Monday, 30 June 2014

(The Star) Timely release of M'sian house price index puts the country in a favourable light

Bank Negara’s release of the Malaysian house price index (MHPI) is timely, just two weeks after the International Monetary Fund (IMF) launched comparative data on house prices.

The release of information puts the country in a favourable light against the IMF’s complaint that countries like Australia have yet to introduce measures to control risky bank lending.

More than 20 countries have adopted macro-prudential measures to control rising house prices, says the IMF on its website.

Malaysia, with its pre-emptive measures dating back to November 2010, would probably be among those countries.

For the first time since the third quarter of 2011, the growth in the MHPI declined to 9.6% in the fourth quarter of 2013, compared with 12.2% a year earlier, saidStarBiz, quoting data from Bank Negara.

Property prices are closely watched as IMF research indicates that boom-bust patterns in home prices preceded more than two-thirds of the recent 50 systemic banking crises.

The latest to announce curbs on risky mortgage lending is Bank of England, which capped some home loans and toughened mortgage affordability tests.

China’s auditor is digging deeper into the abuse of bank loans.

The country’s chief auditor has found that since 2012, Chinese gold processing firms have used falsified gold transactions to borrow 94.4 billion yuan (US$15.2bil) from banks, Reuters reported.

Spot checks on 25 companies that process bullion showed they made a combined profit of more than 900 million yuan by using the bank loans to take advantage of the difference between onshore and offshore interest rates, as well the appreciation of the Chinese currency, said Reuters, quoting a report on the National Audit Office’s website.

Earlier, the National Audit Office released separate reports about Bank of China, the country’s fourth largest bank, and Agricultural Development Bank of China, a state-owned bank that supports the government’s farm policies.

The auditor found that six Bank of China branches disbursed 6.4 billion yuan (US$1.03bil) of loans that violated China’s lending policy in the past 10 years, according to Reuters.

Three other Bank of China branches were also found to have made 3.2 billion yuan worth of loans between 2009 and 2012 to businesses that were not involved in genuine trade, the newswire added.

Similarly for Agricultural Development Bank of China, the auditor found that the bank made a total of 6.8 billion yuan worth of “irregular” loans by relaxing its lending rules in the six years to 2012, said Reuters.

The report said the Agricultural Development Bank had also disposed of 1.5 billion yuan worth of non-performing loans in the past five years through “irregular” means.

Both banks said they have rectified the problem.

China is stepping up its controls on bank lending and some of these irregular bank loans will probably form the basis of further investigation.

These investigations are timely, as China’s corporate debt has become a cause for concern.

US investigators are now turning to broker run trading systems known as dark pools where participants are anonymous and trading information is hidden until the trades are completed.

Barclays Plc has been slapped with a lawsuit by the New York attorney-general, who alleges that in order to increase business in its dark pool, it has favoured high-frequency traders and gave them systematic advantages over other investors trading in the pool, said Reuters.

Barclays and the US Securities and Exchange Commission have declined to comment.

This is another aspect of regulation that banks have to brace themselves for after the investigations into market rigging, money laundering and mishandling of mortgage loans.

Regulators are really digging deep and far and wide for any potential misdeeds to prevent another credit blow-up.

Columnist Yap Leng Kuen is intrigued with terms popping up in the financial system such as shadow banking and dark pools.

(The Edge) I-Bhd launches i-Suite II

Shah Alam: I-Bhd launched a special preview of its i-Suite II residential-cum-commercial development over the weekend.

Designed as a functional home office, the 43-storey i-Suite II tower, comprising 328 units, sits on a 12-acre (4.8ha) plot on the western portion of i-City.

Sharing a common podium, the tower is part of i-City’s lifestyle project comprising 956 i-Soho units launched in 2013 (80% sold); 498 i-Suite units unveiled in end-December 2013 (60% sold); i-Suite III to be unveiled by the fourth quarter of 2014, and 6,500 car parking bays that will be retained by i-City.

While i-Soho was designed as trendy home offices, i-Suite focuses on providing a hotel-type environment for end-users.

Available in various plan types, the i-Suite comes with an ultra modern design that integrates apartment units into a resort-like ambience with recreational facilities.

Designed with both an overhead pedestrian bridge as well as a tunnel link to the CentralPlaza @i-City retail mall (to come on stream in 2017) on one end and another link to i-City’s 25-acre Leisure Park on the other end, it is envisaged that the residential-cum-commercial development will provide a conducive campus-like environment.

In addition to both i-Soho and i-Suite, i-City has a gargantuan development project in the form of an iconic 70-storey staggered tower for mixed use in the pipeline.

Called the Jewel, this tower will be launched in 2016. The soon-to-be tallest building in Shah Alam will consist of a luxury hotel, residential units, A-grade offices and retail units on the lower floors.

The i-Suite II is now open for sale while the Jewel is open for registration of interest.

(The Star) PKNS building 65-storey tower in PJ Sentral after long court battle

An artist impression of the PJ Sentral Garden City project.

SHAH ALAM: Selangor State Development Corp (PKNS) is looking forward to build a 65-storey tower that is slated to be the tallest building in Petaling Jaya with a gross development value of RM800mil in the much-talked about RM3bil PJ Sentral development.

After more than eights months of court battle, PKNS reached an out-of-court settlement with Malaysian Resources Corp Bhd (MRCB) and Nusa Gapurna Development Sdn Bhd two weeks ago over the sale of its 30% stake in PJ Sentral Development Sdn Bhd.

