TEP 2 FRIDAY AUGUST 12, 2016 • THEEDGE FINANCIAL DAILY NEWS HIGHLIGHTS from TheEdgeProperty.com

Mah Sing’s The scheduled for handover by this year- Greenway sees 85% ViiA Residences end while i-Suite features 825 units at KL Eco City to with a GDV of RM448 million and of units booked will be ready for vacant possession Mah Sing’s 492-unit “The Greenway” be launched at by mid-2017. residential development at Meridin benchmark price I-Bhd said the total sales value of East in Pasir Gudang, Johor was S P Setia Bhd plans to launch ViiA both deals was RM81 million. 85% booked during its launch last Residences at KL Eco City, Kuala I-Bhd marketing director Mon- weekend. Lumpur, by end-August at prices ica Ong said most of i-City’s target The Greenway comprises 4-bed- starting from RM1 million. market are young adults and I-Bhd’s room 2-storey link houses with built- KL Eco City divisional general properties are attractively priced ups ranging from 1,595 sq ft to 1,648 manager Tony Ling said the lease- and in an attractive location that has sq ft. Prices start from RM357,000. hold serviced apartment project has theme parks and tourist attractions, The 1,313-acre Meridin East is an estimated gross development as well as the upcoming Central a gated-and-guarded township to value of RM450 million. It will off er Plaza Mall. be developed over the next 12 to 326 1-, 2- and 3-bedroom units with 15 years and has a gross develop- built-up sizes of between 650 sq ft ment value of RM5 billion. It is also and 1,300 sq ft. Estates to be Mah Sing’s biggest development by “The selling price averages launched September acreage. RM1,600 psf, which is a new bench- mark pricing for such properties in Gamuda Land, the property arm of the Mid Valley and Bangsar areas,” construction group Gamuda Bhd, Knight Frank: High- he added. features pedestrian link bridges that will be launching its Kundang Es- end condo market in The 40-storey ViiA Residences is connect the residential towers to tates in , near Rawang, an S P Setia’s second serviced residence the light rail transit station, Mid area the developer has dubbed KL remains lacklustre at the 25-acre KL Eco City trans- Valley City as well as The Gardens North KL, next month. With lower volume and value of port-oriented development, which shopping mall. The company plans to unveil transactions recorded in the first Phase 1 of the 90-acre Kundang Es- Th eEdgeProperty.com half of 2016, the market outlook for tates, which will comprise 2-storey Managing Director/Editor-in-Chief high-end condominiums in Kuala natures, 432 units at Vortex Suites said developer I-Bhd in a statement. houses with built-ups from 1,733 Au Foong Yee Lumpur remains slow as buyers & Residences @ KLCC, and 160 units i-SoHo comprises 925 SoHo sq ft to 2,434 sq ft and with prices EDITORIAL and investors continue to adopt a at The Residences at St Regis KL) units with a gross development val- starting at RM570,000, next month, Editor Lam Jian Wyn “wait-and-see” approach, said prop- during the review period (1H2016) ue (GDV) of RM438 million and is according to its managing director Contributing Editor Sharon Kam erty consultancy fi rm Knight Frank brought the cumulative supply in KL Chow Chee Wah. Deputy Chief Copy Editor James Chong . to 43,782 units. “The township will have four rec- Senior Copy Editor In its Real Estate Highlights re- reational parks occupying 14 acres. Shanthi Murugiah search report, Knight Frank Malaysia They will be interconnected and Writers Rachel Chew, Tan Ai Leng, noted that the widening gap between there will be facilities for people of Natalie Khoo, Shawn Ng, Lum Ka Kay i-Suite, i-SoHo in Shah Art Director Sharon Khoh supply and demand has driven more Alam achieve 100% all ages to encourage community Design Team Nik Edra, developers to expand their catch- interaction and a wholesome life- Nurul Aida Mohd Noor ment to the overseas market. take-up with sale to style,” he said. For New Launches/Events/ The report stated that the com- Chester Properties The construction of