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Showing posts with label Real estate development. Show all posts
Showing posts with label Real estate development. Show all posts

Wednesday, October 3, 2012

Malaysia's property market steady, demand not affected by global factors

KUALA LUMPUR: The property market may be affected by the global economic factors but local demand has not been dampened, according to some property developers.

Low Yat Group sales and marketing executive Sean Saw said there was interest among Malaysians especially the younger adults to purchase property although the economy may be holding some of them back.

“I gather that even though the property sector may be quieter due to external factors, but there are still transactions. Newly launched projects continue to be sold out, surprisingly,” he said after a briefing for exhibitors at the Star Property Fair 2012.

He added that the market for sub-sale may be slower but the overall market was expected to be back in full swing next year.

Saw said the fair would be a great avenue to raise awareness among homebuyers about Low Yat's high-end projects, especially its Tribeca serviced apartments to be launched this quarter.

LBS Bina Group Bhd's managing director Datuk Lim Hock San also concurred noted that despite the economic uncertainty, there was still demand in the local property market especially the affordable homes.

“This can be seen in our recently launched Royal Ivory double-storey double storey cluster link semi-detached development where over 300 units were fully sold in three months,” he said.

LBS which is participating again in the Star Property Fair after a hiatus last year said that it was back with exciting projects.

Senior public relations executive Cleosun Ng said after the first exhibitors' briefing: “It has been an exciting year for us. We have many projects to share with the homebuyers and this fair is the right platform for us.”

She added that the fair would serve as a branding channel for LBS to convey its lifestyle living range of products to the homebuyers.

Bukit Gambang Resort City developer Sentoria Group Bhd would also be exhibiting, promoting its investment development within the Bukit Gambang resort city that include commercial and residential projects.

Sales and marketing senior executive Cony Tan said that the fair would be a great ground for Sentoria to get more exposure and reach new customer as it used to only reach out to existing customers through its buyer-get-buyer scheme.

<B>Bucking the trend:</B> Exhibitors attending the briefing. Some property developers say newly launched projects continue to be sold out. Bucking the trend: Exhibitors attending the briefing. Some property developers say newly launched projects continue to be sold out.
 
“All the while we invite existing customers to our events but since launching our villas, we are trying to market our products through different channels,” she said, adding that Sentoria has started participating in roadshows and exhibitions in the second half of the year.

“The customers who walk in to (the Star Property Fair) would be very potential buyers. There are good chances of growing our customer database and getting feedback on our products,” she said of what to expect at the fair.

The Star Property Fair, in its fourth year rolling, would be held from Nov 30 to Dec 2 at Kuala Lumpur Convention Centre.

By LIZ LEE lizlee@thestar.com.my

Saturday, March 10, 2012

Bankers and lawyers should know better

FOOD FOR THOUGHT By DATUK ALAN TONG

BUYING a property that eventually becomes abandoned is a painful experience for many house buyers. It not only hurts purchasers who have lost their hard-earned money but also affects the property industry's reputation which has taken a beating due to unethical activities of a few culprits.

This is particularly so when the abandoned project is not caused by factors such as economic downturn or withdrawal of purchasers, but solely due to irresponsible people who claim to be “developers” but do not hold a licence to do so.

It was recently reported that our Housing and Local Government Ministry has identified 195 abandoned developments that were unlicensed in our country. I am puzzled as to how these “developers” are able to start their projects when they do not even have their licence to apply for financing if they require a bridging loan, and is their sales and purchase (S&P) agreement properly attested by a lawyer before they start selling?

In this context, what can be done and who should play a part in reducing these unlawful developers? Assessing our existing housing development process would provide us with some ideas.

When a developer plans for a housing project, he must first get the necessary approvals and licences from the relevant authorities such as the development order, building plan, advertising permit and developer's licence. The developer then may need to source for a bridging loan from a financial institution and this is followed by getting lawyers to prepare the legal documents which include the S&P agreement.

When the project is launched to the market, the developer will require the purchasers to sign the S&P agreements in order to finalise the purchase. Should the purchaser acquire a housing loan from a bank, the bank will come into the picture to process the loan application submitted by the purchaser. Those are the basic procedures involved in developing and marketing a housing project in Malaysia.

For unlicensed development, the regulatory bodies are not in the picture. In such cases, it becomes apparent that the lawyers and/or bankers, both representing the house purchaser, have a role to play as the first line of defence to protect the interest of the purchaser.

Hence, there are questions that begged to be answered. How is it possible for financial institutions to approve the end financing loan for a property development in the absence of all or part of the required approvals and licences? The same questions are posted to lawyers who prepare the legal documents for unlicensed development.

I believe everyone has a role in identifying irresponsible players in the industry, especially the bankers and lawyers with their better access to information and strong regulatory network as compared to the general public. As a purchaser and a customer, you would have expected your banker and lawyer to carry out their due diligence duties to ensure that your interest is not compromised.

