Foreigners snapping up Malaysian properties

Influx of investors: They are still buying properties worth over RM1 million because they have the money

There is an influx of investors from China, Hong Kong, Japan, Singapore and South Korea buying residential properties here, says PropertyGuru.com.my head of marketing Jason Thoe.

They are buying the properties for their own stay or as an investment, and their targets are Klang Valley, Penang, Johor and Sabah, he said.

There is concern now of rising property prices. In the last two to three years, property prices have risen by 10 per cent to 30 per cent, mainly in Kuala Lumpur and Penang.

The myth faced by the property sector is complaints of houses being overpriced because of higher foreign ownership and speculation.

But according to Rehda (Real Estate and Housing Developers’ Association of Malaysia), only less than two per cent of local residential properties are owned by foreigners, and the
majority are located in the Kuala Lumpur city centre.

To prevent a property bubble, the government said it is raising the threshold price of residential properties for foreigners from
RM500,000 to RM1 million.

“That is not going to change anything. Foreigners are still buying properties worth over RM1 million. They are buying because they have the money,” Thoe told Business Times yesterday at the launch of PropertyGuru’s property showcase.

On the outlook for 2013, he said there will be higher transactions for properties priced below RM700,000, especially apartments and condominiums.

“The new hot spots will be Seri Kembangan and Kajang because of the infrastructure development. Developers with reputable
brands will have a good following.

“The secondary market in some areas in Klang Valley will also experience growth as first-time property buyers look for affordable terrace houses priced RM800,000 and below,”
he said.

Thoe said Iskandar Malaysia, George Town and Kota Kinabalu are also experiencing higher property transactions.

“Property prices in Kota Kinabalu have been increasing steadily in the last 10 years.

Developers there are launching properties priced around RM1,300 per sq ft, almost on par with Petaling Jaya. The buyers are mainly Sabahans,” he said.

On the property showcase,Thoe expects the 13 participating developers to generate more than RM15 million in sales collectively. They include UEM Land, Country Heights, Andaman,
Land & General and Naza TTDI whereby properties are priced between RM400,000 and above RM1 million.

This is PropertyGuru’s second major property showcase for the year. The first was held in Penang last week where seven developers generated a combined sales of RM14.2 million from the three-day event.

By Business Times

Buyers turn to Kajang as KL home prices rise

The past couple of years, in tandem with the rise in property prices in major towns and cities in the country, Kajang's property market has generated quite a bit of interest among both developers and house buyers.

Located about 20km from the city of Kuala Lumpur, Kajang is benefiting from its second-tier location status as Kuala Lumpur and Petaling Jaya prices move beyond the affordability of ordinary salaried workers.

Two property negotiators based in the area say much of the interest of late is due to improved accessibility with the various highways that have been completed, and not so much because of the soon-to-materialise MyRapid Transit system (MRT).

Says one of them who declined to be named: “The spike in prices in Cheras properties has resulted in people from Cheras buying into Kajang as housing is cheaper over there. Unless it is very old and run-down, it is not possible to buy into Cheras with RM500,000 and below,” she says.

The other factor is schooling. Yu Hua Kajang, which offers both Chinese primary and secondary schooling, will only consider applications from a Kajang address, she says.

“Saujana Impian and Prima Saujana, by virtue of their proximity to Cheras, enjoy good demand, with Saujana Impian having more tenants than owner occupiers.”

She adds that projects in that vicinity by the Naza TTDI group have received good response from buyers and investors. As for Kajang-based developers MKH and private developer TLS Group, she says the Kajang and Cheras population are familiar with both.

She says the issue is not so much a lack of housing, but the scarcity of bread-and-butter double-storey housing.

“Developers, in their search of higher profits, are building three-storeys housing, semi-detached and bungalows in Kajang. What people really want are double-storey terraced housing,” she says.

Because of the challenges in getting land in and around Kuala Lumpur, developers are also scouring other towns and Kajang seems to be within their radar.

Three developers who have bought land in or close to Kajang include Mah Sing Group Bhd, SP Setia Bhd and the Dijaya Corp Bhd. The Sunway group has moved into that location several years earlier. These newcomers will be competing with developers who have built a strong following over the years.