the develop- Press Releases/News Tips pletion of 1,033 units of high-end Following the purchase of 30 units ment started this year and is slated email: [email protected] residences from three projects (441 in i-Suite and 120 units in i-SoHo for completion in fi ve years. Tel: 03-7721 8211 Fax: 03-7721 8038 Email: [email protected] units at Pavilion Banyan Tree Sig- at i-City in by real es- tate agency Chester Properties, both How do I get past issues of this weekly pullout? ADVERTISING & MARKETING phases have achieved 100% sales, Head of Marketing and Sales Go TheEdgeProperty.com Sharon Chew (012) 316 5628 trending Senior Account Manager to download for free Jayne Law (016) 929 3309 now Account Manager Jayremy Sim (011) 1669 6039 Marketing Support & Ad Traffi c Madeline Tan (03) 7721 8218 If you have any real estate-related events, email us at [email protected]. email: [email protected] LAUNCHES + EVENTS Events listed here will also appear on TheEdgeProperty.com. Email : [email protected]

NEGOTIATOR ADVISORY SERVICE Senior Manager Elizabeth Lay Residential Suites this weekend developments which are Senior Associate Stannly Tan at Southville City’s sales located at its Aspen Vision Associate Karen Wong gallery and show village. The City in Batu Kawan, Seberang For enquiries and listings developer will activate the Lure Perai, Penang. The developer email: [email protected] Module every hour for Pokémon will be introducing attractive GL: (03) 7721 8175/ 8172 Email: [email protected] Go players to collect game packages to interested items and catch Pokémon. buyers during the event. Launch of Clarita Tower Contact: (012) 304 6887 TheEdgeProperty.com pullout is at Eco Sky Launch of Eurema terraced Seminar on Financial JLL Property Services published by The Edge Property Sdn houses at D’Mayang Sari, Nilai Feasibility & Modelling, Bhd. It is available with The Edge Date: Aug 14 (Sun) (Malaysia) Sdn Bhd will be Financial Daily every Friday. The Time: 10am to 5pm Date: Aug 14 (Sun) Caveat, 2016 Amendments on showcasing the Reserve by pullout is also distributed at more Venue: Eco Sky sales gallery, Time: 10am to 6pm Strata Act, Land Alienation and Mirvac project located in Perth, than 200 offi ces, shopping complexes, Value Creation Strategies condos, medical centres, F&B outlets Taman Wahyu, Venue: D’mayang Sari Sales Australia to interested investors and LRT stations in the Valley. Contact: (03) 3344 2552 Gallery, Jalan Nilai Perdana 17, Date: Aug 24 to 26 (Wed to Fri) in Malaysia. There will also You can also download it for free at Eco World Development Group Bhd Taman Nilai Perdana, Nilai Time: 9am to 5pm be a seminar titled “Diversify www.TheEdgeProperty.com will be launching Clarita Tower, Contact: (06) 794 1888 Venue: Sunway Putra Hotel, 100, your portfolio through Mirvac” the third and fi nal residential Seri Pajam Development Sdn Jalan Putra, Kuala Lumpur at 3pm, RSVP required. tower at Eco Sky in Kuala Lumpur, Bhd will be offi cially launching Contact: (03) 8884 8888 Th e Edge Malaysia this Sunday. Interested buyers Eurema 2-storey terraced This multi-themed seminar will Homelove 2016 EDITORIAL can bring their family members houses located in its D’Mayang be conducted by six industry Date: Aug 25 to 28 Editor-in-Chief Azam Aris along to the sales gallery for some Sari township in Nilai. Selling experts in the land and property (Thurs to Sun) CORPORATE fun activities including a Pop- prices start from RM489,000. development sector. The Time: 10am to 9pm Chief Operating Offi cer Lim Shiew Yuin Up Bazaar and a food bazaar. seminar is aimed at property Venue: Tun Razak Halls 1 to 4, ADVERTISING & MARKETING Chief Commercial Offi cer Showcase of Vervea and Vertu development practitioners Putra World Trade Centre, 41, Sharon Teh (012) 313 9056 Add to your Pokédex at Resort at Aspen Vision City and industry professionals. Jalan Tun Ismail, Kuala Lumpur General Manager Cerrado’s Tower B launch Date: Aug 12 to 14 (Fri to Sun) Contact: (03) 8737 8228 Kingston Low (012) 278 5540 Sneak peek of Reserve