This is after the High Court had dismissed PKNS’ suit against Nusa Gapurna and MRCB for alleged breach of shareholders agreement over the sale of its 30% stake in the company.

The remaining 70% stake in PJ Sentral is held by Nusa Gapurna and it is being injected into MRCB as part of an extensive corporate exercise which was proposed more than a year ago.

Under the exercise, MRCB acquired all of Nusa Gapurna’s development land, including its PJ Sentral project, in return for shares and cash.

This resulted in Nusa Gapurna emerging as a shareholder and its owner, Tan Sri Salim Fateh Din, helming MRCB as its group managing director.

PKNS contended that it was not getting a fair deal for its 30% in PJ Sentral and took the matter to court.

PKNS acting general manager Azlan Md Alifiah said after losing the court battle that the settlement was the best PKNS could get out of the current situation.

“Ultimately, you can’t win everything. If we could turn back time, of course we would not have inked the joint-venture agreement and develop the whole 10-acre parcel on our own,” he told StarBiz.

“But, now we are excited to build our own towers and to get at least a slice of that land back and retain our presence in Petaling Jaya as our original headquarters was located there. The state wants the building to be iconic and we will definitely deliver that.”

In the out-of-court settlement, MRCB will pay RM85.3mil in cash to PKNS for its 30% stake in PJ Sentral.

In return, PKNS will pay PJ Sentral RM91.1mil for the rights to build and own the tower within the development after MRCB had completed all the basic infrastructure and piling works.

Azlan said PKNS would start construction of the building after MRCB had completed all the basic infrastructure and piling.

“MRCB has two years to complete that and we are given five years to develop our three towers. We will occupy the tallest one, sell and rent out the remaining two towers,” he said.

Azlan said PKNS had made some modification of the tower development to suit its specifications since the development order was earlier approved.

“The buildings are poised to be an efficient and environmental-friendly property with Green Building Index (GBI) gold and Leadership in Energy and Environmental Design (LEED) certification.

“There will also be a podium block with some retail spaces,” he said.

Azlan explained that the construction of the towers would be done in an open tender basis and MRCB could put in its bid if it was interested.

Burying this dark episode behind, Azlan said PKNS was now not only focusing to sell property but was also looking at acquiring some more properties to be injected to its property management subsidiary, PKNS Real Estate Corp, that had recently completed the process of transfer of some PKNS assets into its portfolio.

“This is part of our efforts to evolve into a more sustainable business environment with recurring income from rental and lease.

“I do not deny the fact that, five years down the road, we might go into real estate investment trust,” he said.

(NST) Property mart has ‘structural’ issues

THE local property market has “deep” structural problems and it will come under more pressure as cooling measures continue to take effect.

Bukit Kiara Properties group managing director Datuk NK Tong said there is severe asset inflation everywhere because of the synchronised global monetary inflation.

He said cooling measures by Bank Negara Malaysia may affect the efforts to keep house prices low in the long run. 

“Malaysia has a growing population. When cooling measures are applied, the production of housing stock slows down because sales are depressed. This creates a shortage of housing, and by default, the demand for housing too,” he said in an interview. 

Tong said the key to keeping house prices affordable, aside from stopping the global monetary inflation, is to ensure an adequate supply of new housing and making land affordable. 

“The government should release large tracts of government land for affordable housing, failing which, the problem will not be solved,” he said.

Tong said, high household debt is another concern that is plaguing the local property market.

“Malaysia’s household debt is at 87 per cent. But if we drill down into those numbers, a significant proportion of this debt is in unproductive and depreciating asset classes, namely car loans, personal loans and credit card loans. 

“These loans are a real burden to the rakyat as not only are the assets that were purchased with these loans depreciating extremely fast, but also often the interest rates are very high.

“The government should look at applying cooling measures in these categories to stop the pain and destruction of wealth that the rakyat are facing. 

“By contrast, while housing loans may be larger, these loans, in the long run, do not burden the rakyat because the interest rates are low and reasonable, and better yet, the properties appreciate in the long run, and not depreciate,” he said.

On the Goods and Services Tax (GST), which will be implemented next year, Tong said it is still too early to speculate on the exact effects of GST in general and on the housing market in particular. 

“However, a recent example in Japan could be a good indicator. I am told that their first quarter gross domestic product was high because of the rush ahead of the GST hike in April this year.”

(NST) I-Berhad looks to double property segment revenue

I-BERHAD, the operator and developer of i-City, here, is confident of doubling its property development revenue to RM180 million by year-end from RM90 million last year.

The property development segment has grown tremendously and is now contributing the lion’s share of the group’s total revenue, with 73 per cent as at March 31 this year.

“Our current business plan is to ensure that within five years, we will have half of the group’s earnings coming from recurring income, leisure and property investment segments, while property development will make up the other half,” said its deputy chairman Datuk Eu Hong Chew after the group’s annual general meeting, here, yesterday.

“By then, we envisage that the group will be able to generate a revenue of about RM500 million from its property development projects annually.

“At the same time, I-Berhad’s investment property portfolio would breach the RM1 billion mark while revenue from leisure segment would reach the region of RM100 million annually,” he said.

Eu also said the group’s gross development value (GDV) has grown to RM7 billion from RM1.5 billion in 2005.

“We will definitely increase the GDV within the short to medium-term as we are eyeing more projects. It will be a double-digit growth from what it is currently,” he added.