Chen: ‘Improved rail transport will benefit MKH’s new developments like MKH City, MKH Boulevard and Kajang 2’.

Says MKH group managing director Datuk Eddy Chen Lok Loi: “We have no trouble competing with anybody. We are doing everything that other developers are doing.”

Chen says that at the marketing level, the mid-sized developer, formerly known as Metro Kajang Holdings Bhd, has a strong reputation there, having built 30,000 units ranging from residential to commercial properties over the years.

Financially, having accumulated land at between RM8 and RM9 per sq ft would put it at a great advantage compared to newcomers who have paid considerably more. In areas like Semenyih, some of its land bank was acquired at less than RM5 per sq ft.

“I believe MKH is about to make a huge leap forward. Our strategic land bank, which we bought at a very good price when compared with newer players, and the emergence of MRT will give us a strong advantage over our competitors.”

The third factor is the RM135mil turnkey project comprising about 550 acres in Puncak Alam, Selangor, with Puncak Alam Resources Sdn Bhd, he adds.

Over the next seven years, MKH plans to build projects with an estimated gross development value (GDV) of more than RM5bil.

As a result of the Sg Buloh-Kajang MyRapid Transit line, MKH is tweaking its plans for some of its commercial projects. The 51km Sg Buloh-Kajang line will have two stations in Kajang. One of them will be sited at the town centre, about 500 metres from the police station, which is next to MKH City.

The second MRT station will be located along Jalan Reko at the Sekolah Menengah Kebangsaan Jalan Bukit.

MRT will provide additional public rail transport to the current Keretapi Tanah Melayu (KTM) line. There is also a proposal to have a KTM station next to Kajang 2, another MKH project.

Improved rail transport, says Chen, will benefit the company's new developments like MKH City, MKH Boulevard and Kajang 2. It will also give a boost to its older projects Plaza Metro Kajang and Metro Point.

Chen says the value of Plaza Metro Kajang will be enhanced considerably as the station will be about 400 metres from it. The company is also considering building a walkway to connect to it.

“We had wanted to built a small complex on one of the new sites with a gross area of about one million sq ft. With the MRT line entering Kajang town, we are now considering doubling that to two million sq ft because the MRT line will take care of parking issues,” says Chen.

The line will pass close to MKH's new and existing properties MKH City, MKH Boulevard and Kajang 2.

Chen says the company has between 500 and 600 acres of land, with the bulk of them in Kajang and Semenyih, excluding its 550-acre turnkey development in Puncak Alam, Selangor. Semenyih is about 10km from Kajang.

Besides its base in Kajang, MKH also has projects in Petaling Jaya, Old Klang Road and Kuala Lumpur.

On affordable housing, the current buzzword in the property industry, Chen says its projects in Semenyih are priced at between RM300,000 and RM400,000, which is today categorised as affordable. Kajang double-storey housing, by comparison, are now priced about RM500,000.

MKH's nine-month earnings for financial year 2012 has risen 124% year-on-year to RM47mil, driven mainly by successful key projects in Kajang, Semenyih and Bangsar. A HwangDBS Research report says the three locations collectively achieved a commendable 77% take-up rate.

By The Star

MKH has strong foothold in Kajang, Semenyih

MKH’s Sentosa Heights project in Kajang.

MKH Bhd, formerly Metro Kajang Holdings Bhd, has 500 to 600 acres, most of which are in the Kajang-Semenyih area. The mid-sized developer has outlined some of its future developments which include:

MKH Boulevard: This will include high-rise development on four acres of leasehold land within Kajang town centre comprising 308 units of serviced apartments and 30 units of three and six-storey shop offices with a total gross development value (GDV) of RM172mil.

The target launch is next year.

● Kajang East Township in Semenyih: A 135-acre township that is yet to be developed.

It will offer 770 units of residential comprising terrace housing, semi-detached and shop offices with a total GDV 600mi. The target launch is between 2015 and 2016.

● Reko Avenue: A high-rise residential development located on six acres of freehold land close to the proposed MRT station and near Kajang 2 township.