Senior Sales Managers Date: Aug 13 and 14 (Sat and Sun) Time: 10am to 10pm The Homelove Home and Fong Lai Kuan (012) 386 2831 Time: 10am to 6pm Venue: Concourse, Sunway Pyramid by Mirvac Living Exhibition is a one-stop Gregory Thu (012) 376 0614 Venue: Southville City sales Shopping Mall, 3, Jalan PJS 11/15, Date: Aug 14 (Sun) exhibition for home and lifestyle Michael Tan (012) 213 0252 Peter Hoe (019) 221 5351 gallery, Bangi, , Time: 11am to 7pm solutions. Visitors may grab the Creative Marketing Contact: (019) 988 3854 Contact: (017) 550 0970 Venue: Westin Hotel, Level 2, chance to inquire about home Chris Wong (016) 687 6577 Mah Sing Group Bhd will be Aspen Group will be showcasing Straits Boardroom, 199, Jalan renovation, refurbishment Head of Marketing Support & Ad Traffi c launching Tower B of Cerrado its Vervea and Vertu Resort Bukit Bintang, Kuala Lumpur and interior design. Lorraine Chan (03) 7721 8001 Email: [email protected] FRIDAY AUGUST 12, 2016 • THEEDGE FINANCIAL DAILY TEP 3 NEWS Penang to decide on proposal to revise density guidelines soon

BY NATALIE KHOO units per acre guideline will also “Nationally, the unit price in- take into consideration the af- dex was 227.5 for all houses in PETALING JAYA: Th e Penang state fordable housing component for Malaysia while for Penang, it was government will soon make its de- developers that come under this 262.2. This higher unit price in- cision regarding a proposal to re- guideline. dex recorded for Penang shows vise the current density guidelines Th e current 87 units per acre that the average mean housing to 128 units per acre in order to policy comes with the requirement price in Penang is still on the rise,” provide more aff ordable housing that developers must ensure that Jagdeep added. in the state. 5% of their total project is priced “These statistics prove that in- Penang State Exco for Housing at RM200,000; 15% is priced at vesting and owning a home in and Town & Country Planning RM300,000 and 5% is priced at Penang continues to be highly Jagdeep Singh Deo said the pro- RM400,000. desirable and this is a positive posal to raise the density from Under the new proposed den- indicator for property developers the current 87 units per acre is sity of 128 units per acre, it has in Penang,” he added. in the final stages of discussions been proposed that 5% of the Among other issues discussed and an announcement will be developer’s project be priced at during the summit included sug- made soon. RM200,000 and another 20% be gestions to allow developers to pay “During a series of meetings priced at RM300,000. certain contributions by way of cor- with relevant stakeholders, it was Meanwhile, on the perfor- porate guarantee instead of a bank suggested that the [87 units per mance of the current proper- guarantee; and for contributions to acre] guideline be revised as they ty market in Penang, Jagdeep be capped at a fi xed rate instead of Jagdeep: The are facing difficulties selling large said residential properties in being based on the existing market proposal units that are deemed unafforda- Penang have shown a 15.67% valuation. to raise the ble (pursuant to the density guide- quarter-to-quarter increase The summit also discussed density from lines),” Jagdeep said at the Penang in property transactions from the formation of a State Planning the current International Property (PIP) mid- 3,110 transacted units (valued Technical Special Committee to 87 units per term review conference in Penang at RM1.21 billion) in 1Q2016 to ensure a more efficient consid- acre is in the last Friday (Aug 5). 3,597 units (valued at RM1.44 eration for the applications of fi nal stages of The proposed revision to 128 billion) in 2Q2016. development projects. discussions

Penang exploring ways to bring down rising property development contribution costs

BY NATALIE KHOO

