because the stock's not liquid and the announcement has been expected for some time,” she said. PNB currently has a 51.63% stake while through Skim Amanah Saham Bumiputera, it has another 18.41% stake. Liew has a 5.65% stake, the Employees Provident Fund (EPF) has a 5.28% while Kumpulan Wang Persaraan has a 5.10% stake.

The share placement exercise comes on the heels of announcements by SP Setia of several multi-billion ringgit joint-venture projects, of which the most prominent would be the Battersea project in London announced early last month and the Qinzhou Industrial Park in south-west China announced in April.

Besides the proposed share placement, SP Setia has also proposed a new employees' share option scheme (Esos) of up to 15% of the issued and paid-up share capital of the company while proposing the cancellation of the existing Esos.

SP Setia and PNB were not able to reply to further queries on the proposed share placement exercise at press time.

Meanwhile, a Sime Darby Bhd official said the company had no plans to do a cash call at the moment. “Balance sheet-wise, we're in good shape,” she said. Sime Darby has a 40% stake in the joint venture to develop the Battersea project, the EPF holds a 20% stake while SP Setia owns the remainder stake.

To recap, Maybank Investment Bank Bhd said in an announcement to the stock exchange that SP Setia was proposing a new issuance of up to 15% of the issued and paid-up share capital of the company or up to 322.69 million shares.

The exercise would raise a minimum RM957.4mil assuming the price of the placement shares was fixed at RM3.19 per share based on a 10% discount to the five-day volume weighted average market price and a minimum take-up rate of 300.11 million shares.

The proceeds would be utilised to part-finance the cost of land acquisitions and initial project development expenditure, to meet the general working capital requirements as well as to defray the expenses relating to the proposals.

CIMB Investment Bank Bhd said in a note that the impact of the placement would be slightly negative on valuations.

“We estimate the private placement will dilute revised net asset value (RNAV) by 3% to RM4.17 (per share) and financial year ending Oct 31, 2013 (FY13) to FY15 earnings per share (EPS) by 6% to 12%,” it said, adding that the Esos would be an important means of retaining and incentivising staff.

Affin Investment Bank Bhd analyst Isaac Chow said in a report that the proposal, while positive in the long-term, would dampen investors' sentiment of the company in the short term.

He said assuming all the shares were placed out at RM3.23, the placement would dilute its EPS for FY13 to FY14 by 7% to 8%.

Chow recommends that investors acquire the shares via the placement exercise rather than in the open market. He has put the “reduce” rating and target price (of RM3.60) based on 15% discount to RNAV under review.

SP Setia's share price closed two sen lower at RM3.49 yesterday.

By The Star