In other industries, professional practitioners who do not convey the right message and do not protect customers' interests can be given stern punishment as their action may be deemed as negligence, fraud or even criminal breach of trust.

According to the record of National House Buyers Association, in the case of Keng Soon Finance Bhd (1996), a financial institution had granted a loan to an unlicensed developer, and it was decided that the loan and the security offered were invalid. The bank could not institute the foreclosure proceedings on the land and therefore could not recover its loan.

Under our Housing Development Act, a property developer that engages in, carries out or undertakes housing development without having been duly licensed can be fined between RM250,000 and RM500,000 or to imprisonment for a term not exceeding five years or both. This is an avenue to take action against unlicensed developers. While we have the law in place, it is equally important to ensure strong enforcement comes along.

For house buyers, you are strongly advised to purchase property from reputable developers and to do thorough “shopping” and analysis before signing on the dotted lines. Responsible developers are keen to work hand-in-hand with purchasers and appreciate the role of the National House Buyers Association which advocates the protection of house buyers in Malaysia. We should stand together as a team to fight against irresponsible developers.

And for anyone of you who think that you have bought into one of those unlicensed developments mentioned earlier in the article, it is time to write and call your banker or lawyer for clarification.

Datuk Alan Tong is the group chairman of Bukit Kiara Properties, he was the FIABCI World president in 2005-2006 and was named Property Man of The Year 2010 by FIABCI Malaysia.

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Houses prices hardly fall

HOUSING INVESTMENTS By THEAN LEE CHENG 

 On a per sq ft basis, it has risen

THERE was a lot of talk late last year that property prices will tumble in 2012 after the steep rise in the residential sector over the past few years. So far, we have not seen any of that.

What we are seeing is:

Bank Negara's tightened guidelines on consumer lending have started to work. Loan applications and loan approvals have fallen in January;

● In certain locations, house prices and rental have started to ease; and

● Developers are offering very enticing terms since the beginning of this year.

Keep your finger on these three factors and let us now take a look at today's launches. In some of these launches, buyers need only to pay about 1% downpayment of the property price instead of the required 10% on signing of the sale and purchase agreement. The stamp duty and legal fees are also waived and they need not pay anything else until after the property is completed. Such schemes have attracted many buyers.

The question to ask is: If the market is as good as many claimed it to be, why are developers offering such schemes? When a property is sold, it is registered as a sale. But the absolute revenue of the unit is yet to be paid.

For easy calculation purposes, 10% of a RM500,000 property is RM50,000. If the first 10% is paid, this RM50,000 is registered as revenue by the developer, but in the sales column, a sale of RM500,000 is recorded. That is why the sales and revenue figures vary considerably.

If a developer allows a buyer to pay only 1% of the purchase price, this does not mean he “loses” that other 9%. He will get it back after a certain period of time. The same goes for the waiver of the stamp duty and legal fees. The developer has to pay the lawyers for services rendered. All these charges and fees are packaged into the deal which the buyer will have to bear in due time. In this case, later rather than sooner.

Developers are offering such attractive terms in order to make a sale. Many of these schemes are offered in condominium projects because there is generally a glut in this segment. While such schemes may attract genuine buyers who need a roof over their heads and who are thankful that they can defer payment, it also attracts those who have no problem forking out that 1% downpayment and take a gamble that they will be able to offload it when the project is completed.

If one were to drive around certain parts of the Klang Valley today, there are some completed high-rise with large mobile numbers plastered on windows. It may not be so easy to offload units when there are so many of them.

What is noticeably absent, and which many would like to see are more launches of landed housing. But this is unlikely to happen. Only the secondary market is offering landed units, which may explain to a certain degree why the secondary market was rather robust last year. It applies not only for the Klang Valley, but for Penang as well and is a reflection of strong domestic demand despite the many negative predictions for this year.

When a developer considers a piece of land, he thinks of how much he can make from it. If he were to build a condominium and throw in various facilities, he can sell more houses than if he were to build landed units. That is why most of the launches today are high-rise projects, be it condominiums or serviced apartments.

Developers are also limited by what they have. Increasinlgy, land in city centres and popular areas are getting smaller. Which explains why in highly dense areas, condominium projects continue to be sprout up in the most congested of areas.

The development of landed units can only take place when there is large tracts of land, which also explains why the big boys like Mah Sing and SP Setia are venturing further away from city centres.

The other obvious factor in today's launches are the size and price of the condominium units. Most of the units are small. Studio apartments may be in the 500 sq ft range or thereabouts while those targeted at families may be three-bedroom units with built-up areas of 1,200 sq ft onwards. Most of the launches today are priced close to RM700,000 onwards. On a per sq ft basis, the price is still going up, whether it is a Petaling Jaya address or a Bukit Jalil one.