PETALING JAYA: Th e state government is exploring a number of measures to bring down contribution costs imposed upon property developers, said Penang State Exco for Housing and Town & Country Planning Jagdeep Singh Deo. From left: Property He noted that the state government un- Development, derstands the challenges faced by develop- Construction and ers and a series of meetings has been held to Management discuss how they can assist the developers Committee in this diffi cult period. (PDCMC) convenor “We will defi nitely not increase the con- Datuk Finn Choo tribution cost at this point in time. We are Khuat Seng, Toh, looking at the possibility of allowing devel- Geh, Jagdeep and opers to pay certain contributions for their Teoh at the panel developments by way of corporate guarantee discussion instead of a bank guarantee and in instal- ments,” he said at the Penang International antee, Jagdeep noted there has also been a land needs to be converted, we will have to valuers to sit down together [to see how they Property (PIP) mid-term review conference request to the state government to extend pay an additional premium which will add can work on this matter],” said Toh. on Friday, Aug 5. the period before the bank guarantee or on further to our compliance cost to almost FIABCI Penang committee member Jason Jagdeep had participated in a panel dis- corporate guarantee is honoured, namely RM500,” he said. Teoh Poh Huat noted that this will defi nitely cussion titled “Prospects of Penang Property to more than two years in light of the vola- “In addition to that, the deprecating ring- allow a clearer guideline between the valuers. Sector in 2017” moderated by vice-president tile economic conditions. git has caused important materials for con- “It will defi nitely narrow the gap between of FIABCI (International Real Estate Feder- “Th is proposal is also under considera- struction to increase, which is taking a toll the valuations,” said Teoh, who is also di- ation) Malaysia, Michael Geh. tion and an announcement will be made in on us,” Toh added. rector of Henry Butcher Malaysia (Penang) The summit was officiated by Penang the near future,” he said. Meanwhile, another issue that was raised Sdn Bhd. Chief Minister Lim Guan Eng. Th e high contribution cost for project during the panel discussion was the mis- Other issues, such as the delay in the “In addition to that, we are also in the developments in Penang is one of the main match in land valuation by the National approval of the Advertising Permit and De- process of considering the suggestion that issues faced by developers in Penang cur- Property Information Centre (Napic) and velopers Licence (APDL) by the federal gov- fi nancial contribution in lieu of physical rently, said Real Estate and Housing Devel- private land valuers. ernment, were also raised. provision of community facilities such as opers’ Association (Rehda) Penang chair- “Th e land value which we get from pri- “In this regard, our record shows as of hawker complexes, markets and commu- man Datuk Toh Chin Leong during the vate valuation companies sometimes diff er June 2015, out of 81 applications submit- nity halls ought not to be based on existing discussion. by a large amount compared with results ted since August, 2014, only 34 had been market valuation but instead capped at a “As we know, Penang land prices are high given by the land valuers in Napic. Th ere is approved with some 47 applications still fi xed rate,” he added. because we have a scarcity of land. It can no supporting document provided by them outstanding. I will continue to engage with Apart from reviewing the stringent se- go as high as RM1,300 psf. On top of that, [valuers in Napic] as to how they derived that the federal government on this matter and curity conditions, on the proposal to allow developers need to pay a compliance cost value. We hope to ask for support to have a hopefully there will be some positive devel- corporate guarantee instead of bank guar- of approximately RM200 psf or more. If the session between the private and government opments,” said Jagdeep. TEP 4 FRIDAY AUGUST 12, 2016 • THEEDGE FINANCIAL DAILY FEATURE Let’s ride on the Pokémania wave and ‘catch ’em all’!