For the next five years, I-Bhd intends to enhance its investment property portfolio to hit the RM1 billion mark, with developments of its CentralPlaza@i-City shopping mall and Central Towers expected to begin in the first half of next year.

Besides a RM700 million corporate exercise, which is being undertaken to raise funds to support its property growth plans, the group is also planning to increase visitors to i-City by 10 per cent this year from 5.5 million currently.

(NST) Amendments expected for Forest City

JOHOR BARU: SEVERAL major amendments to the original plan for the controversial Forest City project along the Johor Straits are expected as pressure mounts from environmental non-governmental organisations and concerns from Singapore.

The changes were proposed by Kuala Lumpur-based Asian Environmental Solutions Sdn Bhd (AES), which was appointed by project developer Country Garden Sdn Bhd to prepare a preliminary environmental impact assessment (EIA) report for the mammoth project.

The proposed changes are aimed at cushioning the impact of the reclamation project on the surrounding environment.

In the preliminary report, one of the major changes proposed was to build two parallel water channels cutting across the island, created by reclamation work, almost in the shape of a right angle isosceles triangle.

The water channels, which will form part of the waterfront features, will also be parallel to the Johor Straits to encourage water flow.

A source close to the company told the New Straits Times that the changes were aimed at making the project more friendly to the Johor Straits, which separates Malaysia and Singapore.

“The main purpose of the water channels is to improve the hydrology of the straits, since there are concerns and worries that the reclaimed island may block or hamper water flow along it.

“With the water channels to be used as a mitigation measure, water flow is still possible, despite the presence of the reclaimed island,” said the source.

The water channel, which is 300m wide, could also serve as part of landscaping features on the reclaimed island, offering waterfront facilities.

Another proposal was to replant seagrass, since a lot of it had been destroyed following the reclamation work.

Seagrass is the food source of dugong and other marine life, found in abundance in the Johor Straits.

However, environmental NGOs doubted the effectiveness of replanting works, especially when the replanting zone was fronting the open sea.

A Malaysian Nature Society spokesman, who did not want to be named, said the survival rate of seagrass replanting was 10 per cent.

“Seagrass grows best in its natural environment, but not through replanting. If it is grown in an unsheltered area, the success rate is low,” said the spokesman.

Last week, the Forest City project became a focal point in Iskandar Malaysia after Singapore raised concerns about the controversial reclaimed island with Putrajaya.

Besides waiting for more details about the project, the republic had also expressed worries that the reclamation may affect the border of the two countries.

(The Star) DBKL to end agreement

The long-abandoned Plaza Rakyat project in Kuala Lumpur, which has been in limbo for almost 20 years, is set to be revived as a new contractor has been identified to carry out the rejuvenation work, Federal Territories Minister Datuk Seri Tengku Adnan Tengku Mansor said.

The findings of the arbitrator involved in negotiations with the developer, Plaza Rakyat Sdn Bhd (PRSB), and Kuala Lumpur City Hall (DBKL) confirmed that DBKL was lawfully entitled to terminate the agreement because of nonperformance and breach by PRSB.

However, the arbitrator have yet to issue the final award. When the final award is issued, which should confirm the termination, DBKL would be entitled to reclaim possession of the site.

“The Ministry and DBKL are waiting to move in and clean up the entire place and start working on reviving the project,” said Tengku Adnan.

Presently, there is an interim injunction against City Hall, preventing them from entering the site, until the final award of the arbitrator.

According to reliable sources within DBKL, the local authority 

The abandoned site is set to be revived as a new contractor has been identified to carry out the rejuvenation work. — filepic had issued a conditional appointment to another company to revive the project, subject to the arbitration award, and the approval of the Government within a week or two.

“The new contractor cannot go in yet because of the injunction.

“We are on standy to mobilise and revitalise the place. But, we can only go in after the arbitrators authorise DBKL to retake possession.

“We are at the final hurdle now, and once that is settled, we can move in,” Tengku Adnan said.

The minister said several parties had showed interest in developing Plaza Rakyat, but the Government was adamant in picking the right one.

“We wanted the one with the best proposal that will benefit all stakeholders, including City Hall.

The deal will include the rights of purchasers who have been left in the lurch all this while. It will be a ‘win-win’ situation for everyone,” he added.

Tengku Adnan said PRSB owed the Land Office and DBKL millions in unpaid assessment and quit rent.

“They never paid the fees, the place was badly maintained until it has become a slum of sorts and a breeding ground for mosquitoes and snakes.

“We cannot allow this to go on,” he said.

“We are looking at ways to ensure that DBKL will not suffer losses and once this is over (arbitration), we are going in to clear everything out,” he said.

At the final award hearing, which is expected to be in the next week or so, the arbitrators will decide on the quantum of damages.

Apart from obtaining vacant possession of the site, City Hall will also be seeking payment of outstanding assessment and quit rent fees from the developer.

Meanwhile, StarMetro spoke to several of the original purchasers about the Plaza Rakyat revival plans, and many who are now in their twilight years are still hoping to get back their investments.

Retiree Steven Yong, 70, said all he wanted was for the project to take off so that he could get back his deposit.

“I paid a 20% deposit of RM300,000, 19 years ago. It was a lot of money back then for me.

“I put in all my life-savings for two units in Plaza Rakyat,” he said.

“Today, I pray that I will get something back,” he lamented.

Another buyer, who wanted to be identified as only Lee, said she had paid 30% of RM600,000 as down payment to purchase two shoplots.

“Fortunately, the bank had not released the balance 70% of the payment when the project stalled or I would be paying the loan and interest for a property that is not even completed,” she said.