So, while sales volumes may stagnate in newly-launched projects (which explains why developers are offering units for sale with a 1% downpayment), on a per sq ft basis, prices does not seem to be stabilising. Developers are trying to maintain affordability by having smaller units, deferring payment and leveraging on low interest rates.

Assistant news editor Thean Lee Cheng is glad that Bank Negara is monitoring the household debt and lending in the property sector closely as this year promises to be an exciting one.

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Saturday, December 31, 2011

Property developers – the real landlords!


Developers – the real landlords

Insight Down South By SEAH CHIANG NEE

As a group, exclusive and rich, property developers have always wielded strong influence in small cities with rich land banks in a scale that probably rivals the government – until now.

TRADITIONALLY, property developers in cities like Singapore and Hong Kong have enjoyed economic power far beyond their numbers.

We were politely reminded of this when Singapore’s developers told the government they were disappointed at not being consulted before it announced recent measures to cool the market.

This was tantamount to a right to be informed in advance of any policy or price affecting their interests.

The developers’ reaction stirred public ire, with people considering it an audacity its demand to be consulted over changes.

Yet there is a tradition behind the demand.

As a group, exclusive and rich, developers have always wielded strong influence in small cities with rich land banks in a scale that probably only rivals the government.

After all it controls the city’s most precious asset.

My first lesson of this fact of life came in the 1970s when I arrived to take up the post as news editor of The Hong Kong Standard. A colleague asked who I thought were the colony’s most powerful people.

“The chief editor of New China News Agency” I ventured, regurgitating what I had often read.

“No, my friend, not even the Chinese mainlanders, and not the colonials,” he exclaimed, “It is the Hong Kong real estate developers.”

Land auctions often decided how well - or poorly – the Hong Kong people were to live.

Property prices would affect billions in budgets and living standards, in other words, people’s lives.

When I returned to Singapore, I found a little of the same, the difference being we were an independent country and not led by a passive colonial Governor. In short, developers here were powerful!

Once land values were decided auctions, the developers controlled the ultimate prices and timing of the sales.  To a large extent, it meant controlling of supply and demand.



If the developers thought the asking prices were too high, they would abstain from bidding, making them a sort of a little “pressure group”.

When I returned here I discovered a bit of the same.

Developers collectively could – if they chose to - influence the way the media reported the property market because they were big advertisers.

The bigger the spenders, the greater the influence! They could ensure newspaper reports did not report too negatively on the market and scare away buyers.

Some were not reticent exercising it by making it clear to advertising managers that their money could best be used in a media that keep encouraging property buyers, or at least not to predict weak markets too strongly.

Others stayed away from the game.

Many years ago when I was chief editor of a newspaper here I had one such run-in with several Singapore developers, who were among my paper’s frequent advertisers.

It was at a time when dark economic clouds were gathering and our Business Desk was reporting that property markets were heading for a fall. The bad vibes were strong, and they were reflected in our coverage.

During lunch, one developer referred to how much his company had spent on advertising in our paper.

He added that he “sometimes considered it a waste of money to advertise in a newspaper which frequently talked down the market”.

If this continued, they might as well stop or cut down advertising in the paper, he said.

I was very concerned. I replied that as a newspaper editor, I feared two things most; the government withdrawing the newspaper licence and secondly, businessmen threatening to withhold advertising unless we cooperated with them.

“In either case, our survival will be threatened, and we will bring the fight to Page One and let readers judge!”

We finally struck a deal: No advertising boycotts. In return I would run an interview on record with a property tycoon who predicted his views that the market would rise in the following year.

I am relating this to record appreciation of the National Development Minister Khaw Boon Wan’s stand not to bend to the developers’ will “by consulting” them about market “cooling-off” action or price movements.T.T Durai and Health Minister Khaw Boon Wan at...

That would have been tantamount to tipping them off in advance of price-sensitive measures, an act no government can do.

Analysts expect the recent measures to cool buying and bring down the home prices by between 15 to 30% over the next two years.

“There will be a sell-off in the next three-to-five months,” said a property agent.

By imposing stiff measures against foreigners’ speculative buying, including a 10% duty, Khaw has gained public acclaim.

“Khaw has my full support. His policy is good for the younger generation,” a Singaporean commented.

“If the young people feel that even with hard work they still cannot achieve their goal, Singapore is done for. That dream is to own a private property.”

Khaw has also succeeded in shortening the queue of new Singaporean graduates applying to own their first public flat.

Since becoming minister after the May election, Singapore’s once world-acclaimed public housing is slowly working to dispel public discontent over shortage and high prices.

Many more years are needed to clean up the mess. But for now, wrote Khaw - one of the more popular ministers: “We’re starting to see the light at the end of the tunnel”.

And instead of the usual brickbats, praises are starting to come in for fending off foreign speculators.
“I’m seeing the quality of Minister Khaw,” one surfer wrote.

Another said: “Thank you for the cooling measures. This shows Singapore is clean and NOT controlled by the (property) billionaires club.”

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