BY TAN AI LENG

he Pokémon Go wave has finally hit our shores! Th ose who dismissed this pop culture phenomenon as a mere game may need to reconsider their stance and instead think Tabout how they can tap into the hype sur- rounding it. Pokémon Go, which has taken the world by storm, is currently available in more than 60 countries, including 15 nations in Asia after the game was released in the region on Aug 6. Th e location-based game has now achieved more than 100 million downloads. In Malaysia, within fi ve hours of its offi cial launch last Saturday, the app was ranked No 1 as the top free app and top grossing game. Pokémon, the abbreviation of Pocket Monsters, is a Japanese anime television se- ries featuring the adventures of a young boy who aims to become the very best Pokémon master, like no one ever was. Th e mobile game for iOS and Android users is designed with the features of fi nd- ing and catching Pokémon as well as par- the special game items and Pokémon. ticipating in battles to train the Pokémon to “Th is will, in return, give us the oppor- evolve to a higher level. tunity to share with customers what Mah Th e game uses GPS to help players look Sing has to off er. We believe it is important for Pokémon and an augmented reality ex- to keep up with current trends in order to perience connected to their smartphone reach out to a wider market,” says Ho. cameras — off ering players the experience A quick check with other developers of catching Pokémon in the real world. show that there are indeed PokéStops and Pokémon Go has turned the real world PokéGyms at or near some of their project into a game as players have to walk around sales galleries. looking for Pokémon, PokéStops and For instance, Eco World Development PokéGyms. Apart from this, players are also Group Bhd’s Bukit Bintang City Centre required to complete walking certain dis- (BBCC) is looking busy with Pokémon Go tances — 2km to 10km — to hatch Pokémon players stopping by to collect items at the eggs into special monsters. PokéStop there or to look for Pokémon. With these features, players who used to Meanwhile, S P Setia Bhd has also in- stay indoors behind their computers now formed Th eEdgeProperty.com that there is a hunt Pokémon outdoors. Pokéstop located at its Welcome Business owners including property de- Centre and quite a number of PokéStops in velopers are already riding on this sudden Setia City Mall, Setia Eco Glades in Cyber- spike in traffi c in their business locations. jaya and Setia EcoHill over in as At least one developer has cottoned on. well as one PokéGym situated right next to Mah Sing Group Bhd has discovered several the Setia Eco Park sales gallery. PokéStops located at its project sites or sales Sunsuria Avenue — the headquarters of galleries — namely Southville City in Bangi, Sunsuria Bhd in — also Southgate in Jalan Sungai Besi, Austin Per- has two Pokéstops nearby, which are within dana in Johor Bahru, Icon City in Petaling walking distance to its sales gallery. Jaya and Lakeville Residence in Jalan Ipoh. So, if you are a Pokémon Go player who To leverage on this, the developer will is also looking to buy a property, why not be setting off Lure Modules this weekend kill two birds with one stone and hunt for at its Southville City sales gallery in Bangi, both at the same time? Selangor. A Lure Module is an item in the game which attracts Pokémon to a PokéStop. Like any good piece of infrastructure, the eff ects will also benefi t other players nearby. Mah Sing Group CEO Ho Hon Sang says marketing tools are continuously evolving and the company is riding on the Pokémon Go craze as an additional tool to reach po- tential buyers. “We realised that there were several PokéStops and one PokéGym at Southville City so we are encouraging Pokémon Go trainers to visit us at our sales gallery espe- cially during the launch of Cerrado’s Tower B this weekend and complete their Pokémon collection,” he tells Th eEdgeProperty.com. Ho says the developer hopes to lure play- ers visiting the PokéStops and PokéGym into their sales gallery. To achieve this, Mah Sing will be activating Lure Modules every hour to increase the chance of collecting FRIDAY AUGUST 12, 2016 • THEEDGE FINANCIAL DAILY TEP 5 NEWS Fares are key for HSR, say real estate consultants