Another stakeholder who went by the name of Danny said, “We want our money back, we are entitled to it. No more excuses, please,” he said.

StarMetro reported last week that the 17-year-old Plaza Rakyat project had become a health hazard, with ageing rebar and scaffolding at the development site in danger of collapse.

The mold-covered walls have turned black because of trapped moisture and water leaks from years of neglect, giving the building and its surroundings a pathetic look.

Pools of stagnant water everywhere, with rubbish strewn all over the place, have made it a paradise for mosquitoes to breed.

The “dead” project, located next to the Pudu Sentral transport hub, has been abandoned for almost two decades and was supposed to be one of the first mixed-commercial development projects that was to be integrated with the transportation hub.

The original plan comprised a 79-storey office tower, 46-storey condominium, 24storey hotel and seven-storey shopping centre.

The RM1.4bil project was 30% completed about 15 years ago when the developer, PRSB, ran into financial difficulties during the 1997/1998 Asian financial crisis that forced them to abandon the project.

The Government decided to terminate PRSB’s contract in 2010, 12 years after the company abandoned the mixeddevelopment project.

Subsequently, PRSB went into receivership and came under the administration of a consortium of lender banks.

(The Edge) Income from PJ Sentral by year end

KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB) expects to recognise income from the PJ Sentral development by the end of this year.

According to management, the group has sold two buildings within the multi-billion development on an en-bloc basis, for a total value of RM489 million.

“The profit margin for the two buildings is about 20% to 25%, so we’re looking at a gain of about RM100 to RM125 million,” said MRCB’s chief financial officer Ann Wan Tee. He added that profit will be recognised over a period of three to four years, beginning from the end of 2014.

MRCB’s group chief operating officer Mohd Imran Salim, meanwhile, said the group is looking to grow its total gross development value (GDV) by RM1 to RM2 billion in 2014 and 2015.

“We currently have land bank of 87 acres (35.21 ha), with about RM23.1 billion in GDV in total. We will be looking to grow, in terms of GDV, by RM1 to RM2 billion,” he said.

Mohd Imran said that MRCB will be looking primarily at Klang Valley and Penang for land bank acquisitions. He said the group will focus on mixed developments, especially those with potential to integrate with public transportation infrastructure, such as in KL Sentral.

Sunday, 29 June 2014

(The Star) Ibraco offers 'golden chance' to build one's own beachfront villa

KUCHING: An opportunity to build one’s own villa by the pristine beach stretching 32ha, overlooking the beautiful Satang Turtle Island National Park is what Ibraco Bhd is offering its clients in its latest property launch.

The Second Phase of the Golden Beach detached lot, located just minutes away from the famous Telaga Air fishermen’s village, and about half an hour’s drive from the Matang Wildlife Park, opened for sale yesterday.

It continues today from 9am to 5pm.

Following the remarkable response from Phase 1 of the project, the premier property developer has subdivided another 32 lots comprising one acre each.

The Golden Beach is located approximately 39km from the city centre.

It provides owners with the chance to get away from the hustle and bustle of city life, and to own a home away from home.

In addition, purchasers get to enjoy two years of free maintenance upon ownership of the beautiful seaside detached lots, which is priced from RM317,000 and above.

For more information, contact any of its sales team at 082-361 111, or visit


(NST) I-Berhad sees better uptake for newly launched i-Suite II

SHAH ALAM: I-Berhad, the developer of the 28.8ha i-City, here, expects its recently launched 328-unit i-Suite II residential-cum-commercial development to garner far better sales than the first phase of i-Suite launched last year.

Since the launch in December last year, I-Berhad director Monica Ong said the company had sold 60 per cent of the 498 units of i-Suite I residential-cum-commercial development.

“Over 60 per cent of the i-Suite I development has been sold. If you look at the response from just the private invitation for the launching of i-Suite II, I’m very encouraged that it is (i-Suite development) opening up.

“We think we can achieve an even better response, given the aggressive marketing and promotion that we have put in for i-Suite II,” she said at the launching of i-Suite II units, here, last Saturday.

She said the i-Suite development consists of fully furnished units to hotel specifications and ranges from 566 sq ft at RM437,680.

“It is truly for lifestyle living, as you only need to move in with your suitcase,” she said.

Ong explained that the conceptualisation of the residential-cum-commercial development on a 4.8ha plot has its root in i-City’s vision to become a centre of knowledge economy along the Federal Highway on the northwestern part of the Klang Valley.

“The first step in the direction was achieved five years ago with the certification of i-City as an MSC Malaysia-status cybercentre.

“This certification came on the back of adopting the Cisco ‘Smart + Connected Community’ platform that enabled i-City to develop around a state-of-the-art network environment, which boasts high-speed and back-up broadband.”

Ong said the overall development concept for i-City is also inspired by the common trend at Silicon Valley in the United States, where in addition to providing incubation workspace, incubators began to incorporate accommodation facilities.

“This is in recognition of current trends where many start-ups operate from homes and garages with no clear distinction between office space and a typical dwelling unit.”

While i-Soho was designed as trendy home offices, she said i-Suite focuses on providing a hotel-type environment for end-users and, as a home, it boasts the equivalent of living in a serviced apartment at an affordable price.