It will comprise 576 units of serviced apartments and 41 units of two, three and five-storey shop offices with a GDV of RM180mil. The target launch is between 2017 and 2018.

MKH's ongoing developments include:

● Kajang 2: MKH's flagship town which will comprise 5,000 units of mixed commercial and guarded development, as well as strata developments with an estimated GDV of RM2.6bil to be developed over seven years.

So far, two-storey terraced housing and semi-detached units with a GDV of RM116.6mil have been launched. As of June this year, it has sold 95% of its units.

There are plans to have 32 units of three-storey bungalows, 242 units of 2-storey superlink housing, and six blocks of serviced apartments and 20 units of three-storey low-rise villas.

The KTM and MRT station next to it is expected to further boost assessibility. Currently, only 50 acres of its 273 acres have been developed.

● Hill Park Homes, Semenyih: About half of its 200 acres have been developed. As of June this year, close to 100% of its properties comprising 1,400 semi-detached, two-storey terraced housing have been launched.

There are plans to launch double-storey housing, semi-detached units and 10 units of shop offices in three years.

MKH has other projects in Melawati, Bangsar and Semenyih.

By The Star

Land – the bread and butter of housing developers

A developer who wants to build on the RRIM land will have to first convert it to development land.

INCREASINGLY, the number of new developments being advertised and marketed of late are located further away from Kuala Lumpur closer to Rawang, Cyberjaya and Putrajaya with the projects undertaken by some of the larger Bursa-listed property developers.

The trend of such developers moving into periphereal locations started a couple of years ago due to the scarcity of large pieces of land between 50 acres and 100 acres close to or in the city which explains why there is so much interest in the Sg Buloh Rubber Research Institute of Malaysia (RRIM) land.

If the core business of a company is property development, then land is virtually gold to them. Without land, they will not be able to develop anything which means no sales and no revenue. This is why, every year, developers have to launch new projects.

The replenishing of land bank has be to be done consistently and constantly, unless they already have a large land bank. This objective to have steady revenue year after year can be a challenge when there is a property downturn, which also explains why it is extremely important to avoid a property bubble.

In the last several years, developers have had multiple launches in order to cater to demand. The need to show a consistent stream of income may explain why some of our larger developers are also involved in the plantation sector. Plantation land can be converted into property development if and when the need arises.

Besides the availability of land, the next important issue is land price.

Some of the larger players which have purchased land in the Kajang, Semenyih and Bangi areas over the last couple of years include S P Setia Bhd, Mah Sing group and Dijaya Corp Bhd.

Last year, S P Setia bought 272.5ha, or 672 acres, of freehold land in Semenyih for RM381.26mil or about RM13 per sq ft.

A couple of years ago, Dijaya bought the 200-acre Kajang Hill Golf Club for RM228mil or about RM26 per sq ft. The price a developer pays for his land is important because at the end of the day, this will be reflected in his selling price.

Mah Sing Group Bhd is the other new player in the Bangi area. In May, it bought about 400 acres in Bangi for RM333.25mil or about RM18.50 per sq ft.

When a developer buys land that is not slated for property development, there is conversion cost. For example, if a piece of agricultural land is bought for RM10 per sq ft, it has to be converted into land for development. The land office will consider the price of other development land in the area. If the market price is RM20 per sq ft, there is a difference of RM10. The developer will be charged a premium of 25% of RM10 which is his conversion cost.

That means, in order to change the land status from agriculture to development land, he will have to pay an extra 25% multiplied by his land size. There are various factors that determine the cost of conversion.

The price Mah Sing is paying is benchmarked against rival developers. In this case, S P Setia's RM13 per sq ft versus the current land price of between RM25 and RM28 per sq ft in Kajang, according to RHB in May. This takes us back to the 2,330-acre RRIM land, which was sold to the Employees Provident Fund for RM2.28bil, or RM22.46 per sq ft. This is unconverted agricultural land compared to S P Setia's and Mah Sing's land in Semenyih and Bangi respectively

A developer who wants to build on the RRIM land will have to first convert it to development land. There is a different price range for commercial and residential land, with commercial land being more valuable.