PETALING JAYA: The Kuala Lum- pur-Singapore High Speed Rail (HSR) will be a boost to proper- ties near the stations, if the fares are reasonable. Henry Butcher (M) Sdn Bhd chief operating officer Tang Chee Meng told TheEdgeProperty.com that the HSR is “definitely” a cat- gapore High Speed Rail 2016” alyst for the property market in themed “Where to invest — don’t the areas where the stations are miss the boat! will be held on Sat- located. urday, Aug 27 at Sunway Putra “The HSR may not contribute Hotel, Kuala Lumpur. much to the local economy but Besides Tang and Tan, other real it will benefit the property mar- as the cost is lower. So the local “If the HSR fares are cheap- estate experts who will speak at ket, especially where the stations (Seremban) property market will er than travel by flight or bus to the symposium are Ho Chin Soon will be built, such as Seremban, benefit,” he noted. Singapore from Johor, people will Research chairman Ho Chin Soon, Ayer Keroh, Muar and Batu Pa- Tang will be speaking at Th- prefer to travel by train. However, Savills Malaysia executive chair- hat,” Tang added. eEdgeProperty.com’s “Symposium I believe the HSR will be a success man Christopher Boyd and BBCC Citing Seremban as an exam- on Kuala Lumpur-Singapore High in Iskandar Puteri because it is Development Sdn Bhd CEO Datuk ple, he said the Negeri Sembilan Speed Rail 2016” on Aug 27. His nearer to Singapore and it is an Richard Ong. town will likely benefit as it will session is entitled “Investment established township,” said Tan. TheEdgeProperty.com prod- encourage people who are work- Sweet Spots: The Seremban-Air Tan will be sharing the unique- uct and business development ing in Kuala Lumpur to move to Keroh Lure”. ness of Muar, Batu Pahat and Iskan- director Alvin Ong will also be Seremban. Another speaker invited for the dar Puteri and the likely impact of sharing about opportunities in “Seremban has been promot- HSR symposium is KGV Interna- the HSR stations on these towns. the secondary market. ed as a place where you can stay tional Property Consultants exec- He will also reveal a comparative The symposium is organised by and travel to work in Kuala Lum- utive director Samuel Tan, based chart on the cost for the diff erent TheEdgeProperty.com and sup- pur. With the HSR, I believe more in Johor, who will be focusing on modes of transportation. ported by The Edge Malaysia. The people working in Kuala Lumpur Iskandar, Batu Pahat and Muar TheEdgeProperty.com’s “Sym- presenting sponsor is Bukit Bin- will consider living in Seremban in his talk. posium on Kuala Lumpur-Sin- tang City Centre. TEP 6 FRIDAY AUGUST 12, 2016 • THEEDGE FINANCIAL DAILY COVER STORY

In choosing a home loan, Chang ad- RHB Banking Group head of group vises potential house buyers to check out retail banking U Chen Hock says that as many banks and financial institutions mortgage interest rates differentiation as possible to gauge the best terms as dif- among the various banks in the country is ferent banks have different criteria and currently negligible due to the prevailing risk appetite. competitive landscape of the industry. “Prospective borrowers will need to compare the rates received from the var- Fixed and floating rates ious banks and the terms and conditions There are basically two types of interest attached to the loan before shortlisting agreements on home loans: fixed and the bank with the best package for them,” floating. he added. The fixed agreement refers to the fixed can also take advantage of the various Ching concurs that homebuyers have to interest rate on the product that remains schemes such as MyDeposit, My First scrutinise a few banks first before short- constant throughout the lifetime of the ith Bank Negara Malay- Home Scheme, PR1MA, RUMAWIP and listing two to three banks. facility. sia (BNM) having cut so on. But bear in mind, for first-time “Banks assess each applicant indi- “This product offers peace of mind the overnight policy rate buyers, it is important to buy within their vidually based on nett income, commit- knowing that the pricing will remain the (OPR) by 25 basis points financial capabilities,” he says. ment, repayment, etc, before determining same throughout the loan tenure. Such