“Designed with both an overhead pedestrian bridge as well as a tunnel linked to the CentraPlaza@i-City super regional retail mall (to come on stream in 2017) on one end and another link to i-City’s 10ha leisure park on the other end, it is envisaged that the residential-cum-commercial development will provide a conducive campus-like environment to incubate and harness the strength of companies, especially start-ups in the knowledge sector,” she said, adding that the company has sold 80 per cent of the 956 i-Soho units, which were launched last year.

In addition to i-Soho and i-Suite, Ong said a gargantuan development project called The Jewel in the pipeline.

“It’s an iconic 70-storey staggered tower for mixed use. It’s conceived to reflect the nation’s aspiration to be a developed and high-income economy by 2020”.

With the slew of ongoing property-related developments complementing the existing ones, it is envisaged that come 2020, i-City will transform into a RM7 billion ultrapolis, complete with a theme park, information and communication technology-related businesses and excellent connectivity, from a mere RM1.5 billion township in 2005.

(NST) MRCB eyes 11.6ha govt plot

MALAYSIAN Resources Corp Bhd (MRCB) is said to be targeting an 11.6ha government land adjacent to its PJ Sentral project in Petaling Jaya under a possible privatisation deal.

The plot, home to the former Hotel Singgahsana, Petaling Jaya Magistrate Court and the Chemistry Department, has a potential gross development value (GDV) of more than RM7 billion.

Business Times understands that the land, owned by the Department of Director General of Lands and Mines under the Natural Resources and Environment Ministry, is valued at more than RM600 million, or over RM450 per square feet.

A privatisation proposal for that piece of land was submited by a consortium led by Nusa Gapurna Development (NGD) Sdn Bhd about four years ago, although a deal did not materialise.

NGD — a 60:40 partnership between Gapurna Sdn Bhd and the Employees Provident Fund (EPF) — had a 70 per cent interest in the RM3 billion PJ Sentral mixed development, but was involved in an asset injection exercise with MRCB.

The Selangor State Development Corp (PKNS) had owned the remaining 30 per cent.

“MRCB, which now owns 100 per cent of PJ Sentral after an out-of- court settlement with PKNS recently, wants to take over the 11.6ha land under a privatisation deal, with the government getting payments based on the project value.

“The idea is to have a bigger development that can generate higher GDV than the current estimates," sources said.

MRCB, under the leadership of Tan Sri Mohamad Salim Fateh Din, and NGD, a company that he controls, recently reached a settlement agreement with PKNS Holdings Sdn Bhd over the sale of PJ Sentral Development Sdn Bhd, the owner of PJ Sentral.

In March, PKNS Holdings had filed an injunction to stop MRCB and NGD from completing their multi-million-ringgit merger plans, following MRCB’s proposed acquisition of the 70 per cent equity in PJ Sentral Development from NGD for nearly RM200 million.

The settlement agreement saw MRCB paying RM85.3 million cash for PKNS’ 30 per cent stake in PJ Sentral Development.

MRCB is currently involved in the RM11 billion KL Sentral transport hub in Brickfields, Kuala Lumpur. Its other ongoing projects are Puncak Iskandar in Johor and Taman Kajang Utama in Kajang, Selangor.

Saturday, 28 June 2014

(The Star) Full-disclosure by developers


THE National House Buyers Association seems to have finally succeeded in persuading the Government to make developers provide purchasers with a full set of detailed approved documents of the property.

In fact, this has all along been a legal requirement. As far as landed properties are concerned, the approved layout plan and the approved building plan are to be included in the sale and purchase agreement (SPA) as the first schedule and second schedule respectively.

With respect to the strata titles, there are the site plan, layout plan, floor plan of the parcel, storey plan of the building, accessory plan and common facilities plan, all approved, which comprised the first and second schedules.

The Urban Wellbeing, Housing and Local Government Ministry has now agreed with HBA that the detailed dimensions of the property and its facilities are to be given to the purchaser at the outset as part of the building plan attached to the statutory SPA. These may take the form of copies of the approved plan on paper no matter how thick it makes the SPA or in electronic form, for example, as a compact disc with readable format accessible through the ordinary computer.

Internal features of the property: the building plan, measurements, materials and setting

Developers have taken advantage of purchasers’ lack of knowledge and may be making unauthorised alterations in the measurements, using sub-standard or alternative building materials, changes in the wiring and plugs, plumbing and other ways of saving costs in the hope the purchaser will not discover these in time, at least during the duration of the defects liability period. Without detailed knowledge, purchasers are at an disadvantage in their fight with developers.

External features: Is the playground not part of your property?

Although this is important, the SPA gives the purchaser the impression that they are entitled only to what they have purchased. But often, purchasers may be persuaded by the external features too like playground and open space in the area. Young couples are vulnerable to advertised features such as playgrounds and open spaces but they are blindsided about the existence of an “active” graveyard nearby or the location of the oxidation ponds.

The purchaser buys into the atmosphere or concept of living of the whole housing estate. Is the developer then entitled to mislead purchasers with pictures of a spacious housing estate, only to dig up the children’s playground for a condominium immediately after the houses are sold?

If the developer promotes such features as the playground at the time of sale, then you (as the house buyer) should take down the answers, the name of the developer’s staff and designation and have your solicitor confirm this in writing.

It may constitute what is known in law as “a collateral oral warranty to the transaction” and may be read into the SPA to make it binding on the developer. These matters are not provided for in the SPA because the SPA is a standard form to be used in a whole range of property transactions where the details vary.

However, it does not mean these details cannot be added; the law allows it (Tun Suffian in Lee Poh Choo v SEA Housing Corp) but rare is the developer who would allow it. That is why the purchaser must have his own lawyer, not the legal firm chosen for the purchaser by the developer.