Apparently, Mont'Kiara land is already between RM600 and RM700 per sq ft, and the Tropicana land is RM200 to RM300 per sq ft.

Because some parts of RRIM land is next to Tropicana, when the land was parcelled out, the price may be rather prohibitive to smaller and less capitalised property developers.

Considering that large-scale developers have been land-hungry and have been buying into places in Semenyih, Kajang and Bangi, and the RRIM land being far more strategic, it is hoped that the Government, by virtue of the fact its cost of funds is cheap, will parcel a considerable portion of it for affordable housing.

The Government could also help by releasing other land under its plan to provide affordable housing for the people but as it stands today, it may, in all likelihood, also be further away from the city with places like Kajang, Semenyih and Nilai mentioned, among others.

Deputy news editor Lee Cheng is of the view that housing issue can become a social problem if not dealt with expediently.

By The Star

Let the house buyers beware!

A file photo shows a house for sale in Alexandria, Virginia, outside Washington DC. In countries like the United Stat es and Canada, home inspections are a standard practice in the purchasing process. — EPA

To not educate yourself and learn from the mistakes of others only sets you up to be at best, disappointed and at worst, being house poor'

FOR many people, the purchase of a home is the most important financial decision of their lives. Therefore, it makes sense to approach the decision carefully.

The purchase of a home is unlike any other consumer product as it covers a lot of ground including legal, financial, technical and emotional considerations. To not educate yourself and learn from the mistakes of others only sets you up to be at best, disappointed and at worst, being “house poor”.

Caveat emptor! Let the buyer beware! The idea is that buyers take responsibility for the condition of the items they purchase, and should examine them before purchase. How true is this for the property buyers? It works well for buyers of completed units but not if you are buying an abandoned house to call it a home.

What happens if you have paid for your house and discover defects later which cost thousands of ringgit to repair? This would not have happened if you had used the services of a building inspector. His duty and responsibility is to give you a report on the condition of the house, and to check for permitted renovations, against shoddy renovations, before you buy.

The report would have given you room for negotiation with the seller too.

Most people are under the mistaken belief that the local council issuing the Certificate of Fitness for Occupation (CFO) will discover problems such as defects and shoddy workmanship when they issue it. They do not. Their job is strictly to ensure that there are no by-law violations or safety issues. They are not quality assurance officers and nor do they have that authority.

Furthermore, there could be problems with the house that are not necessarily related to by-law violations, yet have serious consequences for the new owner.

We believe that it takes three types of know-how to make a wise decision on a purchase: financial know-how; legal know-how and technical/engineering know-how.

In the first two, consultations with financial or legal experts are not a problem as those professionals, namely “buildings/home inspectors” are already in the market.

However, when it comes to the technical part, there is a lot of tension from the layman's point of view and the vendor's as getting a professional home inspection report has yet to be practiced by house buyers as one important process of the purchase. These building/home inspectors are themselves professionals like architects, engineers and surveyors.

The layman is only guided by his untrained eyes (to inspect), naivety assumptions. When it comes to quality and workmanship, new homeowners' problems are compounded by the fact that there is no degree of benchmark on buildings and its components for the layman to rely on.

In countries like the United States and Canada, home inspections are a standard practice in the purchasing process. Home inspectors conduct inspections of newly built or previously owned homes. Prospective home buyers hire home inspectors to inspect and report the condition of a home's systems, components, and structure.

They typically are hired either immediately prior to a purchase offer on a home, or as a contingency to a sales contract.

In addition to structural quality, home inspectors inspect all home systems and features, including roofing as well as plumbing, electrical, and heating or cooling systems.

After you have known what you are purchasing, the legal issue of sale and purchase contracts are the usual conveyancing routine in buying and selling transactions.

Checks will be made by the lawyers as to the arrears of quit rent and assessments rates at the land office and local council, respectively.

The potential buyers could also made checks at the utilities companies as to outstanding charges for service provided to the property.

Chang Kim Loong is the honorary secretary-general of The National House Buyers Association, a non-profit, non-governmental, non-political organisation manned by volunteers. For more information, check www.hba.org.my or e-mail info@hba.org.my

By The Star