to 3% from July 13, 2016, However, The National House Buy- whether he/she is qualified to borrow the a premium feature however, comes at a some major banks have ers’ Association (HBA) honorary secre- desired amount,” he says. higher pricing compared with a floating Wreduced their base rates (BR) and base tary-general Chang Kim Loong says that “Banks have many considerations for rate product,” U says. lending rates (BLR). a reduction of 25 basis points in the BR is loan approvals but the rates offered by On the other hand, a floating interest Among these banks, Maybank was the not material, and prospective house buy- them are generally about ±0.1%-0.2%,” rate home loan comprises a variable com- first to react. The bank lowered its BR and ers must carefully assess their ability to he adds. ponent, namely the BR. The interest rate is BLR by 20 basis points to 3% and 6.65%, repay the monthly loan obligations and According to Ideal Mortgage Specialist expressed as BR plus spread. The BR will respectively, with effect from July 15. only go ahead with the purchase if they Sdn Bhd senior marketing manager Ste- be subjected to fluctuations in the event Subsequently, Ambank, CIMB, Public are certain that they have no problems in ven Cheong, banks usually set the interest of movements in the benchmark cost of Bank, Hong Leong Bank, RHB and Affin servicing the loan instalments. rate on a mortgage based on two factors. funds, he explains. Bank reduced their BRs and BLRs as well. “Although the reduction is very much First is the loan amount. Second is the Besides the OPR movement, factors The cost of loans will be lower as banks welcomed, it cannot be the deciding fac- borrower’s credit profile. “If the credit that will affect the BR also include the decrease their BRs, making current bor- tor on whether a prospective house buyer score is good, the buyer may get better borrower’s credit profile, and the bank’s rowers and property buyers the winners, should pursue their dream home,” he says. interest rates, and vice versa,” he offers. operating cost and profit margin. Ideal Mortgage Specialist Sdn Bhd head of marketing Vincent Ching tells TheEdge- Property.com. Banks reduce their BRs in order to maintain their competitiveness, he says. “Normally, when one bank lowers its BR, other banks will follow.” With the current relatively low interest rate environment and with more BR cuts expected in future, should a first-time homebuyer be motivated to consider buy- ing property now? In such a competitive financing environment, how does one choose a loan with the so-called “best interest rate” or that best suits one’s re- payment needs? Ching says that based on the current soft property market, there may be some great deals. “Besides the BR cuts, first-time buyers FRIDAY AUGUST 12, 2016 • THEEDGE FINANCIAL DAILY TEP 7 COVER STORY

semi-flexi loan instead of the flexi loan as the latter may incur extra costs. “Some banks will charge the fl exi loan borrower a set-up fee of RM200 and a monthly maintenance fee of RM10, so these are the extra costs,” he notes. And if a bor- rower doesn’t make additional payments, he or she will not benefi t from the interest savings feature of the fl exi loan but would In a mortgage, the eff ective lending rate have incurred more cost anyway, he adds. refers to the rate that a consumer pays Ching says buyers need to find out all for a loan facility. the costs involved in buying a property to Meanwhile, the BR is determined by avoid buying something they can’t afford. the financial institutions’ benchmark “The main reason buyers face difficulties cost of funds and the Statutory Reserve getting a mortgage is because they are buy- Requirement (SRR). Other components ing something they can’t afford,” he says. of loan pricing such as the borrower’s Besides the cost of a property, buyers credit risk and liquidity risk premium, should know that there are other costs like and the bank’s operating costs and prof- down payment, stamp duty and valuation it margin will be refl ected in a spread fees, Cheong adds. above the BR. According to BNM’s web- site, the Base Rate (BR) replaced the How to choose? Base Lending Rate (BLR) as the main When deciding on the type of mortgage, reference rate for new retail floating HBA’s