Even with the new requirement, the purchaser may still have to rely on the collateral warranty argument with respect to things not mentioned in the SPA which the developer does not include in the approved layout plan but may still try to give the impression that it is meant to be part of the housing estate.

The density of the area is the number of houses allowed to be built in the housing estate; it makes all the difference between spaciousness and over-crowding. Developers, when they see houses are selling well, sometimes add more houses than was approved.

As this affects the quality of life, the purchaser believing that only a certain number of houses is going to be built, has a cause of action against the developer. He can no longer be told by the developer to talk only about what he has paid for in the SPA.

The quality of a housing estate may also be affected by the types of houses and other buildings. A matter of particular concern may be the number and type of houses and shop houses. Their distribution is also to be taken note of as it may affect the convenience to the occupants.

Advertisements not affected by the new disclosure rules

As houses are rarely built and then sold by developers, the non-existent nature of the houses requires developers to make use of artist impressions. These are not art pieces. Hence, there is the need for actual dimensions of the property and the purchase price has to be given. Developers are required to submit mock-ups to the ministry for its approval. They enable the ministry to check on the advertisements by developers, and to see if there are any deviations from the approved versions.

However, it is the accompanying verbiage which is seriously misleading. There are those which give amazingly short travelling time to important places without mentioning the mode of transport. For example, proximity to upmarket Mont Kiara even if the place is closer to Segambut. Or that the Petronas Twin Towers are within sight of the property? How long do you want to gawk at it anyway?

Even guarantees of return on investment are promised provided you spend more money on furniture and fittings.

Advertisements calculated to mislead – and which have misled purchasers - may give purchasers right to a civil suit against the developer where the ministry cannot be moved to act. In a Singapore case, the developer’s brochure had boasted of “a panoramic view of the sea”, the court held that it gave the purchasers a right to sue if they had been induced to buy because of that claim.

The law as usual is clear and strict. Under the 1989 Regulations, developers are required to give “accurate and true particulars” in the advertisements of their housing schemes. On conviction, they can be fined a sum not exceeding RM20,000, or face imprisonment not exceeding five years or both; So far, there have not been any prosecutions, not that there have been no violations.

Chang Kim Loong AMN secretary-general of the National House Buyers Association (HBA):

(The Star) Suburban offices to draw MNCs from KL and Singapore

Kuala Lumpur and Singapore have long been the hub for many multinational companies (MNCs) to site their Asian headquarters. As city land becomes scarce, commercial property rates rise, MNCs are beginning to decentralise to areas surrounding city centres and Malaysia is a beneficiary of this trend.

For one, Malaysia has Iskandar Malaysia where two flagship zones have been earmarked to be the pulse of a metropolis and many new Grade-A offices are being developed beyond the city centre in the Klang Valley.

MCT Consortium Bhd general manager Teoh Eng Poh (pic) says Singapore and Kuala Lumpur have helped the Klang Valley to attract MNCs coming to the Asia-Pacific region.

“This does not mean the MNCs or local companies will move out of Singapore or Kuala Lumpur, the city office address remains coveted.

“But MNCs are looking for cheaper office space for their smaller or back-end operations as they expand their business in Asia, with white collar professionals no longer wanting to work in factory outlets,” he says.

He cited Nestle Malaysia which relocated its corporate division from the industrial office in the Petaling Jaya Section 13 industrial zone into Boustead Properties Bhd’s Surian Tower in Mutiara Damansara.

From MCT’s survey of the current Grade-A office rates in Singapore and the Klang Valley, Singapore ranks the highest at RM23.20 per sq ft compared to between RM4 and RM8 for areas around Kuala Lumpur. Teoh says MCT’s OneCity development in USJ 23 has managed to lease out 400,000 sq ft office space in the nine months since its buildings received the certificate of completion and compliance.

Of that, 50% of the space taken up was by MNCs and 20% by listed companies. OneCity’s phase one and two have a total of 490,000 sq ft Grade-A office space, and Teoh is confident the remaining space will be taken up within six months.

MCT estimates a net yield of between 5% and 6% from its OneCity office rentals. For phase one and two, the group expects a daily working population of 4,000.

Among the international names Teoh has brought into OneCity are Xerox, Regus, Thomson Reuters, Maersk Line, Heidelberg, Linfox Logistics, Futec and Sparky Animation.

The international companies come from the United States, Denmark, Germany, Australia, China, Japan, Singapore and Indonesia.

The last phase of the OneCity development will have 1.5 million sq ft of Grade-A office space. When that is filled up, MCT expects 15,000 white collar workers in phase three alone.

“Estimating RM10 per day spend from each worker in the retail podium below the office block, that would be RM3mil of business volume in a month, which will in turn support our retailers,” Teoh says.

(The Star) Focus on Iskandar flagship zones

Artist impression of MCT Consortium Bhd's mixed development in Nusajaya called d'Pristine @ Medini superimposed onto an aerial view of the current Medini development.

ISKANDAR Malaysia has always been the influencing factor in Johor property, but Klang Valley-based developer MCT Consortium Bhd believes it’s time buyers and investors zoomed into the different flagship zones and look at what each has to offer.

Iskandar Malaysia has five flagship zones, two of which are now inundated with upcoming property developments and catalytic government plans to develop the regional socio-economic hub.

“When people think of the projects in Iskandar Malaysia, they do not usually think in terms of the flagship zones, which have different selling points,” executive director Datuk Soo Kai Chee says.

He says although Iskandar Malaysia is a market of its own, differentiated from the surrounding areas not marked for metropolitan development, within itself are flagship zones with different master-plans at different progress levels.

“Perhaps because Iskandar Malaysia property projects have been largely marketed to attract Singaporeans, hence many Malaysians are less familiar with the masterplans for each zones and perceive Iskandar Malaysia as a singular property market,” he says.

Soo drew attention to Nusajaya in Flagship B, where the company is managing 8.42-acre mixed development in Nusajaya called d’Pristine @ Medini. The project is sited on the northern corner of Medini, the area designated to be the central business district (CBD) of Nusajaya.

“If you visit Medini now, there is not a single completed project.

“However, the Government has planned Nusajaya very well; they started with the non-property industries,” he says of the under-served residential property market.

There are six service and light industries – creative arts and entertainment, medical facilities, educational institutions, tourism, biotechnology and hi-tech manufacturing.

Now that some of the projects like the EduCity, Pinewood Iskandar Malaysia Studios, some healthcare components and theme parks have started operating, Soo notes that the Iskandar Regional Development Authority has created a great demand for property, most of which will be ready in a couple of years.

According to Iskandar Malaysia’s website, Nusajaya has 24,000 acres of contiguous development-ready land, and is one of the largest property development in South-East Asia.

Flagship B will be a major new growth centre of Iskandar Malaysia where most of the catalyst projects will be developed. The projected population size for this area by 2025 is 500,000, according to the website.

In Nusajaya itself, job opportunities should hit 88,430 within the next five to eight years, according to data compiled by MCT.

This is bolstered by other major developments in Nusajaya, such as the Southern Industrial & Logistics Cluster, Motorsports City @ Gerbang Nusajaya, Huawei Data Hosting and Logistic Centre, UEM Group’s China Wholesale Mall @ Asian Trade Centre, Puteri Harbour, Afiat Healthpark and Kota Iskandar.

“Now, most employees in the new service industries have to stay further away in Bukit Indah. Many of them come from other states or are expatriates, and we know that they, especially the foreigners, prefer to stay in higher-end residentials within the CBD,” Soo says.

He says Bukit Indah’s Klang Valley counterpart would be Puchong or Cheras.

On whether he feels competition from Chinese developers coming into Johor, Soo says they were not competing within the same flagship zone as most of them are in Johor Baru, which is Flagship A.

MCT in Nusajaya

MCT’s development in Medini is a near replica of the third phase in its flagship mixed development in USJ Subang called OneCity.

Like that phase, d’Pristine @ Medini will integrate two blocks of small office flexible offices (SoFos), an office block, a hotel and a mall as the base of all these components.

With a gross development value of RM850mil, d’Pristine is strategically sited across the road from the entrance of the Legoland theme park, and will be a stone’s throw away from other facilities under construction, like Gleneagles, Afiniti urban wellness centre by Khazanah Nasional Bhd and Singapore’s Temasek Holdings (Pvt) Ltd, and a transportation hub which is being planned.

At the back of the project is a lake and linear park that will be managed by the authorities.

The SoFos are already 70% sold, with 60% of the buyers from Singapore and some from Taiwan and Japan.

“We have plans to manage the SoFos as well, to help our investors, especially those overseas, manage their units here,” he says.

About 1,265 SoFo units in d’Pristine are priced between RM600 and RM800 per sq ft. In the Flagship A property market, similar properties are going at over RM1,000 per sq ft.

The units range from one-room at 644 sq ft to 3+1 rooms at 1,416 sq ft.

As for the 32-storey Grade A offices, the group is considering selling en bloc or floor by floor, depending on the demand.

“Many Singaporean companies or multinationals are prepared to relocate their back-end offices to Medini, while still having their headquarters in Singapore for the address.

MCT will retain the mall and four-star hotel for ownership and recurring income. “We want to show our buyers our commitment by maintaining our ownership so that we will have a say in the whole project,” Soo says.

The three-storey mall will have about 460,000 sq ft of net lettable space while the hotel is designed with 300 rooms.

Although plans for the hotel are not finalised, Soo says it would likely be managed by MCT.

Target for completion of the d’Pristine project will be in late-2017 or early 2018.

MCT will be listed via a reverse take-over of GW Plastics Holdings Bhd. The property group is in the process of finalising its audited interim financials for the purpose of inclusion into the circular for the proposed regularisation plan, which it had resubmitted to the Securities Commission last week.

The corporate exercise could be completed by the last quarter this year.

(The Star) Property bubble still growing


The property buying frenzy has cooled down, but elements of a bubble brewing are very much intact.

So far, none of the major property projects have been shelved or delayed in Kuala Lumpur and Johor Baru, suggesting that developers are confident of a successful take-up despite statistics showing that there is a slowdown in demand.

According to Bank Negara, the evidence of a slowdown in the property market is obvious, backing the claim with statistics.

It says the Malaysian House Price Index has declined to 9.6% in the fourth quarter of 2013, the first time it has dipped below 10% since the third quarter of 2011. The dip was recorded across most states and most dwellings.

Sales and new property launches slowed towards the end of last year, while borrowers with three or more outstanding housing loans declined to about 4% from a peak of 15.8% before the implementation of the macro-prudential measures to cool down the property market in 2010.

According to the central bank, borrowers with three or more property loans outstanding account for only 3% of total borrowers, and some 84% of housing loan borrowers have only one outstanding loan.