Chang reckons that there should be rate loans eff ective Jan 2, 2015. no real difference to the borrower whether The effective rates come under the their housing loan is under the conven- cost-plus structure which is translated tional financing or Islamic financing. into the “BR + spread”. However, the borrower should ensure “Since the introduction of the new that early redemption or repayment of framework, all financial institutions the facility is allowed under the Islamic now have their own independent pub- fi nancing facility as the previous genera- lished BR and spreads,” says RHB Bank- tion of Islamic fi nancing by certain banks ing Group head of group retail banking did not have provision for early redemp- U Chen Hock. tion which posed problems to borrowers A revision in the BR will impact the wishing to settle their housing loan early eff ective lending rate of a mortgage fa- or to dispose the property, he adds. cility, thus it would entail a revision of the The choice of a fully-flexible loan or instalment amount, U adds. U says that due to the current accom- redrawing against the accumulated pre- semi-flexible loan account depends on the The spread on the other hand is fi xed modative interest rate environment, paid amount, he says. needs of the borrower, he offers. upon entering a mortgage contract, un- most mortgage products are offered “With the two features, mortgage prod- “If the borrower prefers to make regu- less there is a change in the risk profi ling as floating rate schemes. ucts are now becoming transactional prod- lar pre-payments and withdrawals, then of a borrower particularly due to deteri- ucts that enable customers to prepay and a fully-flexible loan account is more suit- oration of the mortgage account, which Conventional and Islamic loans redraw at any time, as opposed to a typ- able. But if the borrower is not going to includes non-servicing of the monthly There are two concepts of mortgage ical loan that limits transactions to only make regular pre-payments or withdrawals, instalments, he notes. in Malaysia — the conventional loan monthly instalments,” U adds. then a normal semi-flexible loan account “Under such circumstances, the and the Islamic loan. To comply with Under a normal non-flexi mortgage, would suffice.” financial institutions are allowed to Shariah principles, the Islamic loan however, borrowers are not allowed to do Ultimately, borrowers should choose what vary the spread to reflect the risk of must comply with Al Bai Bithaman any prepayment and redrawing, he adds. suit their lifestyles and requirements. the mortgage account,” U says. “Such Ajil (BBA), Musharakah Mutanaqi- As for semi-flexi loans, a borrower can provisions are refl ected in the Letter sah, Musharakah and Ijarah contract, do prepayments but they have to serve a of Off er and consumers are advised to explains Ching. two-day notice to the bank if they want to peruse the terms.” Both the loans are divided into three redraw from the prepaid amount. categories — flexi, semi-flexi and non- Ching suggests that borrowers go for the flexi. Compared with conventional loans, Islamic loans have a few ad- vantages. “There is a 20% stamp duty discount for Islamic Loan Agreement documents, and the so called interest rate of Islamic loans are capped at a ceiling rate of up to 10.75%,” says Ching. Also, when refinancing from a con- ventional mortgage to an Islamic one, there is a 100% stamp duty waiver on the existing refinancing loan balance, Ching adds. Furthermore, in contrast to con- ventional loans, which usually have a three-year lock-in period, most Islamic home financing packages do not have a lock-in period. During the lock-in period, borrowers are not allowed to refinance or fully set- tle their loans unless they pay a penalty of 2% to 3% on the loan outstanding.

Flexi, semi-flexi and non-flexi loans Home loans are also categorised as flexi, semi-flexi or non-flexi loans. “Flexi” features give greater flexibility, namely the ability to make additional payments over the monthly instalment amount. The additional payments will be used to immediately offset the prin- cipal balance outstanding resulting in interest savings, explains U. In addition, the prepaid amount can be used in future if the need arises by