Banks are also seeing an improvement in their buffer against any possible slide in property prices, as the proportion of outstanding housing loans with a loan-to-value ratio of above 70% had declined to 46.6% towards the end of last year compared with 50.1% in 2012.

However, a slowing property market is not equivalent to it not being a danger to the financial system.

The signs of slowing down are there due to the macro-prudential measures that have been put in place since 2010.

A severe blow came about during the budget last year when the Government imposed a 30% real property gains tax (RPGT) on property sold within the first three years of purchase.

This effectively quelled speculation to a large degree. The 30% RPGT ruling effectively shaved off the profit margins of those wanting to offload the property as soon as they received the keys.

However, what’s perplexing is that while the macro-prudential measures seem to have an impact, there does not seem to be any stopping the over-building situation in Kuala Lumpur and Johor Baru.

In the city, the continued building of commercial space is a cause for concern, while in Johor Baru, the massive launches of apartments by developers from China have gotten even government agencies worried.

What’s worse is that the bulk of the over-building of commercial space in the city is coming from government-owned developers.

The Tun Razak Exchange (TRX), a project by the government-sponsored 1Malaysia Development Bhd, is going ahead, thanks to the cheap land it managed to get on a silver platter.

According to property consultants, the first phase of development is slated to kick off with some six million square feet of commercial space coming into the market over the next four to five years.

This is bigger than the commercial space that came into the market from the KLCC project in the late 1990s.

The TRX project is a 15-year development, and eventually, some 30 million square feet of commercial space will be coming into the market. This is based on the present planning approvals. As the years progress, the authorities may get generous with plot ratios, allowing for more building of commercial space.

Apart from the TRX, there is also the 100-storey Menara Warisan that is being built by Permodalan Nasional Bhd, and the Bandar Malaysia project that is being planned on the 495 acres that presently house the air force base in Sungai Besi, Kuala Lumpur.

Over in the south, Johor Baru is expected to see a massive supply of commercial and residential space in the next few years, with the carpet-bombing style of development undertaken by the big guys from China.

Country Garden Holdings Ltd launched 9,000 units of apartments one to two years ago and sold 6,000 units. So far, there is little news on whether the rest of the units have been taken up.

Country Garden is the first of the developers from China to flock to Johor Baru. Many more are coming, with one developer said to be looking at launching some 30,000 units of apartments in Johor Baru.

Existing developers in Johor Baru and Iskandar Malaysia are worried, with good reason too.

It has prompted a government strategic investment arm to undertake a study, which revealed that the number of apartments and commercial space coming into Johor Baru in the next few years is 30 times that of Mont Kiara.

Obviously, the macro-prudential measures have not stopped developers from building.

The macro-prudential measures taken by the Government and Bank Negara are only measures to delay a property bubble. They help to reduce the overwhelming optimism and prop-up demand when the overall environment is sober. It helps smoothen out the boom-to-bust cycle.

Such measures have been taken by central banks from Asia in the last four years to help reduce speculative demand and over-building.

However, questions remain on how effective these measures are in curbing property bubbles.

Many a time, developers and speculators exploit loopholes in the system. For instance, the Government had put in measures earlier this year to stop developers from offering retail buyers with schemes that allow them to reduce their down-payments for purchases.

But it was not effective because speculators had established property clubs to buy property in bulk and circumvent the ruling.

The ruling on a 30% RPGT for the first three years of disposal that came into effect at the beginning of this year has had an impact. But for how long it will be effective remains to be seen.

Over the last four years, central bankers all over the world have been grappling with containing the asset inflation due to ample liquidity without having to raise interest rates.

They have been able to cool off demand on a short-term basis. But the over-building persists and is fuelling a property bubble.

This suggests that macro-prudential measures are no replacement for conventional tools such as tightening monetary policy to curb speculation.

(The Star) Naza TTDI ready to launch residential tower in Platinum Park

KUALA LUMPUR: With its Naza Tower near completion, Naza TTDI Sdn Bhd is looking to launch its first residential tower in the RM4bil Platinum Park development by year-end.

The tower is part of the phase involving two towers of 1,000 units of apartments worth a gross development value (GDV) of RM1bil, according to the group.

Naza TTDI deputy executive chairman and group MD SM Faliq SM Nasimuddin said the first tower would likely be launched in the fourth quarter this year, while the second one in the middle of next year.

“The first tower, with 500 units, should take around five years to complete,” he said after a topping-up ceremony at the Naza Group’s future corporate tower, Naza Tower.

The serviced apartments will between 600 sf and 1,000 sf in size, but Faliq said the prices had not been finalised. The two serviced apartment blocks would take up about three acres of the remaining five acres of undeveloped land in Platinum Park.

The RM4bil GDV for the entire development would probably need to be revised upwards as well, Faliq said.

The group is confident that Naza Tower, the third corporate block built in the entire development can be completed by April 2015. The office tower for which construction started in 2009 is now 70% complete, according to a company executive.

Platinum Park has two completed office towers, Menara Felda and Menara Lembaga Tabung Haji.

“We will likely take 10 years to complete the balance of the project, depending on the response of the market,” Naza Group CEO SM Nasarudin SM Nasimuddin said, estimating each tower to take an average of four years to complete.

The last phase of the development would be a mixed development, Faliq said, adding: “It will be an office and hotel in one tower but the plans are in a preliminary stage.”

Naza TTDI’s assets total about RM1bil, which the company was confident would triple to RM3bil in five years.